Do you feel like, no matter how much you plan and track and record, you just can’t seem to stay within your budget? Where does your money go after all that effort?
Or maybe you’re starting to suspect that the idea of sticking to a budget is really some made up myth because, now that you think of it, you’ve never been able to stick to one and you don’t personally know anyone who has either.
I’m the first to say I really suck at budgeting. Sometimes I try to talk myself into believing I don’t need one. I think I’ll just pay all my bills then whatever is left over I can spend on whatever I want. Not such a bad idea, right?
Except when all your money is spent and you still have 3 days left until payday.
No, a budget really is necessary if you don’t want to overspend and you’re trying to get out of debt. And if you don’t want to overspend, you need to track where the money is going. This allows you to see where the “leaks” are so you can redirect that money towards expenses that you value and have a high priority for.
I decided to get out my magnifying glass and look a little closer at our spending. What I found was that I tend to make impulse buys on things that aren’t particularly of high value to me. And the reason I do that is typically because I am in denial about how much the impulse purchase has an effect on our total budget.
If I buy a frappuccino at Starbucks for $4.75, I think, hey, it’s less than $5, that’s nothing!
But if I do that 4 times in one month, then that’s almost $20, which is a half a tank of gas. Of course, each time I buy a frappuccino I’m not thinking about the previous ones I bought or the ones I’ll buy in the future. I only think about that one $4.75 purchase.
This, my friends, is what you would call a leak.
A drip here, a drip there is no big deal. But consistent drips over an extended period of time? That adds up, folks, and can take a big bite out of your budget.
So I thought I would make a list of spending leaks – those items or services we spend money on that a) may not be something we truly value but keep spending money on anyway, or b) could either be replaced by something less expensive or removed from your budget altogether.
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Where Does Your Money Go? Start Tracking to Find Out!
If you keep wondering where all your money is going, you’ll probably need to take a closer look at your spending habits. Be sure to get on a budget and track your money closely. Look for spending leaks like the ones listed below, then do what you can to minimize or cut these expenses altogether.
1. Bank Fees
Paying bank fees adds quality to my life, said no one, ever.
Do you pay a monthly account fee for just keeping money in the bank? If so, why not just keep it under your mattress? Just kidding.
But seriously, there are plenty o’banks that don’t have monthly service fees. Find one and switch. Also, practice good money management habits and you’ll avoid overdrafts and late fees.
2. Keeping your savings in a non-interest bearing account.
Okay, so it may seem like this isn’t a leak because you’re not actually spending anything. But if your savings are sitting there stagnant, that means its value is not keeping up with inflation and your purchase power is diminishing. Possibly look into a money market account.
3. Paying for extended warranties.
This is usually an emotional purchase you make because you’re worried your investment will be lost if you don’t buy some type of insurance. But if you stick to buying quality items, you will most likely never need one. Besides, just knowing that as much as 70% of the cost of an extended warranty is profit for the retailer is enough to tell you that even they don’t think you’ll ever use it.
4. Playing the lottery
You’re not going to win, so why spend the money?
5. Shipping fees
If you online shop as much as I do, no doubt you are always conscious of how much the shipping fee adds to the total purchase amount. Occasionally there is no way around it, but most of the time you can find a website that offers free shipping with a minimum purchase.
I don’t recommend throwing in another $20 worth of stuff just to not pay for shipping (that’s another budget leak), but possibly wait until you have a list of necessary items that add up to the minimum purchase.
Another idea is to choose the in-store pickup option if that retailer has a location near you.
6. Impulse buys
I’m not necessarily talking about when your TV dies and you impulsively run to Target to pick up a new 55-incher before the next Broncos game. That *might* happen, but rarely.
What I do mean is picking up a couple of items at the dollar bin, and/or that cute sweater on clearance, and then a bottled Starbucks cold mocha on the way to the register. I am *sooooo* guilty of this one, and I’d be ashamed of how much these impulse buys eat up my budget.
Go to the store with a list, and stick to it.
7. Buying brand name groceries
In my experience, rarely is a brand name grocery item worth the extra cost over the store brand. The price difference may seem small, but when you add up the cents you save on each purchase over time, the savings are significant.
If you are a die-hard brand name shopper, try going generic for a month and see if you can live with it. Your wallet will thank you for it.
