How To

How to Patch Up a Leaky Budget

Do you consider yourself a financially responsible young adult? Personally, I like to think that my finances are mostly in order. Rent, student loans, car payments—everything big is blocked off nicely. If the math works out right, I have a bit left over every paycheck to go into your savings or retirement account, and a little on the side to have some fun.

At least, that’s what should happen.

Recently, I looked over my bank statement and noticed a bit less money than I’d planned for and this prompted me to think that a thorough checkup was in order. I hadn’t made any late-night purchases or splurged on a new gadget or game system—it was all because of small charges that had built up over time.

Unless you’re keeping a close eye on your spending, these small charges can poke holes in an otherwise watertight budget. Here are a few of the most common forgotten costs that may have noticed crept onto your bank statement.

Recurring Fees for Online Services

I use quite a few services and products that require recurring access fees: Adobe’s Creative Suite, upkeep costs on a few web domains, and a few subscriptions to stock photo and graphics sites are prerequisites to working online and keeping my creative side hustle afloat.

Because I don’t need to think about them regularly, these fees tend to slip off of my budget until they become a problem. After all, it’s just a part of my job, and as long as the services are working, I don’t have any reason to complain.

Grouping these smaller costs into a single budget item I call “operating expenses” helped me to keep track of these static expenses over time, and has helped me to tailor my savings plan to match my new cash reserves.

Membership and Subscription Fees

I listen to a lot of podcasts, read quite a bit of online news, and play more than my fair share of video games. If you’re as invested as I am, these kinds of products will often present paywalls that you need to cross in order to access more content.

Because these are just the price of admission for some of my favorite hobbies, I tend to forget about them exactly the same way I forget about my domain renewal charges because they happen in the background.

Grouping these together as a lower-priority budget item helped me decide which services to keep and those to let go of for a month or two.

Canceling any memberships or subscriptions like this that you don’t use anymore will save you quite a bit in the long run.

Regular Donations to a Charity or Cause

Donating a few bucks to charity feels great. You know what feels better? Making it a recurring monthly donation. After all, what’s five bucks a month when you’re working toward building a better world?

As it turns out, positive karma can get a little pricey if you aren’t keeping tabs on it. I started making regular donations to Minnesota Public Radio (which is amazing, if you haven’t ever tuned in) years ago. However, forgetting to keep track of my donations meant that my budget was leaking a few dollars a month.

In addition to strengthening your budget, keeping close watch on your charitable donations can pay dividends when tax season rolls around. Tax-deductible donations can spruce up your tax return, so it turns out that good deeds do pay off in the end.

Sub-memberships and Packages for Larger Services

Did you watch the reboot of Twin Peaks last year? For a diehard fan like me, it was glorious.

Four months of the Showtime add-on for my Amazon account ran me around $52.

The only problem with that plan is that I spent more than $52.

What was supposed to be a four-month subscription ended up becoming a year-long ball and chain. At $13 per month, I ended up spending well over $100 before I realized that I still had an active subscription and had cancelled it.

I’m not too upset though–I would have paid $100 just for Episode 8–but it was proof that a budget review can even help you spot sub-subscriptions that latch onto existing costs.

Cable Packages

On that same note, your cable plan might be charging you money for channels you don’t even use. We all know that cable packages are built so that even if you only want one channel out of the bunch, you’ll need to pay for every other part of a package.

While many people are fine with this structure for things like sports packages, odds are that you aren’t getting the full value of your cable subscription.

If you only tune in to certain channels depending on what’s currently airing (like I do for Game of Thrones on HBO) you can often save money by foregoing a cable package in favor of an online service that you can start and stop month-by-month.

It’s a bit more work on your end, but the savings are definitely worth it, and it always feels better to only pay for what you want. Sorry Cinemax, you can’t ride HBO’s coattails into THIS party.

Bank Fees

By far, the hardest charges to remember to include in your financial plan are the costs that you don’t actually incur yourself. The most common of these come from the fees that banks charge in order to hold onto your money for you.

Minimum account balances and other maintenance fees can sneak onto your budget depending on your bank. When interest rates drop, banks can actually lose money managing small accounts, so they often add charges to make up for their operating expenses.

Spot and plan for these charges before they happen by asking your banker if there is a way to avoid these fees by depositing your paycheck, for example, automatically each month or carrying a minimum balance on a savings account.

Deposits to Investment Apps

I may be pretty good at balancing my savings, but I’m kind of clueless when it comes to investing. To help me pad out an investment plan, I use an app that automatically pulls money into my account when I make purchases.

What I didn’t fully realize is that while I wasn’t seeing my investments day-to-day, I was taking a few extra cents onto each and every purchase that I made over the course of a month. On a case-by-case basis, this was negligible, but over time, I began to notice that I wasn’t able to put as much into my savings as I expected.

These little deposits into my investing app weren’t technically new costs, but forgetting to plan for them has made me do a double take at my account balance a few times. After all, I’d remember if I had spent $25 all at once. But $25 in nickels and dimes? That’s a very different story.

There are dozens upon dozens of small fees that can sink an otherwise perfect budget over time, so it’s always a good idea to do a thorough financial check up every now and then to make sure that your budget is watertight.

 

Eric Lindholm moved from sales to communications at Quotacy. His writing is informed by his experience guiding hundreds of people through their own life insurance buying journey. Eric lives in Minneapolis, where his coworkers are trying to convince him to start his own podcast, do stand-up, or take his humor into the spotlight. Connect with him on LinkedIn.