These days it seems like the more money you make the more you spend. You work all week, make a enough money to pay your bills and still have some left over too, so why don’t you have more money in the bank? The truth is financial freedom doesn’t come easy. If you take a good look at your spending habits, it may become clear what is holding you back. See if one of these 7 reasons are contributing to why you are still broke.
Meeting up for happy hour may seem harmless, but your nightly outings can add up. I’m all for cocktails during girls’ night out or beers with the guys on game day, but if you find yourself at the bar several nights a week, it may be stopping you from getting on the road to financial freedom. Smoking is also an expensive habit: 10 cigarettes/day will cost you an average of $89/month or $1068/year on the addiction. Sounds like a lot of money for just blowing smoke.
Membership and Subscriptions
Signing up for wine of the month club sounded like a good idea to start, but now all you have is a lot of wine and not a lot of money. Dues and subscriptions can eat away at your hard earned cash. Most are automatically debited from your bank account, so withdrawals happen without you noticing. It’s time to cancel gym memberships that you don’t use, magazines subscriptions that you don’t read, and the premium channels that you don’t watch. You will be pleasantly surprised at the extra money you have when you stop paying for things you don’t use.
I love going to dinner, but I don’t do it as often as I would like because the expense can really add up. Restaurants charge on average 3x their food cost on what you’re served. Meaning that meal you just paid $30 for only cost them $10 to make. If you cut back on dining out you’d really be saving yourself a ton of money. I have some delicious and inexpensive recipes that are easy to make right here in the food section of the blog. Since cooking is not everyone’s favorite hobby, there is an alternative. Purchase pre-made items from the grocery store, like fresh roasted chicken that are typically ready just in time for dinner and stop by the deli counter for some ready to eat sides.
Making expensive purchases on a whim can quickly diminish your savings. We have all been at the mall when something has caught our eye that we just “had to have”. Impulse shopping can often lead to buyer’s remorse. Taking an inventory of your items before you go shopping may prevent you from loading your closet with clothes and shoes you don’t need. If you are planning a large purchase, research the item to ensure that you are getting the best price and save the funds instead of putting it all on your credit card.
Not Paying Yourself First
It can be difficult to save money, especially when you pay your bills, go out to dinner, go to the salon, etc. and then try to save what is left over. That is why I have started to pay myself first! I set up a transfer to automatically put a fixed amount into my savings account the day after I get paid. This way the money is in my savings no matter what and I can spend the remainder. It can truly be impressive what you can stash away when the bank does it for you.
It’s time to take a serious look at how you spend your free time. Do you hit the green like you are Tiger Woods, are you whisking down the slopes like an Olympic snowboarder? If you have to save up to enjoy your free time, then you need a new hobby. Your favorite activities may be putting a serious dent in your wallet. Try a different activity that has low equipment fees or minimum dues like hiking, tennis or even starting a blog. Check out 100 Inexpensive hobbies for more ideas.
Paying only the minimum amount on your credit card
It may seem like you are leaving more money in your bank account by only making the minimum payments on your credit cards, but you are doing yourself a horrible disservice. By only paying the minimum due, you are adding years to your payoff date. As the interest compounds, it increases your principal, making it almost impossible to quickly pay off your balance. If you are serious about getting out of debt you need to put as much as you can afford toward your credit card bills. For more great tips on becoming debt free read my post, Get Out of Debt…Today!
Were these tips helpful, I would love to know how you plan on saving money?