8. Cute pet products
I get it. Fido is a part of the family and as his “parent” it’s your responsibility to clothe, bathe, feed, care for and entertain him. But just remember, that red argyle sweater is really for you, not for him. And he would be just as happy with a tennis ball than with that $15 bright orange, bumpy, squeaky toy you picked up at Target.
9. Buying all your clothes new
The key word is “all”.
More often than not I’ll shop on the clearance rack or go somewhere like Ross to find something new. But to save a few more bucks I’ll occasionally shop at a secondhand store.
While Goodwill is not my favorite, sometimes I do find good deals. I bought some nearly brand new Clarks there a few years ago for $10 and they are still one of my favorite pairs of shoes. But for clothes, I’ll usually go to a secondhand store like My Best Friend’s Closet. Sometimes I’ll find something at a garage sale.
The point is, don’t always pay full price.
10. Buying furniture new
I purposely didn’t use the word “all” like I did in the previous one. This is because I believe buying new furniture is like buying a new car – you pay a premium because it’s new, then you lose most of the value once it’s yours.
Look on Craigslist, Facebook Marketplace, NextDoor, or go to garage sales. If you have patience you will eventually find the perfect piece for a fraction of the original cost.
11. Eating out
This should be a no brainer. Eating at home is significantly less expensive than eating at restaurants. If you rely on restaurant food for sustenance more than once a week then you’re practically just letting the faucet run.
Make a meal plan, have a weekly appointment with the grocery store, and make your food at home. You’ll be richer for it.
12. Letting groceries expire
Yes, you should make a habit to keep your kitchen stocked so you’re not running to Panda Express when your stomach starts grumbling. However, be careful when buying items that expire relatively quickly – like fresh produce, dairy foods, and deli meats.
Make sure you are only buying what you need and using these items sooner rather than later in your meal plans. Otherwise, you’ll be throwing money down the drain.
13. You don’t eat leftovers
I can feed my family at least twice a week on leftovers, so it’s like two meals for the price and work of one!
If one dinner costs you $10 to make but you have enough for two meals, this saves you $10. If you can do this a couple of times a week, that’s $20 saved. Over a month that’s $80, and over a year it’s almost $1000!
Make a little extra and add a “twist” the second time around. Your family will get used to it, especially if you decide to put some of the savings in a family vacation fund! (Just a tip: write the date made on the container so you don’t accidentally start eating something that’s about to grow legs).
14. Using too much energy
No, I don’t mean physical energy, so don’t go put your pajamas on just yet. I’m talking about utilities like electricity and natural gas.
Do you have teenagers? Then you know what I’m talking about. They are very good at turning things on but have a strange aversion to turning them off. So, if you’re not careful, you’ll look up from your laptop and realize your house is much brighter than it needs to be.
And, you know as well as I do, your kids aren’t paying for that power. You are. So make your kids come downstairs and turn off the damn light, or you could just get up and do it yourself. Either way, it saves you money.
Also, you could replace all your bulbs with energy efficient ones, and install dimmers.
15. Keeping unlimited memberships
It sounds so good. You pay one relatively small fee per month and you get unlimited use of a service. Places like the gym, the car wash, the movie theater.
However, you have to actually *use* these services a minimum number of times per month to get your money’s worth. So, be honest with yourself. Are you only going to the gym a couple of times a month? And are you really going to go to the movies three times in one month? If your answer is no, you should plug this leak by canceling your membership.
16. Signing up for free trial offers
They make it so easy, don’t they? And you think, hey, it’s free so why not? It can be seemingly harmless until you forget to cancel before the trial period ends and your credit card is automatically charged. Before you know it, you realize you’ve already paid 3 months for a service that you don’t even use. If you just can’t resist, set a reminder in your calendar to cancel. Otherwise, try to muster up the willpower to pass these up.
17. Unused or redundant expenses
You pay for a landline but only use your cell phone. You pay a cable bill but mostly use Netflix. Or, as mentioned in #15, you pay for a gym membership but *never* go (guilty!).
Sometimes we take on an expense thinking it’s a good idea at the time, but eventually, we no longer use it or now there are new, free options that could replace that expense. Track your spending to see if this could be a leak in your budget.
18. Magazines and books
If you have a library close, there should rarely be a reason to actually purchase a book or magazine for yourself. Library memberships are free and – *bonus* – they network with other library branches and districts, so free access to any book is close to guaranteed.
