Benjamin Franklin said, “Beware of little expenses; a small leak will sink a great ship.”
Does this describe your finances?
More often than not, budgets are wrecked or debt is accumulated by little things. Sure, those big surprise expenses also strain our finances, but we can probably credit smaller, sneaky expenses for doing the real damage.
Here are the most common financial leaks and how to prevent them.
Americans spend a lot of money on food – over $3,000 every year just to eat out! With the addition of the cost of groceries, we spend well over $6,000 on food every year, totaling about 12% of our overall budgets.
Part of the reason we spend so much money on food is that it’s one of the most socially-influenced expenses.
We’ve probably all been in this difficult position: our friends are making plans to go out to eat, we’ve already maxed out our eating-out budget for the month, and now we have to decide if we will overspend or miss out on the fun.
Or perhaps you find yourself in the grocery store about every other day, desperately trying to find something to keep all your growing kids full for more than an hour. Inevitably, more snacks end up in the cart than you planned on, but to save face and try to keep your family fed, you don’t put anything back, hoping that it’ll all work out at the end of the month.
Maybe you overspend on food because you don’t know how to cook, forget to pack your lunch, or order-in food after another exhausting day of work. Whatever scenario you find yourself in, don’t let food be the biggest leak in your financial ship.
Planning is the best way to plug the “leak” in your budget when it comes to food. Make a schedule of meals for the week, do your grocery shopping all at once, and meal prep. Eating healthy doesn’t have to be expensive, and planning your meals will absolutely save you money (and probably time, too)!
If you have groceries in the fridge or a meal already prepped, it’s easier to say “no” to eating out with friends or running by a drive-thru on your way home from soccer practice. It provides ease of bringing your lunch to work or coming up with snacks to keep hungry kids fed. And throwing a prepared, healthy dinner in the oven after a long day of work is a breeze if you’ve planned ahead.
Instead of going out with friends, invite them over. A big pot of soup is inviting and inexpensive. Make extras, and save any leftovers for lunch throughout the week.
If you don’t know how to cook, now is the time to learn! Instead of allowing your schedule, friends, or convenience, to dictate your budget, plan ahead. If you’ve never cooked before, now is a great time to learn! There is a copious amount of free information and how-to videos on the Internet to help you learn. Start by making simple meals with simple ingredients.
How much do you think it costs the average family of 4 to attend an NFL game? If you guessed $500, you’re right! That includes four tickets, small beverages, hot dogs, parking and two cheap hats.
Attending a National Hockey League or NBA game costs somewhere around $300’s, and a Major League Baseball game came in at just over $200.
In fact, a new study conducted by CreditCards.com reveals that over the past year, Americans spent $56 billion on sporting events, $33 billion on sports equipment, and $19 billion on gym memberships; totaling $100 billion total on sports alone.
Aside from sporting expenses, Americans love to spend money on entertainment. On average, we pay $100 a month on cable and will spend just under $3,000 on various forms of entertainment throughout the year. This includes concerts, movie tickets, technology, and other events or activities. We are obsessed!
Of course, there is nothing wrong with enjoying an NFL game with your friends or family, but maybe forgo the 50-yard line tickets, and eat before the game.
Think simple. Be intentional with your family and spend your time wisely. Learn new skills (like cooking!) together, and don’t get caught up in the pressures of knowing the latest TV drama series. Read books, play board games, and enjoy nature. Rethink what a necessity actually is, and save yourself some money but cutting out extra expenses like cable or your fantasy football league.
Transportation takes up a surprising amount of money in your budget – about $8,500 a year, or 17% of your overall expenses.
This number includes a downpayment on your car, monthly payments towards a car loan, gas, maintenance, and repair fees. Depending on where you live, these costs may instead consist of public transportation tickets, parking garage fees, or Uber/cab rides.
Take care of your car! Schedule routine maintenance, keep your tank half full at all times, and use the right kind of gas.
Try to plan your trips when you run errands to save on gas. Moms of school-aged children know the pains of driving a total of 3+ hours a day. Coordinate with other parents to carpool to sports or activities, and share some of the burden.
The best thing you can do to find and plug your “financial leaks” is to track your expenses. According to a Gallup poll, only 1 in 3 Americans does this!
You need to create a budget to know where your money is going and what your spending habits are like. Crown has an easy-to-use guide that makes budgeting simple. Download it for free here!
Have you experienced these financial leaks before? Share your thoughts with us on our Facebook page!
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