Plugging money leaks
What if you could stop the cash leakage? Whether rich, middle class or poor; money leaks, exists. First you must be able to identify and plug the leakage. What are money leaks in your spending plan (budget) and how do you stop the leak? Money that leaks from your spending plan can be so subtle that you won’t notice that the money is disappearing until your bottom line is in the red. Plug the leaks and you will be able to maintain a positive cash flow.
Let’s look at a few money leaks:
Frequent ATM visits – If you are making more than one visit to the ATM you have a slow dripping leak. If you are visiting an ATM that is not your bank; you are absorbing unnecessary penalties from your bank and the financial institution outside of your banks network.
Overspending – According to CNN Money (2015), household incomes with $50,000 or less are spending more than they bring in. Serious cuts, assessments and reallocation are necessary.
Wants – Be aware of wants that appears to be a need. Take the time to determine if your purchases are a need or things you can do without. Ask yourself why you are spending impulsively or emotionally.
Cash without an assignment – Your money will dictate where it goes if you do not assignment every dollar. Aim to spend 70% of your money on living expenses, 10% on savings, 10% spend on yourself and tithe 10% or give to your favorite charity.
Unallocated, unexpected income – Don’t count on bonuses, lottery winnings or other projected income for living expenses. These kinds of increases are unpredictable and should not be included in your monthly spending plan.
Living like the Joneses when your pay increases – Carefully determine where the extra income goes. Avoid up sizing your home or automobiles, instead, get smart and invest and save more. When you have surpassed inflation – splurge with caution.
Remember to plug the LEAK!!
Christine Roebuck/CEO/Financial Strategist
I realize that when the allocated budget in certain areas increase it affected the whole budget. Grocery store purchases for common items were a leak because the prices increased but I did not account for it. The same e observation with gas purchases. The same number of fill ups but at a higher cost. The month end result the budget exceeded the allocation. Over 3 months it was significant. I had to adjust fuel use to offset price and use coupons or adjust menu to lower priced items. I see the leaks.
Pastor Lisa, Excellent point regarding inflation. This kind of fluctuation is a leak that catch most people off guard and sometimes have a hard time recovering from the rise in gas prices and food. For example, operating at the same standard of living when a set income and inflation meets can be detrimental to an individual’s spending plan and opens a door to use of credit cards, payday loans, collateral loans or car title loans to cover for the price hikes. Taking the time to make the necessary adjustments is key. Great job on being cognizant and making adjustments where needed. Thank you for your comment.