Occasionally, looking at your bank account can be shocking. You get so caught up in the day-to-day that you don’t realize how much money is leaving versus coming in. While that can be alarming or even frustrating, it doesn’t have to stay that way. Whether you are trying to recover from a financial disaster or simply bulk up your savings, there are ways to improve. Here are six steps that you can take to plug your money leaks.
Think about the last time you gained a few extra pounds. More than likely, you changed your habit for a little while, maybe even a month or two. Then, when you got the result you wanted, you went back to your old ways. Or, when you didn’t see the changes you wanted, you threw in the towel. It’s possible this happened because you relied on a quick-fix diet.
It’s frustrating when you want to improve but don’t have the tools to do it—like fad diets, changing your spending habits for a short time might not be the solution. Instead, you need to tackle the problem at its source: you. First, take stock of how your relationship with money and spending it. Perhaps you spend too quickly when you’re in a social setting. Or, maybe you impulse buy to cope with stress in your personal life. Next time you’re in that situation, consider what spending money will do for you long term. Then, examine whether you need to buy something to improve that moment.
Some financial changes are band-aids. They only take you from one point to another. Not only is money mindfulness is a habit you build up and carry forward in your life, but it can also help you plug your pesky money leaks.
Stick to a Plan
You know that you shouldn’t go grocery shopping on an empty stomach and without a list. The same applies to any other type of purchase. Without a plan in place, you’re prone to overspend even if you didn’t intend for it. That’s because there is nothing to check in with or keep you accountable.
With a plan, you have a set of guidelines to follow that make it easier to know when to pull back. If that sounds like a tall order, you’re not alone. Struggling with a financial plan is common. Northwestern Mutual puts out an annual report on financial behavior, and according to their 2020 Planning & Progress Study, most people need a little help. Based on their research, 71% of Americans feel their financial planning needs improvement.
By creating a plan, either for a day’s outing or for the month’s expenses, you can ensure that you stay on track.
Cut Down on Costs
Cutting costs is a great way to plug some money links. You would be surprised by how much you can save by cutting down on the little things. You may not realize it at the time, but even small costs add up. By removing some of those expenses from your life, you can save money in the long term.
For example, approximately 36.7% of Americans have landlines in their household, according to the Centers for Disease Control and Prevention (CDC). Instead, it’s more common to rely on mobile devices. The monthly costs for a landline can be upwards of $40. So, by canceling this service and using your cell phone instead, you have the potential to save around $480 a year.
Alternatively, you could be making a financial mistake by letting late fees pile up. Credit card late fees alone can stack up to a similar $40 at a time. You could handle late fees with the landline costs you stop paying, then, which would help you stay on top of your bills better in the future. In this way, building up multiple habits to better yourself can have a domino effect.
Hunt for Deals
Looking for a discount doesn’t mean you have to hunch over the kitchen table and cut out coupons. There are many ways to save these days, whether through online discount codes or loyalty programs. Or, sometimes, all it takes is a little patience. Retailers lower pricing on different items as we cycle through the year. In particular, you can expect lower prices around certain holidays and at the tail end of a season. Waiting for the right deal might take some time, but it will be worth it when you have what you wanted at a fraction of the cost.
Alternatively, instead of bringing down higher prices, you can look at less expensive items. Think about your upcoming summer wardrobe. You may be excited to add a new sundress or button-up shirt. While you could try to buy a new article of clothing, a secondhand item may do just as well. Thrifting is always an option, but there’s no reason you can’t look closer to home. Maybe try a clothing swap with your friends or family to change up everyone’s closet.
Save on Waste
One of the most significant ways Americans waste their money is on food. The U.S. Environmental Protection Agency (EPA) estimates that 30- to 40% of all available food in the U.S. goes to waste. While there’s undoubtedly an environmental concern, food waste is an economic issue as well. A Penn State study estimates that the average American household may lose about $1,866 per year on this alone.
Likely, you are also affected by this area of money loss. If you want to cut down on food waste, go over your routine. Do you overbuy? Or do you forget to check the use-by dates? Try to plan out what you need from the grocery store ahead of time to don’t feel tempted to buy things on the spot. Also, finding foods that preserve or freeze well can help your stock last longer.
You can also carry this over into other areas of spending. Look at how you view everyday items and see where you can improve their longevity in your household. It may help to reevaluate your relationship with these items. Viewing things as too easy to replace can make you careless when using them.
Revisit Memberships and Services
Sometimes it can feel like everything and anything has a subscription service, but subscriptions are significant money leaks. Between streaming apps, magazines, monthly surprise boxes, and more, there are enough options out there to send you into a financial tailspin. Go through the services you purchase regularly and decide if you use them. If you don’t, get rid of them.
Don’t feel like you have to cut out everything, though. If you use something regularly, then keep it. It would help if you didn’t deny yourself things you like and can afford. But if they’re just a monthly withdrawal out of your bank account and nothing more, then you probably want to cancel your subscription.
The Bottom Line
Keeping your boat afloat will take some work. But, while there might be rocky waters ahead, you can take steps to make the journey easier. Consider how you can work on your spending habits and plug up your money leaks. Working on your finances will set you up for success by making your goals workable. Again, it might not be easy, but you’ll thank yourself when you hit smooth financial sailing.