Is your financial Ship leaking? Budget leaks can create a struggle to pay bills in a timely manner. And these costs are usually expenses that cannot be accounted for. The weeks go by and you forget to cancel a subscription or you are paying for ongoing services you never use. Money spent at convenient stores and spontaneous spending that adds little or no value to your life, yet drains your budget.

Finding and stopping these leaks may be the difference between living within your means or adding debt to your bottom line each month. Plugging spending gaps can create extra funds that may be used to pay down debt or build a rainy day fund, without impacting your quality of life.

Finding The Leaks

Track Spending. The easiest way to find budget leaks is to track every penny for 30 days. While this task may not be enjoyable, it forces you to confront where your money goes. You can either keep a journal of every expense, including the $2 for lottery tickets or the $5 for a soda and candy bar, or charge everything to your debit card, noting each purchase on the receipt and storing them in a box.

Evaluate Where Money Is Going. You can’t identify wasted spending until you understand where your money goes. After the month ends, categorize each expense, analyze the spending, and create a strategy to reduce waste.

Look for savings

There are a few areas where leaks are common or strategies for reducing unnecessary spending. These might include:

• Consolidate shopping trips and avoid places where you tend to overspend. By doing this, you can reduce unnecessary spending.
• Set aside a week, or even a month, for a spending freeze. During this time, reflect on what you truly missed and what expenses you didn’t even notice.
• Shop with a list. This simple habit will help you stick to your shopping agenda, reducing impulse purchases.
• Find a less expensive source of entertainment. For example, are you paying for premium cable channels or pay-per-view when you could simply subscribe to Netflix and enjoy the same shows for less? Additionally, concerts or other forms of entertainment might be available for free or at a reduced price on certain days.
• Don’t save credit card information at online stores. When you’re forced to re-enter your information, it will act as a reminder to reconsider your purchase. Convenience can often lead to overspending.
• Earmark money as soon as it arrives. When you have an “extra” $50, it’s easy to spend it impulsively. However, by accounting for every dollar in your budget, you’ll be less likely to splurge.
• Review memberships and subscriptions to ensure they’re being used and providing value. For instance, paying for a gym membership or magazine subscriptions that you don’t use is a major money leak.

Set a Budget

Once you have trimmed your expenses set a realistic budget and follow it. The more closely you follow your budget, the better you control your spending.

Money management isn’t about restricting how you spend; it’s about giving you control to allocate funds where they matter most.

Plugging spending leaks will free up more money for the things that truly matter to you and your family.