Apr 25, 2019

Our Insights

Where has all your money has been disappearing to?

You thought you were doing ok with budgeting. At least, you can’t remember the last time you made what you thought was an unnecessary purchase. But there are some surprising money sucks that could be throwing off your budget and hindering your efforts to get your finances in order.

Watch out for these very common areas of money loss.

1. Buying brand names

Those big names you know and love have been marketed specifically to appeal to your emotions and psyche. But you should try to kick the habit of reaching or the same brand name products by opting for their less popular but similar and cheaper counterparts.

2. Buying cheap

In what might seem like a contradiction to the first item on this list, paying for cheap items can also cost you a lot of money. Going cheap may not matter when it comes to food and disposable cleaning products. But the big ticket items are often where it pays to pay for quality. Think furniture, kitchen wares, bedding, electronics and interior finishings. Spring for the higher quality item where it really counts since this will mean that the item will last you longer and thus save you money.

3. Shopping without a list

If don’t know exactly what you have and what you need, you’ll be more likely to buy things unnecessarily. You might feel pressured to purchase because of shopping with friends. You may be compelled to buy something just because it’s on sale. Maybe you’re prone to impulse buying without stopping to think about whether or not you actually need something.

The simple remedy is to take stock of what you have at home, weigh objectively in advance what your needs are, create that list and then stick to it when you go out shopping.

4. Eating lunch out

Save the spontaneous gastronomic expeditions for your next exotic holiday. On a day-to-day basis, try packing your lunch. It may be more convenient to grab a bite on the go, but those meals out will add up.

Instead, stock up on healthful ingredients you can use at home to assemble simple portable meals you enjoy, keep a few days’ worth of them in your refrigerator and watch how much this simple habit switch will save you. The same principle goes for bottled water and buying coffee drinks. Bring your beverages from home in reusable containers and bottles to save money.

5. Excessively costly housing 

Many people are paying too much for more living space than they really need. Perhaps you too were pressured to maintain a certain standard of living that’s just not practical. Evaluate the needs of everyone in your family and reconsider whether your current location is saving or costing your family money. Consider also the size of your house or apartment. Downsize and move and watch your monthly expenses go down.

6. Unused or forgotten subscriptions

From magazines that get tossed out to streaming services you hardly use and online memberships you no longer care about, there is an extensive list of subscriptions that are easily forgotten.

You might want to check your own list, sometime. In today’s digital age, it’s an easy thing to connect your bank account to any digital service and have automatic payments go through without knowing. Initially, you might have thought that you’d never miss those five or ten dollars a month. But go through your credit card and bank account statements on occasion to see how much all those little fees add up and you might be shocked to find a lot of money you miss!

7. Food waste

Many families waste food by serving portions that are too large. Lots of food goes to waste when it’s purchased as an impulse buy and then never consumed. 

You can avoid losing money to food waste by carefully planning your meals for each week and shopping for the needed ingredients in the right quantities. This will stretch your weekly or monthly food budget.

Remember to save those leftovers instead of throwing them out! They could make a perfect packed lunch for the next day.

8. ATM and banking fees

ATM and other banking fees are very subtle drains on your hard-earned finances. You may have accepted those fees as a part of life long ago and so you don’t pay too much attention to them now. As long as you don’t overdraw your account, you’re good, you might think.

Do the maths. You might be shocked to see how much you’re charged. If you use ATMs on a regular basis, those fees could easily add up to hundreds of dollars each year.

Save money by switching to a banking system that offers zero fees or reduced fees.

9. Interest fees 

That lump of credit card debt is annoying to have, but you can’t afford to just pay it all off at once. You can just pay it off slowly, right? Every little bit helps, doesn’t it? It will go away, eventually.

Except that it probably won’t.

The longer it takes you to pay off credit card debt, even a small one, the more time interest fees have to accumulate. As those fees pile on, making the minimum payment each month means that you’ll only be paying off the interest and not even touching that principal debt. So you’ll remain saddled with this persistent debt and keep losing money despite making diligent payments.

The same goes for your home loan. Paying more now could wipe years off your home loan.

If you’re only making minimum payments, develop a strategy to start paying more and reap the benefits long-term.

10. Doing your taxes yourself

You might feel like you’re saving money by lodging your taxes all on your own, but without professional advice, you could be paying too much at tax time, or alternatively, making costly mistakes that have the ATO knocking on your door. An experienced accountant in conjunction with your financial planner will make sure you meet your tax obligations, but also identify opportunities.

Get advice

Calder Wealth Management are the wealth experts, helping you reach your financial goals. Call us on (08) 8373 3333 to schedule your free initial appointment. 

Written by Ben Calder, Private Client Adviser at Calder Wealth Management.