In addition, many library districts now offer multiple book formats, including audio, PDF, and Kindle. You don’t even have to go to the library these days. You can literally open up your laptop, check out books online, and download to your Kindle – all from the comfort of your La-Z-Boy. Two caveats: sometimes you’ll need patience if that hard copy is popular, and you must be a responsible library member by returning your books on time.
19. You pay for convenience
Those containers of colorful pre-cut fruit in the produce section look so … convenient. As you stare at them, you try to talk yourself into believing the cost is worth it. After all, your time is valuable and it takes soooo long to cut up all that fruit. Besides, you would need to buy each fruit as a whole, which would make so much more than you would actually eat.
I get it. But just know that you are paying an enormous premium for that convenience. Same with bottled water, prepackaged dinners, paper plates, packaged salads, individual-sized foods, and more.
Think about why you pay extra for these things. Do you really not have the time, or could it be poor time management Compare the costs per unit before grabbing that convenience item. Your shock may just be what convinces you to find the extra time the better deal requires.
20. Premium gasoline
By pumping regular grade instead of premium you could save 20 to 40 cents per gallon. This is a huge savings! If your vehicle’s manual only *recommends* premium then it is typically safe to use regular grade without a noticeable difference in performance.
21. DVDs and CDs
It took me a while to plug up this leak. I like having a physical product that I can take with me or lend out. However, I had to weigh how often I actually do that with the extra cost I was paying.
I found that the higher price and extra space needed to store these items wasn’t worth it, so I switched to digital products. If I know I’ll watch a movie more than once, I’ll purchase it through Amazon. I don’t even buy music anymore, but instead, I just split a family Spotify subscription with my kids.
22. The newspaper
This one might be hard for some. You grew up with the paper and you either feel like it’s essential to getting the news or to your daily routine. Maybe it’s just more like tradition.
Perhaps it’s just something you consider to be a part of your budget and not an actual leak. But, if you’re just reading it out of habit and wouldn’t mind getting the daily news through other sources, you have a lot of choices – and most are free.
As I’ve gotten older, I’ve come to appreciate experiences over material things. This means I would rather go to the theater than buy a new sweater or take a road trip over purchasing some new furniture. Sometimes I get a little carried away and want to make the experience *extra* special – like buying front row tickets or taking the kids to the movies & dinner on a Saturday night at the dine-in theater.
Maybe you have a favorite sports team so you buy season tickets, or you’re into video games so you buy the latest one as soon as it comes out. These are all examples of overpaying for entertainment.
Buying seats a little farther back, eating dinner at home before going to a matinee, or renting the latest game instead of paying sixty bucks for it are minor adjustments that will keep you in line with your monthly budget.
24. Salon services
Sometimes it’s nice to treat yourself to a new hair color or a set of pretty nails. However, these things require expensive upkeep to maintain. Consider coloring your hair at home and learning how to do your own nails. The money you save over the years will serve you better in an interest-bearing retirement account.
25. Expensive hobbies
Hopefully, you have something you really enjoy doing in your leisure time. Hobbies are a great way to learn new skills and improve our quality of life. But some hobbies will drain your account faster than others.
Keep track of how much of your budget you’re spending on your chosen hobby and decide if it’s worth the expense. Maybe you just need to cut back on the accessories you buy or cut down your lessons to twice a month instead of once a week. Or if you’re not too committed, you could switch to something that requires less financial outlay.
The key is tracking your spending so you know how much is being poured into something that is purely for fun. Making some small sacrifices will still allow you to enjoy your hobby but also save you some money.
26. Cell phone plans
No longer is a $100 cell phone bill inevitable. Services like Ting and Republic Wireless offer considerably reduced plans with no contracts, or you could opt for a pre-paid plan with Cricket or MetroPCS. You could easily slash your bill in half.
27. Buying daily deals
Sites like Groupon and LivingSocial offer products and services at a discount so you may think you’re *saving* money. The catch is you have to use your “coupon” by a certain date or else the deal expires.
I’ve bought many Groupons that I didn’t use in time so I lost the deal, and usually, they were on items that I didn’t need in the first place.
Be careful with these types of sites. Know what you are looking for before you start browsing, do a little research to find the actual value (don’t just take the site’s word for it), and make sure you’ll be able to use the coupon before it expires.
