7 Ways Your Personal Budget Could Leak Money Every Month

7 Ways Your Personal Budget Could Leak Money Every Month

A personal budget is smart for everyone. The key to making the most of your hard-earned money is knowing how much comes in every month, and where it goes. But your personal budget won't help if you don't take the important step of tracking your spending. Most people are so busy they don't notice all the little everyday expenses that add up over the course of a month or year.

Tracking spending may not be exciting, and it may reveal some harsh truths about where you fritter away money unnecessarily. But it's the only way to determine where the leaks are in your personal budget so you can plug them. Here are 7 common ways your personal budget may leak every month.

1. You Have Redundant Technology

Do you have a landline because you've always had one, even though nodiv ever uses it? Do you have an extensive cable package even though most nights you watch Netflix? Does your mobile phone plan cover unlimited talk time, even though you're not much of a phone talker? Take a look at the technology you use and see what would go unmissed if you were to cancel it.

2. You Rely on Takeout and Convenience Foods

Even the most disciplined person gets takeout once in a while. But when takeout, fast food, and convenience foods make up most of your food spending, you could save significantly by preparing more food yourself. You don't have to be a gourmet cook to put together a healthy, appealing bag lunch. Learn to cook five basic dinners, and you can cut your food spending dramatically.

Start now: Get budgeting software from Mint to help identify the leaks in your personal budget. Click to get started.

3. You Engage in Retail Therapy

Again, everyone is guilty of this sometimes. But if a little shopping to lift your spirits is your go-to response to stress, you're not only spending unnecessarily, you're missing out on some great alternatives. If the weather's nice, a long walk in a city park can work wonders for your mood. Making cookies with your kids can be a great way to reconnect and enjoy a lazy Saturday afternoon. Shopping isn't the only way to feel better.

4. You Always Pay With Credit Cards

Yes, credit cards are convenient, and make it easy to track expenses. However, people tend to spend more when they pay with credit because they don't experience the same fiscal "sting" as when they spend cash. If you don't foresee switching to cash, at least be sure you're paying the least in terms of fees and interest rates. Mint can help by letting you know when you may qualify for a lower credit card interest rate.

5. You're Too Nice

We all want to be generous, but if you always pay when you and your friend go out for Happy Hour, or if you're constantly handing out small sums of cash to your kids, you could be draining your finances more than you think. Particularly around the holidays, people want to be good gift-givers, but the truth is, your friends love you for your friendship and probably won't remember what you gave them by the time the New Year arrives.

6. You Overspend on Entertainment

If you need to get your entertainment expenses under control, there are ways to do so without committing to a life of drudgery. Attend a couple of your team's home games rather than buying season tickets. Learn if you're eligible for student or senior discounts on things like movie tickets or bowling. Many libraries let you check out video games, so you can try them before buying them for yourself. Strategize, and you can cut entertainment costs without eliminating fun.

7. You Aren't Prepared for Minor Emergencies

Having an emergency savings account is one of the best ways to ensure a more stable financial life with fewer crises. Maybe you can't (yet) accumulate six months' worth of living expenses, but everyone can save a little. An emergency account makes little emergencies, like replacing a broken window or seeing the dentist when a filling falls out, far less of an impact on your day-to-day finances.

Track spending for a month and you'll learn exactly where you're overspending. Then you can create a realistic personal budget that helps you reach your financial goals. Great personal budget apps like Mint make it easy to track spending, and let you link all your accounts to your personal computer and mobile devices, so your budget goes wherever you go. Once you find all those "leaks" in your personal budget, you can create a strategy to plug them so you can make the most of your money.

Start now: Get budgeting software from Mint to help identify the leaks in your personal budget. Click to get started.