We’ve all been there. You just got paid and have allocated all of your expenses and given yourself a budget. You seem to be doing well with your money and feel like you’ve limited your spending. The week continues on, and the next thing you know you pull up your bank account and see all of your money has disappeared. You don’t remember spending that much, yet your account tells a different story.
We get it, and as it turns out, so do almost half of Americans.
A recent Pew Study found that around 46% of Americans spend more than they make on a monthly basis. You may be part of that group and wondering how money seems to be leaking out of your bank account. Finding the leaks may not be as difficult as you think. Here are 5 of the most common expenses that are likely draining your bank account:
1. Monthly Recurring Payments
Chances are that you have some monthly deductions that you may have forgotten about or are not fully utilizing. The first step to eliminating these deductions is finding them. While you could manually inspect your bank account and identify every subscription, there is an easier way. Make use of the countless tools and apps available that do the work for you. While searching through your account, keep an eye out for these common recurring payments:
Subscription Boxes: Though some subscription services only cost around $10 a month, they easily multiply. Having a few different services (especially at various price points) can really add up over time. Determine if you are really taking advantage of each subscription service and if it’s something necessary to keep.
Streaming Services: Netflix, Hulu, Amazon Prime, YouTube, and Spotify just to name a few. The content streaming selection seems endless. Original TV shows are a major draw for users when it comes to video streaming services. If you have shows that you watch across many different service providers, you might be paying substantially more than initially intended each month. Take note of which services you have (you may have even forgotten about a few) and which you feel you can’t do without.
Club Memberships: Golf, country clubs, spa, or simply the gym. Club memberships can be a large burden on your wallet. If you don’t use them regularly, you are likely wasting money. For example, some Gyms can run you anywhere from 100 - 200 a month. Determine if what you pay is worth the value you receive and if you are willing to do a cheaper or free alternative.
Cable TV: The average cable TV subscriber pays between $85-$100 a month. This is another great opportunity to determine how much value you are getting out of your cable subscription. If you don’t watch much of the programming, consider canceling cable and just getting a streaming service instead.
2. Food And Drink
From wasted food to eating out with friends, this is where a large chunk of money tends to be wasted. According to a study done by Hloom, 68.89% of Americans admit to wasting money in the food sector. Here are some of the most common ways:
Groceries: Grocery budgets fluctuate from family to family, but even the most frugal shopper still has food go to waste. If you are throwing out a good chunk of food you have purchased, reconsider how you shop. There are endless ways to save money ranging from clipping coupons, buying in bulk to getting off-brand items. Be mindful about perishable items and how quickly you plan to use them and, as always, don’t shop hungry.
Eating Out: There are many reasons that American’s choose to eat out, whether it’s convenience, date nights, or simply just lack of knowledge on how to cook. Even though these purchases can seem cheap at the time, before you know it you’ve spent $100 on just a few meals. You don’t need to stop eating out completely, but make small goals to eat out less by packing a lunch for work or having a date night in.
Coffee: A lot of people need that morning cup of joe to help get their day started, but how much is it costing you? Americans can spend anywhere from $1-$3 dollars a day on a single cup of coffee, which adds up exponentially over time. Consider skipping the coffee shop and start making your own coffee at home.
Alcohol: According to the Bureau of Labor Statistics, the average American household spends around $565 a year on alcohol. You may find that you align with that average, or that you fall above or below it depending on how often you drink. Keep tabs on how often you drink and how much each drink is costing you. If you find the amount you spend is too much, consider incorporating a “dry” week into your routine.
Going out with friends, on dates, or hanging out with your family. There are an infinite amount of ways to spend your money when it comes to entertainment. Prices can range anywhere from $8 - $100 dollars per person, depending on the entertainment. As you can imagine this can be a hefty amount of cash, especially for a family. Here are some of the more frequent entertainment purchases that can drain your bank account:
Movie Theater: Catching an earlier matinee showing can certainly save you a few extra dollars, however often times those who go to the movies end up purchasing a snack as well. With a small popcorn priced around $6 and a small drink at $4, you’ve now turned your discount ticket into a $16 dollar seat. Imagine if you have a family of 4, adding additional tickets and snacks to that purchase. You can see how the cost quickly escalates. Try renting a movie at home, or going without snacks in the theater to help save some additional money.
