The Top 5 Money Leaks Affecting Your Finances and How to Fix ThemDec 08, 2022
How often do you find yourself looking at your finances and wondering where all the money has gone?
I bet it’s often!
If you do then I bet that you have several money leaks that are making it feel almost impossible to reach your financial goals. Money leaks are often where we spend money on lots of small things that aren’t providing us with any real long-term value. A lot of us may be used to looking at our expenses and looking at areas that we can save money on such as large bills but when we get down to the real nitty gritty of our everyday spending that’s when we can start to identify the real leaks and then make a plan to have those dollars to work harder for you through savings or investments.
So what are some of the top money leaks that I see most often?
1/ Subscriptions: On a personal level this could be subscriptions to mobile phone apps, beauty product boxes, tv services such as Netflix etc. On a business level this could be softwares or networking clubs. Subscriptions can be cost-effective in certain cases, but if you’re carrying too many at once, your bank account is probably suffering.
A great way to look at these are to ask yourself, ‘Am I using this service regularly - every day or week or month, in order to be getting my full money’s worth?’ If not it’s time to cut it out and redirect those dollars elsewhere.
2/ Food & Drink: Whether it’s takeout that you grab after work because you’re tired and forgot to food shop over the weekend, or treating your employees to those coffees and doughnuts mid-week food and drinks are an area where a lot of people can overspend!
It can only seem like a small amount of money each time but it very quickly adds up. The average U.S. household spends $2,375 per year on dining and takeout purchases. And I think that’s low.
Things like meal prepping and batch cooking can really help you cut back on this money leak at home. And in the office, think about whether treating employees every week is a habit rather than a real reward. Maybe instead think about putting that money towards an annual dinner out where you can all enjoy the time together more and bond as a team.
3/ Phone Plans: Phone plans are essential for most of us, but you could be paying for unnecessary fees and services that are draining your bank account. Also think of setting up an auto pay to your credit card so you don’t every get any late fees.
Whether you have a company or personal phone, always make sure to check your account regularly and make sure that you’re using the benefits that you have fully. If you’re not using that huge data allowance each month maybe it’s time to downgrade to a cheaper plan.
4/ Bank fees: If you want to avoid money leaks, then look at how much you are spending on bank fees each month. Bank fees have been going up over the years, especially for business accounts. You might not even be aware of potential fees.
Besides monthly maintenance fees, banks also charge overdraft fees, paper statement fees and ATM fees if you don’t use their branded ATMs Look for a bank who reimburses you for your ATM fees, they are out there. I personally have one. Reach out if you want me to connect you to them.
Again this is all about having awareness and making sure that you’re not being tripped up by fees that could be easily avoided if you did a slight behaviour change or moved banks.
5/ Miscellaneous spending: This is quite a wide category I know but think about how many Amazon purchases you made in the last 3 months? Are you using all of them fully? Or how about office supply costs in your business? Do you know how much your employees are ordering? Thes costs often get overlooked but if you take the time to sit down and track them individually I can guarantee you will get a shock!
Whether it’s about being more intentional with your spending or letting your employees know a budget for office supplies and putting some boundaries around this type of spending can really help with those money leaks.
Money leaks affect most of us and can be very financially draining, but they are avoidable. My top tips for fixing and preventing them are to review your spending(look at individual transactions and not just overall categories), plan your budget, and optimize spending habits.
Are you ready to face your money leaks? Let me know in the comments if you’ve identified any more leaks
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