You’ve tried to make a budget, and have made an honest effort to stick to it, but money seems to slip away without you knowing where it went. You aren’t alone! Many people find that unaccounted-for expenses – called money leaks – are the downfall of many well-planned budgets. So what are they, and how can they be stopped?
The first step is finding the money leaks. Get your budget out, and take a second, long look at it. Finding them may not be simple, but here are a few common ones:
- Uber and cab fares, and tips
- Cable, insurance and cell plans that no longer fit
- Buying more-expensive products from habit
- Impulse buying
- Forgetting to budget for hobbies or leisure activities
- ATM fees
- Takeout or other convenience meals
These should be enough to get you thinking; there are as many small things like this that slip by us as there are people. Everyone’s blind spot is different- you may find that you have money leaks not listed here. My personal one is fruit, coffee, or the weekly promotional item when stopping for gas. A dollar or so a week adds up over a year’s time, I could have saved nearly $100 this year alone by not buying these!
If you haven’t found any money leaks, but you still have money seemingly gone before it should be, you may have made the mistake of not budgeting enough for some of the expenses, or not counting fees, loans paid out, or other ‘hidden’ leaks. Lifehacker, along with other sites, have lists of other common money leaks- one of these may be able to point out your personal leaks.
Plugging money leaks
One of the first places to look is your fixed bills. Your insurance agent will be able to help you look at what you have in insurance, and make sure that your coverage is accurate. If you have had an event at your home, you may have added extra insurance to cover it, and it has never been removed. Your agent may recommend an updated inventory, to make sure that you don’t drop your coverage below the replacement value of your valuables. As well, with the major changes in health insurance, you will need to take a look at the policies you have: you may now have duplicate coverage that is an expense you can do without.
Next, your habits can be examined. If you pay for cable, telephone, and internet, but rarely watch TV or get calls on that telephone, you may be able to save a considerable amount on your bill by shifting to a membership service for shows you love, and keeping only the internet. Then look at the other areas; if you are willing to work on hobbies from what you have, or not download books until you are ready to read or listen to them, you may find a savings that will surprise you.
With a bit of research, finding less-expensive but comparable products may save you many dollars. Unless you are in the midst of a crisis, slowly plugging the money leaks of automatically buying brand name items will let you try various brands to find one that you like just as well as you do your current products. Start with those that are less-critical to you: you can develop trust in these brands, and you may be more willing to try other products by the same company.
There’s nothing I can do!
Some of the money leaks have to be there for now, due to circumstances. A change of job, recovering from time off work, or other life changes can cause this shift. Money leaks are not a leak then, but they do have to be budgeted for. Most people, however, find that a planned evening out less often is a different pleasure, or public transportation and a walk to work not only eliminates money leaks, but provides other benefits.
You need to decide what is most important, and insure that you can afford it. For example; making sure you have cash when leaving the grocery store for needed expenses may be a smaller expense than stopping at an out-of-network ATM. Shifting your habits to avoid money leaks, then making sure new ones do not develop will allow you to have the financial security to live within your income, as well as have both security and fun.
You have your budget, and you need to add in all of these leaks. After adding them in, if you are convinced that you cannot live without a candy bar at the grocery store, the $30 a week in craft supplies, and the takeout you normally do on Friday nights, you will need to shift your other expenses to pay for them.