With inflation pushing up living costs, budgeting is more important than ever. If you don’t know where your money is going each month, now is the time to check your budget to save money.
Here are 5 common expense traps that could be ruining your budget:
1. Paying monthly
Monthly payment plans often work out to be more expensive, but a lot of people still pick them, regardless of the price. It seems like less as it’s spread out across the year, but it could be having a negative impact on your budget, so make sure you check first.
There are lots of subscriptions that offer paid monthly services. To improve your finances, check everything you’re signed up for and cancel everything you don’t use. Then, see if you can save money by switching to a quarterly or annual plan instead.
2. Credit card interest
Lenders make a lot of money off credit card interest. The average interest rate is now 23.55% and, depending on your balance, it could be costing you a fortune each month.
To avoid this expense, the best option is to make a plan to reduce your credit card debt as much as possible. Ideally, you should pay it off altogether. However, if this isn’t an option right now, make sure you’re getting the best deal and consider moving to a card with a lower interest rate.
3. Bank account fees
Bank fees and interest are rarely accounted for in budget plans, but they can quickly add up and affect your budget. A lot of people have paid accounts without being aware of it, and this is another way banks make their money.
If you have a paid bank account and you’re not using the benefits, you should consider switching to a free account. Also, make sure you check if the benefits are worth the money.
4. Store promotions
Stores offer promotions on products all the time. Marketers have tactics to make you spend, like flash sales or end-of-season discounts. But, if you don’t need it, it’s probably not a good deal and you can quickly blow your budget this way.
Instead, make sure you make a shopping list every time you go to the store – and stick to it. Plan in advance and don’t be tempted to make impulse purchases when you get there.
5. Expensive utility bills
Lastly, for utility bills like gas and electric, TV services, phone bills, and insurance, it’s important to look for the best deals and switch suppliers if you can get it cheaper elsewhere.
You can make big savings by doing your research. Also, check with your current supplier as they may be able to switch you to a cheaper deal or offer a discount.