Consumer Tip of the Week

 Plugging Spending Leaks

One of the first tasks to sprucing up your finances is to take a close look at your spending. Even if you’ve been successful with keeping a budget in the past, it is important to periodically take a look at where your money goes realistically. You might notice reoccurring expenses that you feel have become a necessity, so you should update you budget to include them.

However, you may also find many small expenses, on items you do not need, that are draining your money slowly. Spending leaks are these types of expenses that undermine your weekly budget without you really noticing. They're often incidental items that may seem small at the time of purchase, but add up significantly by your next paycheck.

Below are some easy ideas from the creative budgeter on plugging spending leaks:

• ATM fees: Today there is simply no reason to be paying ATM fees. If you can’t use an ATM that is free with your financial institution, then get your money at the checkout.
• Memberships and subscriptions: Are you paying for a gym membership you do not use? Or perhaps you jumped on the DVD rental services bandwagon, but now find that you only get one or two a month? These types of subscriptions can slowly drain hundreds of dollars from your wallet every year.
• Premium television service: If you’re subscribing to more than the basic tier of cable or satellite service, you should evaluate your subscription.  If you find that you’re not using the premium channels that often, it may be worthwhile to downgrade your service. Many people are finding it much cheaper to watch their television shows online. You might consider getting rid of the television all together.
• Late fees: All you have to do is pay your bills on time to avoid this leak. This may seem like common sense, but it is easy to forget a bill and end up with a late fee. These fees can be substantial. If you have trouble keeping track of due dates, set up an electronic payment plan to make sure your bill is paid on time.
• Eating out: Eating out is expensive, even on the dollar menu, compared to preparing meals at home. For many busy professionals and parents it has become a necessity out of convenience. Taking the time to prepare your lunch to take with you to work will plug a huge spending leak. If you spend only $6 a day on lunch out, it adds up to nearly $800 per year per person in your family. Consider how much you will save on eating at home for dinner as well. 

No matter your personal financial circumstances, there is probably some amount of money is wasted every month. That waste could go toward helping you meet your financial goals instead. Be sure to check back next week for more tips on financial spring-cleaning.

Additional Resources  

Financial Plumbing: A great worksheet to help you locate excessive incidental spending

A Beginners Guide to Financial Readiness: An article on your spending, saving, and future

A Beginners Guide to Financial Readiness: An article on your spending, saving, and future

For more information, please visit the Consumer section of www.montanalawhelp.org/.  Or, call the Montana Legal Services Association Helpline at 1-800-666-6899.

This Consumer Tip and MontanaLawHelp.org is a joint project of Montana's Credit Unions and Montana Legal Services Association.  MontanaLawHelp.org has information about consumer issues, housing, money management, and more.