Creating a personal budget is the number one way to save money and manage expenses. However, creating a streamlined budget, free from common money drains is the only way to truly optimize your income and get the most from your personal budget. Your household expenses are broken down into two major categories: essential expenses and unnecessary expenses. While most people think that the only way to cut their budget is to cut from the unnecessary expense category, there are often money drains in both categories that can be eliminated.
While we all need a place to live, unnecessary space is a money drain. Heating, cooling, and maintaining a house that’s larger than you need, can cost a ton of extra money. Also, a home that requires frequent, costly repairs could be more than you bargained for.
If your car is more luxurious than your budget, you may need to rethink your purchase decision. Likewise, if your vehicle gets horrible gas mileage, you’re blowing money out your tailpipe.
If you frequently waste food, you’re throwing away money. Dining out several times a week can easily quadruple your eating expenses. Also, coffee shop and vending machine habits should be avoided at all costs.
If you have more pairs of shoes and clothes than you could ever possibly wear, a clothes intervention may be in order. If you buy clothes that never get worn or only see the light of day once or twice, you should rethink your clothes buying habits.
Late Fees and Overages
If your monthly spending is plagued by frequent late fees, bank overage charges, and ATM fees, you’re throwing money away. While a $5 late fee may not seem like too big of a deal, it all adds up. Pay your bills on time, drive the extra mile to a friendly ATM, and regularly balance your checkbook to cut these expenses.
Smoking and Drinking
A smoking or drinking habit will not only take a toll on your body, it will take a sizeable chunk of your budget as well. A smoking habit can easily cost up to $2,000 a year. Your body and wallet will love you for quitting. Even the costly stop smoking aids can save a ton of money overtime if they are successful at helping you quit.
Unnecessary energy consumption costs money. Leaving a light on when you leave the room and letting the water run while you’re doing dishes is another money drain. Also, if you’re paying a hefty cable or satellite bill for a ton of channels you aren’t watching, choosing a different package might help save you money.
In a perfect world, maintaining an efficient budget would be simple. However, in order to properly cut your expenses and ensure you’re spending the bare minimum without drastically changing your lifestyle, money drains must be identified and eliminated from your life. Any money spent unnecessarily is a money drain and should be cut. Once you have identified these sneaky drains and eliminated them, you will be able to enjoy the extra cash you’ve saved.
Juna Cherish writes about finance, personal happiness, and home owners insurance.