The Most Common Budget Busters & Tips for Avoiding Them
Creating a budget is no small task. In fact, it’s hard work and takes consistent dedication. This is why it’s important for me to educate my clients (and you!) on the kinds of distractions that can derail all that hard work.
Let’s be honest, it’s easier than ever to spend money these days. You don’t even have to carry a wallet! While technology has provided a more convenient way to shop, it can also be detrimental to our financial behavior. I’ve compiled a short list of common things to avoid when you’re creating and sticking to a budget. My hope is that you can find some room in your budget to save towards your bigger goals. You’ve got this!
When you sign up for a subscription, there’s an expense that is automatically charged to your credit or debit card on a regular basis. If you have a subscription service that you use regularly, then that’s great! But beware of the subscriptions that you don’t use and may have forgotten about. With the gaining popularity of delivery and the convenience of shopping online, it can be easy to sign up for a service like this. The trick is to remember to cancel it once you’ve lost interest. Many of these services aren’t necessary to daily living, so cancelling a subscription is one of the easiest ways to make room in your budget.
Daily Coffee Habit
There are so many delicious and quaint coffee shops around the country, but Starbucks is the most popular by far. For those who love a latte every morning, driving through Starbucks is so tempting. If you have the app where you can order and pay ahead, you probably don’t even see how much you’re spending each time. Well friends, a daily coffee run will add up! If you’re saving towards a financial goal, you’ll be surprised how much money you’ll find in your budget when you say no to Starbucks every day. This doesn’t mean you have to say no to coffee. You’ll just have to get really good at making it at home.
Things You Can Buy with Your Thumbprint (App Purchases)
Isn’t it amazing how we can purchase things on our phone with just our thumbprint? It’s almost too easy! App purchases are a big budget buster. While these purchases are usually not high in dollar amount, they can add up if you’re not diligent with your spending.
Interest & Fees
If you’re using a credit card for daily purchases, make sure you know what amount of interest is charged if you only pay the minimum payment. Pay the balance in full every month, or consider moving your balance to a zero percent APR for 1 year and plan to pay off the balance within that time frame. Additionally, many personal and small business bank accounts have minimum balance requirements that could result in a fee if not met.
You may not even know you’ve received a fee charge if you’re not looking at your statement every month. That’s why it’s important to check your statements every month. If you are noticing a fee being charged to your bank account every month, call your bank immediately to request that it be reversed and inquire about what ways you can bypass this fee on a monthly basis. I am frequently advising my clients do this because they simply didn't know they have this recurring monthly charge showing up on their accounts. A charge every month can really add up!
Have you ever thought about what you’re spending on car insurance every year? How about renter’s insurance? It’s easy to find an insurance plan and then just forget about it. Insurance rates are always changing depending on your qualifications and liabilities. So, while you may have the cheapest rate one year, the next year you might be able to find an even better rate. Shopping around for insurance every couple years is your best bet.
Tips for Avoiding Budget Busters
Now that you are aware of a few of the most common budget busters, I hope you’re motivated to start cutting some of them out. The best way to avoid busting your budget is to track your expenses. Once you create your monthly budget, don’t set it and forget it! Keep an eye on your credit card statements so you can process and think about every single expense. Even if you’re nervous to see how much you’re spending, it’s important to look at your accounts. When you have an emotional moment with your spending, it might make you think twice the next time you’re wanting to purchase something outside of your budget.
Other tips for sticking to a budget include:
Sleep on it before making a purchase
Use an app to track expenses
Avoid one-click purchases
Shop around for the best price
Get rid of services you don’t use enough
Ask yourself if what you’re buying is a need or a want
Switch to a credit card with a lower interest rate
Can you think of any other budget busters? Head on over to my Instagram and share with me. I’d love to hear from you!