It’s a phrase we’ve all probably used: “I don’t know where my money goes.”
We get our nice, fat paycheque and feel supremely rich for a few days, but by week’s end we’re staring at an account in overdraft. And though we claim to be saving for that vacation/new car/laptop/retirement, it seems there’s never anything left over to stow away in our savings fund.
There’s only one way to break the hand-to-mouth cycle and make our money go further: Taking a long, hard look at how we’re spending our money.
First things first: Take care of that debt. If you’re carrying a nasty burden of credit card debt, you’re unlikely to be able to sock anything away (and frankly, you really shouldn’t, if you’re shelling out 18 per cent interest).
However, if you’ve managed to keep debt to a minimum and you’re STILL finding that every last penny is going out the window, it’s time for a little financial analysis. Here are seven budget-busters that could be keeping you from achieving your financial goals:
Coffee Breaks – You’ve probably heard of the Latte Effect. It’s the idea of taking the few dollars you spend every day on a caramel macchiato and almond croissant and saving it instead. It might not seem like much, but those coffee break expenses will add up over time. You’ll find some financial experts who “pshaw” the Latte Effect, saying you’d be better off making big financial changes than depriving yourself of minor luxuries. But if you’re determined to get some real savings happening, making your coffee and baked goods at home will not only be good for your wallet, but most likely your waistline too.
Service Charges – We’re all awfully time-starved, aren’t we? Even when our own bank’s ATM is only three blocks away, we choose to take out cash at the closest bank machine because we just don’t have the time to make that extra trek. And it’s costing us — $1.50, $2.00 or more in service charges every time. Take a minute to think about the unnecessary charges you’re paying out, and you might find the extra five minutes is worth it. As well, stop in and chat with your friendly neighbourhood bank teller (or do it by phone) to see if you’ve got the plan that’s appropriate for your banking habits.
Cable – No one can avoid paying bills, but you could be paying more than you have to. It’s worth a call to your cable provider to see if you can finagle a better deal (say you are considering opting for a different cable company to get a cheaper rate). Take a look at your plan – are you really watching all the channels in the super-mega-monstro cable package you opted for? And if you’re a movie addict, consider services like Netflix or TMN, instead of laying out $7.99 each time for flicks On Demand.
Parking – If you love your car and you live in a metropolis, you’re probably paying a mint for parking. Plus, try adding up how much you’ve lost to parking tickets over the years. You may not be able to avoid the cost of parking if you work in an area that’s inaccessible by mass transit. But it won’t hurt to take a look at your bus/streetcar/subway options to see if that might be a better way. It really is a simple numbers-crunching exercise. A transit pass can save you hundreds per year in the long run, not to mention those high gas prices. Walking and biking are free options, of course, and much more environmentally friendly to boot.
Phone Bills – When’s the last time you considered your phone plan? Many of us pay our phone bill blindly without really thinking about it. Maybe you’ve been calling your long-lost friend in Albuquerque an awful lot lately, or you’ve been emailing your favourite videos to everyone you know and going way over your paltry data limit. Your phone habits are bound to change over time, even if your phone plan hasn’t. Take a look at where you may be over-spending and see if your cable company can offer you a better deal. Consider Skype to save on long distance charges, and don’t be afraid to change phone companies if the grass is greener somewhere else.
Nights Out – Many people find their bank accounts particularly depleted after the weekend. If you are accustomed to hitting movie theatres, restaurants and/or bars every Friday and Saturday (and maybe Sunday, Monday and Tuesday too), it’s unlikely your paycheque is going to go very far. Take a hard look at your entertainment spending and consider starting a new tradition with your friends and family. Perhaps an evening in with a movie, some wine and gourmet popcorn might take the place of a wallet-busting bar hop. Or a potluck dinner with a killer iPod playlist and board games might be just as satisfying as that new, overpriced charcuterie joint (which incidentally, may also offer boardgames — a new gimmick).
Apps – Yes, we know you need something to entertain you at the doctor’s office or the DMV. But do you really have to buy every single “must-have” app that comes along? Try a library book next time and save yourself a couple bucks.
Shelley White is a Canadian freelance writer, editor and TV producer who contributes regularly to The Globe and Mail, The Huffington Post, The Grid and Spinner.com. Shelley is also a mother of two who aspires to never again carry a credit card balance.