Most of us are not perfect when it comes to money. It’s inevitable that financial hiccups will happen to even the most meticulous planners, but what about when money is really tight and there doesn’t seem to be room to save any more? It could be that you are spending out of habit and don’t even realize there are opportunities for improvement. Here are some hidden budget killers and how to fix them.
Eating out should be a special treat and not the normal way you sustain nourishment. I have a friend who is in dire straits about her financial situation and the amount of debt her family is carrying, yet, she buys lunch out almost every work day. What’s wrong with this picture?
Don’t fool yourself into thinking it saves money by eating off the value menu or ordering the happy hour special. Bite for bite, eating out is always more expensive that cooking at home.
Even if the amount of dollars is the same for a large home cooked meal vs a restaurant dinner, the home cooked meal usually provides several days of leftovers while take out container food will be soggy and smelly by the next morning.
The Fix: If you are short on time before work, prepare food in the evening or on weekends and divide it into easy to grab containers. If eating out is more is more for social reasons, invite friends over or do something active like taking a walk. Not only will you save hundreds of dollars, you’ll eliminate food waste and probably eat healthier as well.
Obvious and Hidden Fees
Fees, those apparent and hidden, can really throw a monkey wrench into a well balanced budget. One overdraft or late payment can trigger a domino effect of fees and interest. With bank fees on the rise, many think paying a few dollars here and there is the cost of doing business. That doesn’t have to be the case.
Hidden fees can also zing even the most diligent financial plans. Although there is no increase in cost to make monthly payments on certain annual or semi-annual bills, like car or homeowners insurance, companies often charge a billing fee if you choose to make more than one payment. Some businesses even charge more for paying with a credit card instead of cash or check.
The Fix: Keep a bit of padding in your checking account or set up electronic alerts for low balances and payment reminders. If you use a service like Personal Capital or Mint, it’s easy to see when balances are getting low or payments are due.
Make sure to study all bills to make sure you aren’t paying more than you have to. The best way is to budget for annual expenses every month. Take the estimated annual expense, divide by 12, and stash away that amount each month. When annual bills roll around, you’ll be able to take advantage of savings by paying in full or with cash.
There are still free checking and savings accounts available that don’t require a zillion dollar balance or 50 debit card transactions to avoid fees. Capital One and Ally get high marks as online banks. Your local brick and mortar bank or credit union might be a good alternative as well.
Not Sure Where My Money Went
Before we tracked our finances, I shudder to think about all the money that got piddled away on stupid things or impulse buys. Every month, I felt like there should be more money in our account, but it was gone. We were never sure where it went.
Once we started keeping track, it was very revealing to see that we were spending way more than we thought on food, eating out, and shopping.
The Fix: Before the month starts, decide how much you want to spend and stick to it. If you track your finances for a little while, it will motivate you to lower expenses and not waste money on things that aren’t important to your overall values.
The best way I know to not spend money is to avoid stores and mindless internet browsing without a specific purpose. When you do need to buy things, make a list, get in, get it done, get out. Don’t get tricked by sales or BOGO offers for things you don’t need and weren’t really planning to buy.
Planning Can Fix Most Budget Killers
This might be hard for people who like to live in the moment, but planning goes a long way toward fixing budget leaks, and having an emergency fund can take care of unexpected expenses.
We’ve been huge planners for years now, and I don’t feel deprived in any way. We still have way more than we probably need and do enjoy occasional treats and spontaneous surprises. However, life is no longer a mess of overspending and being in debt. I encourage you to work on fixing the triggers that are killing your budget and keeping you from having the financial freedom you deserve.
What are your budget killers? How is the best way to keep from overspending?