Budgeting is hard. Period.
Many people normally don’t pay attention to their expenses and just buy things on the fly. They suddenly find themselves broke before their next paycheck arrives.
Once you note down each and every single expense, you start to realize just how tough it is to balance your income and expenses to avoid going broke.
Small things start to add up in your budget and expenses keep piling up until it overtakes your income.
Here is our list of top 5 seemingly insignificant expenses that can kill your monthly budget.
Did you know that interest is compounding?
That means if you leave your debt alone, the interest that you incur on the loan be added to the principal amount of the loan, and subsequently increases the interest you have to pay further. In other words, the interest of interest.
For example, a $5,000 credit card debt with a 15% interest rates will have you pay $750 in interest in the first year, $862 the second year, $992 the third year and so on. The interest grows.
That’s why if you are only paying the minimum amount on your debt, you will end up paying a lot more in the long run and it will even take longer to pay it all off too.
Pay your debts off as soon as possible. Interests can add up really quickly.
2. Service Subscription
These days there are so many services that we need to subscribe to, and many services aren’t even necessities.
We’ve got anything from a gym subscription to Netflix, Hulu and many, many other subscriptions that we pay for every month.
Many people often overlook these subscriptions because individually, each of them doesn’t cost a lot. However, when you put them together, they can add up to a significant amount.
Note down what service you are currently subscribed to and if you don’t use those services enough to justify the pay, end those subscriptions.
3. Bank Fees
Bank fees are small, but they can happen quite frequently. Many don’t pay any attention to a $4 maintenance fee or a $3 every time you swipe your card. They are making a big mistake.
Adding them together you will find they make up quite a big chunk of expense if you use your card frequently. So read the terms and conditions of your bank carefully and do some research. Switch to a bank or credit union with better terms if you must.
4. Impulsive purchases
The word “SALE” is quite stimulating to the eyes of impulsive buyers. Marketers know this. That’s why they make sure that those “On sale” signs are especially flashy and eye-catchy.
Some are easily swayed by the discounts in price tag and give in to their impulse. But don’t fall for this too often.
You can prevent your impulsive buying from taking over by setting aside a set amount of money for random purchases in your budget and keep to it. Do not falter and the leak won’t happen.
5. The Newest Fad
Chasing the newest trend is a social phenomenon and sometimes we can’t help it. It makes us cool and trendy. However, do you really need to purchase a new iPhone when your current one is still working perfectly?
Think carefully before you spend money chasing the latest trends. Consider what you currently have and whether you really need what you are buying right now. Your budget will love you at the end of the month.
To gain financial security
Saving money is the only way to gain financial security and following your budget is the first and most important step in this saving process. Make a budget and stick with it, keep track of all your expenses and remember, expenses do add up so don’t ignore even the small ones.