01 Mar “Where Did My Money Go?” Identifying The Leaks in Your Budget
People tend to overlook the little “leaks” in their budget because they don’t often realize how much they’re spending. As long as you’re not purchasing anything extravagant or fancy, you’re all good…so, where on earth is all of your money going?
Budgeting is making sure that you’re spending less than you’re earning and planning for both the short and long term. Unfortunately, many people think of budgeting as depriving themselves and they avoid it like they do a diet. However, just as a diet is really a program for eating, budgeting is just a program for spending. (From Investopedia) You create a plan how to spend your money to determine in advance whether you have enough to purchase the things you want. However, there are moments where you deviate from the budget and find yourself thinking, “where did all my money go?”
The culprits are probably the tiny “leaks” or “sinks” you tend to not noticed. These are simply costs that aren’t accounted for in the budgeting process. Usually, they’re completely reasonable expenses – they just happen to eat up a lot more money than was expected for a number of reasons. (From The Simple Dollar) This little “leaks” sneakily come through until they add up and before you know it, your money is gone.
Let me enumerate some of these “money sinks”/”leaks” to help you determine and revisit your budget. This way, you can adjust your original financial plan and not wonder where your money was actually spent.
- Non-essential bills – monthly subscription, telephone bills, gym membership, etc.
- Irregular bills – your daily coffee, car maintenance, house maintenance, haircuts, personal time off, etc.
- Recurring little expenses – a snack, drink, any purchase from a quick trip to a store, etc.
The list can go on but you get the picture. A $1 chocolate bar might not really have a bearing but if you make a daily trip to the store purchasing this, that’s roughly $30 out of your budget every month. The key is to review your statements, bills, and receipts and identify where the majority of your budget is going. You might need to cut back on that coffee or consider preparing your own lunch at home. Prioritise your spendings. Reviewing your finances from time to time is actually a good practice as it can literally pay off.
A little saving goes a long way.
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