Almost everyone has holes in their budgets. Chances are you don't even notice the money that seeps away because of them. But small leaks, left unchecked, can quickly turn into a flood of money problems. Don't wait until your best-laid financial plans are wrecked and all your hard work is undone. The trick to avoiding this situation is to thoroughly go over your budget, find the holes, and immediately plug them so that no more money is lost.
The extra cash you hold on to can open up a whole new world of financial possibilities, such as:
- Finally being able to save or invest for your future needs.
- Becoming debt-free and financially independent.
- Successfully breaking the cycle of living from paycheck to paycheck.
Here are some of the most common ways people waste money. If any of these sound familiar, take notice and start plugging your budget holes now.
Common Money Wasters
- Carrying a balance. If you don't pay off the entire amount of your credit card bill each month, you are blowing money on interest charges and other possible fees. This revolving, never-ending debt is a burden which can really hold you back. Only charge what you can afford to pay off in full every month. Stop making the credit card companies rich and look after your own financial security.
- Paying late fees. Stop giving your creditors even more money. Credit card companies and other lenders (including most utility service providers) generally provide online access to your accounts. Here you can print your statements and pay what you owe. There really is no excuse to forget to pay a bill or overdraft your bank account. Get organized with your finances. Throwing away money on late fees and other charges can sink your credit score and bust your budget.
- Choosing name-brand products instead of generic. This habit doesn't only apply to groceries. You can save a lot of money on clothing and drugs (both prescription and store brand) also. Don't be swayed by clever advertising and fancy packaging. Generic food products have the exact (or close to it) ingredients and nutritional value. They just don't cost as much. Changing your pre-conceived ideas about generics can save you big bucks in the long run.
- Selecting a low insurance deductible. Choosing a $1000 deductible instead of a $500 one can sometimes save you up to 40% on your car insurance premiums. For homeowner's insurance, the savings can be as much as 20%. Do a review of your policies every year or so and see where you can save. Remember to ask your agent about any available discounts for which you might qualify.
- Paying ATM fees. Again, why would you ever want to give your bank even more of your hard-earned money in the way of ATM fees? Plan ahead for when you know you will need some cash. Use one of your own bank's ATMs or get cash back when you purchase items at the grocery store or drugstore.
- Relentlessly clipping coupons. Yes, coupons can save you money. But using coupons to buy things you don't need or weren't going to get anyway really defeats the purpose. Remember to check generic or store brand items first. Many times they are less expensive than name-brand products even with a coupon. Don't needlessly spend money just to save a little bit of cash.
- Dining out frequently. Sure, everyone enjoys having a meal at a nice restaurant. But if you eat out more than you eat at home, the odds are your food/entertainment budget is enormous! You can enjoy big savings by planning weekly meals and shopping with a list. Preparing meals at home is almost always less expensive than restaurant fare and usually healthier for you. But no one wants to walk in the door after a long day at work and wonder "what's for dinner?". Having meals planned out (and the pantry and refrigerator full) not only saves you money but also reduces stress. And isn't that reason enough to do it?
- Paying for services you don't use. Are you really watching those 500 cable channels you pay for each month? Do you ever actually use that gym membership? Do you read all the magazines to which you subscribe? All of these seemingly small expenditures can really add up. Decide what you truly need and use and get rid of the rest.
