Plug up the leaks in your spending plan- Part 1
Slow and steady drips and needless things are two spending habits that impact your budget.
Michigan State University Extension has a great deal of resources to help you create a budget or spending plan which can assist you in managing your money. Whether an adult or youth, these tools are important to help you gain control of your cash flow.
In looking at how your money gets spent, consider the possibilities of leaks in your budget. The National Endowment for Financial Education (NEFE) High School Financial Planning Program uses the term “spending leaks” to refer to those unplanned or unhelpful expenses. These types of expenses you have can interfere with your successful saving goals. They categorize spending leaks into six categories.
We will cover all of these leaks in a series of articles. This article focuses on slow and steady drips and needless things.
Slow and steady drips
This is the leaky faucet that keeps dripping all day, week, month and year. The slow and steady drips are those purchases that are little, but over time add up. Consider these examples:
- 75 cents at the vending machine twice a week for a snack= $78.00 a year
- $3.50 for a coffee shop latte four days a week= $728.00 a year
- Lunch out at work (approx $8 a meal), five days a week for 48 work weeks=$1920.00 a year
The amounts, 75 cents, $3.50 or $8, are not a lot on their own, but over an extended period they can start to be a substantial amount. The first thing to do with slow and steady drips is to look at your spending pattern and find the drip. Where do you spend little amounts of money regularly? Then come up with alternate behaviors. Buy snacks in bulk at a grocery store or bulk food store and bring them with you or keep them at the office so you don’t use the vending machine. Make coffee at home on most days and only splurge occasionally for the coffee shop latte. Pack your lunch to bring to work and use coupons on the days you have to eat out. There are lots of clever solutions!
These are items that you purchased and never really needed or use. Consider these examples of needless things:
- A membership to a gym that you never go to
- A subscription to a newspaper or magazine that you never, or rarely read
- A membership to an organization that you do not participate in and do not get benefits from
- Books that you bought and never read
- A new shirt that you never wear
- A DVD that is still in its packaging
- Cable stations or a movie subscription that you never watch
We often have really good intentions to use, wear, read or watch whatever it is we purchased but we don’t. Needless things are hard to eliminate, but they can be minimized. Use Stop, Drop and Think before making a purchase. This will help you avoid having too many needless items affecting your spending plan.