Are You Spending Too Much?

It is very easy to spend a lot more money than you should. Between ATM cards, credit cards, and online shopping, it seems that your money leaves your bank account automatically (actually, it sometimes does)! The point is to make sure that you are spending and saving money on the things that are important in your life. Here are a few ways to make you more aware of what you are spending your money on and to help you cut back:

Use Cash: If you use either an ATM card or credit card for purchases then it is harder to feel when you give up your money. By using cash it forces you to think about your purchases, especially a larger purchase.

Groceries: It is surprising how many store brand products there are that are less expensive and similar in quality to the name brands. A good example of a store brand is cereal, and you may find that you actually like the store brand better! I remember when I was a kid there was the “No Frills” brand, and my mom used to purchase the No Frills iced-tea mix. Whenever I had friends over they used to love the iced-tea and they had no idea what the brand was. Beware that cheaper isn’t always better though and know when it makes sense to buy the higher priced goods, such as with garbage bags.

Automobile: A lot of money is spent on automobiles that can easily be above our means. You don’t have to drive around a clunker, but maybe just tone it down and drive a middle-priced model without features that you will never use anyway. You may even save on insurance premiums.

Repeated Small Purchases: Not only do the larger purchases have an impact on your finances, but so do the smaller everyday purchases. You would be surprised if you added the annual cost of these purchases. For example:

Lunch: At around $10 a day, 5 days a week, this adds up to around $2,500 a year.

Morning Coffee/Snack: It depends where you go, and at $5 a day, 5 days a week, this adds up to around $1,250 a year.

Car Washes: A $10 weekly wash will add up to around $500 a year.

We all have to spend money to live our lives, but if we are more aware of the spending decisions we make, even small ones, then this will help us to prioritize where our money is going. Even minor changes such as one less lunch purchase a week will save round $500 a year, which can be saved for your retirement, educations funds, or other important long-term goals.