Budget Basics: 5 Expenses That Can Add Up Quickly
We are all guilty of rationalizing our spending. It’s easy to excuse cheap purchases because they usually don’t destroy our budget, and often, they bring us happiness. However, we don’t consider how much these inexpensive items cost over time. For example, if we buy one doughnut per week for $1, that’s $52 per year on doughnuts (not to mention that most of us pick up a coffee with that doughnut, and then our bill often doubles or triples.)
With such a small expense, it might not matter. But when the expense goes up even a little or you incur it more often, the overall cost can jump quickly. We get in a habit of paying for inexpensive items that we enjoy, and suddenly we often stop paying attention to their cost. In addition to the small expenses, we often pay bigger bills that could be avoided completely. Here are five common money-suckers that you may not be being attention to.
1. Eating Out too Frequently
With an annual sale revenue of $32 billion, pizza is clearly a popular food. With over 70,000 pizzerias to choose from, you will rarely be at a loss for how to find a place to get a tasty slice. Since 93 percent of Americans eat at least one pizza per month, chances are, if you’re reading this, you do too. If you spend $20 once a month on pizza, that would cost you $240 per year. This habit becomes more expensive when you factor in the fact that many families eat pizza weekly because it is an easy, and for most people, an enjoyable way to get dinner quickly.
You can lower your overall bill significantly by purchasing frozen or uncooked (but already prepared) pizzas at the store, but if you are stuck on restaurant pizza, you can save money by at least picking it up yourself instead of ordering it or eating at the restaurant. In general, by avoiding eating in restaurants for dinner in general, you will save a lot of money. Currently 66 percent of the workforce purchases their lunch out, and you can easily save additional money by packing a lunch as well.
2. Not Paying Attention to Bank and Credit Card Fees
Depending on your bank and particular account type, you may be paying unnecessary fees. There are several different banking fees that you might face, including facing a charge for closing your account early if your bank requires you to keep an account open for a certain amount of time. Most banks charge around $25, which is small, but why waste the money? Several banks also charge monthly maintenance fees, but these can often be avoided by maintaining a minimum balance.
You also might be charged for cashing a bounced check, or a small fee for any foreign transactions. Certain banks also charge you if you lose your debit card. You can avoid the ridiculous paper statement fee that some banks charge by easily signing up for e-statements, and you can avoid fees for undeliverable mail (when you move) by updating your address at the bank. Most of these fees are avoidable if you pay close attention to the details of your account.
This is also true of credit cards. Many credit cards come with a long list of rules that most people would not want to read, but you can complete a simple credit card comparison search online to avoid cards that punish you with small charges that quickly add up.
3. Racking Up Phone, Television, and Internet Charges
Ninety-one percent of Americans use cell phones, and 71 percent of households still have a landline, even though more than half of American households don’t use landlines at all. One easy fix is to get rid of your landline if you don’t use it. If you have a cell phone and you frequently use more minutes than you have, update your plan. Avoid roaming charges by updating your plan if you have to travel out of the country and you need international calling abilities.
If you have internet, look over your bill regularly to see if you are paying the right amount. You may find that you are paying for options that you aren’t using with your television service, like DVR, or an extra cable box. Many plans come with free premium channels for a specified amount of time, and if you don’t cancel those channels before that time runs out, you will be charged for them.
4. Impulse Grocery Shopping
It seems obvious, but don’t go grocery shopping when you are hungry. When you shop on an empty stomach, you will spend more money on food you don’t need. A Cornell University study found that of the people they polled, the ones who didn’t eat before they shopped bought 18.6 percent more food and 31 percent more high-calorie snacks. Not only are hungry shoppers spending more, but they are purchasing less healthy food than their full counterparts.
In addition to eating before you shop, be mindful of how much money you spend on groceries. According to Forbes, the more money Americans make, the less they spend on groceries. The bottom fifth of earners spend 12 percent of their yearly budget on food at home, while only 6 percent for the top fifth. If you budget carefully and you are mindful of how much of your budget you want to spend, you can plan healthy meals without spending too much.
5. Driving Your Car More Than Necessary
Americans spend an average of $2,000 per year on gas for their cars. This amount depends on what type of car you have and gas prices in your area, but it still seems like a very high number. If you were able to cut down that figure by even 1/4, you would save $500 per year. We Americans love our cars, and we use them constantly — even when it really isn’t necessary. We drive to the movie theater, we drive back to our house when we forget our money, and then drive back to the movie theater. We drive to the park, our friends’ homes, and pretty much anywhere else we go. Yet, some of these drives could be eliminated completely by walking or biking when possible, or by waiting until you have multiple errands to complete instead of doing one errand in the morning, one in the afternoon, and one in the evening. You can also save money by determining the right fuel for your car; most cars will be fine with regular fuel. When possible, driver slower, use the AC as little as possible, and avoid idling when you can.
There are so many small expenses that add up quickly. You may be accruing hefty bills for regular dry cleaning, movie or sports tickets, or even a weekly car wash. If you spend $5 per week on an item, that’s $2-+ per month, or $260 per year. If you are spending that money on a magazine, will you really feel you got your money’s worth at the end of the year? On the other end, wouldn’t you be happier if you saved the $100 or more you could be paying on unexpected credit, bank, or phone fees, and instead used it for something better?