Sports/Concerts: Whether you are going to a concert, sporting event, or buying a sports entertainment package, this can eat up a large chunk of change from your budget. Similar to the movie theater, purchasing food, drinks, or even merchandise at the event can become an unplanned expense. If you do go to an event, control potential overspending by only taking a limited amount of cash with you.
Video Games: You can get a lot of playable value from one video game, the problem is people often buy a new game before they’ve had a chance to finish their current one. Limit yourself to one game and make sure you’ve gotten your full value from that game by doing everything possible within it before moving onto the next. You should also be mindful of how much you are spending on in-game purchases. Although they have a small price point, these types of purchases can add up very quickly.
Utilities are an expense that everyone succumbs to at some point in their life. Whether you are in full control of your environment in a home that you own or if have limited control because you simply rent, there are many ways to cut down the cost of utility bills. Here are some of the biggest money wasters:
Lighting: According to the Department of Energy, if you switch out the 5 most used light bulbs in your household with energy-efficient bulbs, you can save $45 a year on lighting. Make sure to always turn the lights off if you are not in a room, and try to utilize more natural lighting.
Heating & Air Conditioning: By making only a few minimal changes to your current style of living, you’ll save money month after month without sacrificing home comfort.
Consider adjusting your thermostat one degree lower during the winter to attain a 3% savings on your home’s energy bill. If you’re feeling adventurous, you can double or triple those savings by lowering the thermostat even more. If you want to avoid the manual adjustments, get a programmable thermostat.
Additionally, help your home regulate its temperature with ease by closing the blinds during especially hot seasons, and keeping them open during the cold ones.
Electricity: You don’t need to make any drastic changes here to help you save money. Some simple acts, such as unplugging all unused devices, can help you save. Items that are plugged in but not in use, still consume “standby” energy. Be aware of what’s plugged in and how much energy it might be using. You can also invest in power strips that have timers on them or work with your smart home devices.
When it comes to shopping, either out of necessity or luxury, you’re probably wasting money somewhere. According to the Bureau of Labor Statistics, the average American household spends around $1,700 on clothes a year. According to The American Journal of Psychiatry, up to 16% of Americans form an addiction to shopping. So whether you fall into that category, or fall for clever marketing ploys, here are the top mistakes that may be causing you to spend more than you realize:
Buying More for Rewards: This is very common and can come in many different forms. A good deal of shoppers will end up adding more to their carts just to meet the minimum threshold to get free shipping. Another one you will see frequently is if you hit a certain price threshold, you will receive $15, $25 or $50 off your order. Make sure you give yourself a strict budget and don’t fall for these marketing tactics.
Impulse Buys: We’ve all had those moments where we see something, either in an ad while scrolling through social media or an item you spot on the shelf, and you buy it without thinking. It can be difficult not to succumb at the moment and purchase that item. There are ways around this. Some people follow the 10-second rule, giving themselves some time to ask, “Do I really need this?”. Other people give themselves a full 30 days to think it over before buying.
With the convenience of online shopping, and being able to store your card information in online accounts, it’s easier than ever to click the checkout button without thinking about it. Try removing all of your card information from these accounts to make it harder for yourself to buy.
Quality Vs. Price: You may feel like you are saving money by buying cheaper clothing items. however, because they are cheaper the quality generally suffers, and you end up spending more down the road to replace those items. Try investing in some higher quality items that will last longer and provide more value.
Awareness is the first step to creating change. When you are more aware of your spending habits, you can learn how to alter those habits. Pretty soon you’ll be able to plug all the leaks in your bank account - creating a strong financial future for you and your family.