Do you ever look at your bank balances online and ask yourself where did all your money go? Don’t feel alone. Many working adults get the same sinking feeling, and most have one thing in common: their monthly budget is leaking.
It’s not a problem of too little income, but of too much spending. What are the most effective ways to remedy those leaks? One of the most powerful techniques is tracking, meticulously recording every penny you spend for an entire month. It’s the financial version of a full-body physical exam. People are often shocked when they see all the data after a month of tracking.
After that, consider honing in on expenses you can eliminate without much pain. These soft expense items include things like premium cable subscriptions, health club memberships, and similar fare.
The next stage of the battle takes aim at grocery and discretionary spending, two areas where almost everyone can chop a significant amount of fat. Identifying wasted money in your budget is an essential component of finding and plugging all the leaks. Here are several suggestions for putting the plan into action.
Track Every Dollar for One Month
Professional plumbers add dye to water lines to make finding the cracks in pipes easier by letting fluid seep out. You can do the same with your money by keeping a detailed record of all spending for one month. When the time is up, compare the data to your monthly budget and note the differences.
Don’t be surprised to see variations in categories like groceries, meals out, entertainment, and a few others. The tracking exercise offers a keen insight into the precise places where you can plug a few cash leaks.
Take Aim at Soft Expenses
What are soft expenses? They are those you can easily eliminate as soon as you identify them. Keep your eyes open for stealth members of this category as you scan your budget and review the monthly spending analysis. Other outflows are not so soft and include items like car loans and student loan payments.
The good news is that you can refinance an education loan quite easily and gain access to lower monthly payments. The goal is to work with a private lender for the best shot at more attractive rates, terms, and repayment arrangements than came with the original loan. The best aspect of the refinancing agreement is that you can lower monthly cash outflow almost instantly.
Focus on Food
Be careful to keep food spending to no more than 50 percent of your monthly income. That includes fast food, meals out, groceries, and snacks you purchase at other times. Work to eliminate junk and fast food from your life and avoid letting goods expire while sitting in your pantry.
By saving money at the grocery store you are also creating a habit of being cost-conscious. Shop for groceries strategically, which means never going to the store without a detailed list. Consider joining a wholesale club to save about $1,000 annually on common food items.
Expired foods are wasted money, pure and simple. If you’re single, don’t be surprised to notice that you spend far more than planned on impulse foods like candy, coffee shop treats, and desserts.