28. You’re too generous
Okay, this is me, but with only certain people. Namely, my kids. I can get a little carried away with birthdays and holidays and spend more than I should. I think there’s some kind of guilt factor involved. Anyways, I tend to focus on how happy my kids will be instead of staying within a budget, and that’s a leak if I ever heard one.
Maybe you’re too generous when you’re with friends at the bar, or you feel like you have to “pay back” your parents by always footing the restaurant bill. Perhaps you just feel too awkward to suggest splitting the tab.
Whatever the case, maybe what you need is a mind shift, and accept the fact that your friends and family love you for you, and not your money. If you truly enjoy being generous (which is a great thing!), then make a budget for gifts so it fits in your budget instead of breaking it.
29. Emotional spending
Do you tend to go shopping when you’re stressed, or just after an argument with your spouse? This is usually a sign of emotional spending.
Making decisions based on your emotions is rarely wise, and can really derail your budget in extreme instances. Be aware of how you’re feeling before you go shopping. Are you upset, angry, hungry, tired, or sad? Take a walk or read a book instead, at least until your brain is in a rational mode again.
You’ll have a healthier bank account and fewer regrets.
30. You use a credit card as a preferred payment type
More and more people are choosing the convenience of online spending, and this usually means entering personal information into your preferred websites so the shopping experience is easier for you.
If you choose to use a credit card for your account, it’s much easier to wind up with a fuller cart. The idea of getting something now and paying later tends to make us overly optimistic about what we can actually afford.
When you use a debit card, you’ll think twice about actually reducing your bank balance immediately.
31. Delivery charges
Pizza, groceries, even furniture – these are purchases you can usually pick up yourself and skip the delivery fee. I know, getting pizza delivered when you’re tired and just want to put your pajamas on is really tempting. But when you can, schedule a pick-up time that’s convenient (maybe on your way home from work, or while you’re running other errands), and save a few bucks.
Of course, I mean Starbucks, but I really mean *any* coffee not homemade and exorbitantly overpriced. Buy a Keurig if you’re short on time, or an espresso machine if you like the fancy stuff. In the long run, you’ll save a ton.
33. Being unorganized
That time you couldn’t find the extra phone charger for the kitchen, so you went out and bought a new one. Or forgot you had a new pack of pens in your junk drawer so you picked up some more. This is simply a matter of being a little disorganized. When you’re organized, you misplace things less often and don’t end up paying for things you already have.
34. School supplies
If you’re still buying school supplies for your kids, you may want to take stock of what wasn’t used (or used up) last year so you’re not buying more than you need. I have ended up with enough unopened packs of markers, pens, lined paper, folders, and white out to last 3 years.
This could potentially be a big leak in your budget. Check your insurance to see if you can afford higher deductibles. This will save you a ton on premiums. Also, do what you can to be a lower risk to your insurance company so your rates don’t go up. Lastly, it usually pays to shop around. Many times you’ll find a lower rate than you’re paying now.
36. No emergency fund
When you don’t budget for emergencies, you could likely end up using your credit card. This means you are paying interest on top of the actual emergency expense. If the emergency requires a large financial outlay, which is typical, the interest you’ll pay will be significant. Instead, vow to put aside a percentage of your paycheck for emergencies. Yes, you’ll be making sacrifices now but you’ll be so glad you did later.
37. Unplanned spending
How often have you gone into Bath & Bodyworks to get a $5 travel sized lotion and left with $75 worth of candles and hand soap? I get it. They smell so good and would look great in your house. But now you’ve got $70 less in your budget for necessities.
Indulging occasionally is fun, but be sure you’re sticking to your list. Perhaps bring only cash into the store and limit your time to ten minutes. You’ll never miss that extra soap dispenser.
38. Alcohol, appetizers, and dessert
My family loves to eat restaurant food. I like it because it sort of forces us to all be around the same table at the same time, and everybody can eat what they want. So I have room in my budget for dining out.
But if my husband has a couple of beers, the kids order an appetizer and I have a dessert, the tab can get close to doubling and I’ve just eaten up a big part of that budget. Try to stick to just water and a main entree, and your dollars will stretch a lot farther.
39. Not using your Flexible Savings Account funds
This is just like throwing money in the trash. Make sure you use up all your FSA funds before the end of the fiscal year, so you don’t lose it.
40. A 401K Loan
My husband and I have taken a couple of small loans out of our 401K in the past, and we lost some headway in our retirement fund because of it. I would suggest that this be your last resort for nothing but an emergency. Otherwise, you’re losing valuable interest that could be compounding its way to a bigger nest egg.
These can be huge spending leaks unless you plan carefully. It’s easy to get carried away with the experience of traveling, eating out for all meals, finding fun and entertaining things to do as a family, and of course, buying souvenirs.
Make a detailed budget by estimating each cost – what your daily meal allowance would be, how much you’re willing to pay for entertainment and recreation, and how much you’ll put aside for mementos. The last thing you want is to still be paying off your vacation a year from now because most of it was charged.
42. New technology
I know people who *have* to have the latest model – despite their current one working just fine. Next time that bright, shiny, new object catches your eye – take a look at what you already own (and have already paid off) and determine if the extra financial outlay is truly worth it. (Or you can ask me. No.)
Keep your thermostat slightly lower than comfortable in the winter, and slightly higher in the summer. Knock on the bathroom door when your teenage son has been in the shower longer than 10 minutes and tell him to “get out!” Use a space heater instead of heating the entire house. These little adjustments will lower your utilities and keep more money in your pocket.
44. Changing your oil
If you don’t know how to change your car’s oil, learn. It’s an easy skill that meets a need and will save you money.
45. High mortgage rates
We had to get an ARM when we moved into our current home and we could handle the payments just fine – up until the 2nd year after the initial rate expired. That’s when we really started feeling the pinch. So, we refinanced and saved over $300 a month on our payment.
If you have a rate that’s higher than the average right now, consider talking to a mortgage lender about refinancing. You may be able to save a significant amount on your monthly payment.
46. Supporting your adult children
This may be tough for some. The transition from financially supporting everything to nothing can be difficult and awkward as our kids grow up. Sometimes our emotions or their immaturity can extend our financial help beyond what is healthy and helpful.
If you feel your support is putting too much strain on your finances or is perpetuating an unhealthy dependency from them, you may need to set some boundaries. You can still support your grown kids (and should) by offering advice and teaching them about money management.
47. Payment plans (instead of paying in whole)
Okay, so I have a confession that’s a little embarrassing to reveal. We’ve been making a monthly payment for life insurance for about 17 years. I *just* found out that we’re paying almost $100 extra a year because we pay monthly instead of annually. How did I ever miss that?? For 17 years?? That’s almost $1700 down the drain!
Learn from my mistake, and make sure you’re not paying more just because you’re on a monthly payment plan. If you can swing it, choose the payment option that results in the lowest cost. You’ll likely need to make bigger payments, but you won’t be paying extra just to make smaller ones.
48. Hanging on to vices
We all have them, and they all have a cost. For most, we pay with our wallet and our health. Bad habits like smoking, tanning, excessive alcohol, gambling, speeding, drugs, and pornography can eat up a lot of an income, especially if one is dependent on it. Even seemingly innocent routines like online shopping or eating fast food can become unhealthy addictions if not controlled. Get help if you need it because your health depends on it.
49. Out of network ATMs
Unless you have an unexpected emergency and there are no other options, always plan to just get cash out of your own bank’s ATMs. Usually, this comes down to poor planning, so with a little forethought, you should be able to easily bypass this budget leak.
50. Multiple Student Loans
Consolidate your student loans so you only have one payment and one interest rate (hopefully one lower than any you currently have). This will lower your debt overall and help you pay it off faster.
Don’t forget to download this FREE checklist to help you fix the leaks in your budget!
Take Control of Where Your Money Goes
If you don’t keep a close eye on your spending, you are probably leaking money somewhere.
This is why it’s really important to have a budget! Track your spending for a couple of months, and you’ll see where you can plug up the leaks and have more money for debt and savings.
Some things might be difficult to cut out of your spending. You may have made mistakes that are hard to recover from.
That’s okay. Take some time to write out your priorities and goals. These will give you the motivation to follow through and the perspective you need to stay on track.
Then once you plug the leaks, start applying all that money you’re saving toward your financial goals. Make the money you already have work harder for you, instead of working hard to make more money.
You can take control of where your money is going with a little extra effort. Those small spending leaks will add up to big savings!
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