Benjamin Franklin said, “Beware of little expenses; a small leak will sink a great ship.”
Does this describe your finances?
More often than not, budgets are wrecked, and debt is accumulated by little things. Sure, those big surprise expenses also strain our finances, but we can probably credit smaller, sneaky expenses for doing the real damage.
Here are the most common financial leaks and how to prevent them.
1. Food
Americans spend a lot of money on food – over $3,000 every year just to eat out! With the addition of the cost of groceries, we spend well over $9,000 on food every year, totaling about 12% of our overall budget.
Part of the reason we spend so much money on food is that it’s one of the most socially influenced expenses.
We’ve probably all been in this difficult position: our friends are making plans to go out to eat, we’ve already maxed out our eating-out budget for the month, and now we must decide if we will overspend or miss out on the fun.
Or perhaps you find yourself in the grocery store about every other day, desperately trying to find something to keep all your growing kids full for more than an hour. Inevitably, more snacks end up in the cart than you planned on, but to save face and try to keep your family fed, you don’t put anything back, hoping that it’ll all work out at the end of the month.
Maybe you overspend on food because you don’t know how to cook, forget to pack your lunch, or order-in food after another exhausting day of work. Whatever scenario you find yourself in, don’t let food be the biggest leak in your financial ship.
How to Avoid It
Planning is the best way to plug the “leak” in your budget when it comes to food. Make a schedule of meals for the week, do your grocery shopping all at once, and meal prep. Eating healthy doesn’t have to be expensive, and planning your meals will absolutely save you money (and probably time, too)!
If you have groceries in the fridge or a meal already prepped, it’s easier to say “no” to eating out with friends or running by a drive-thru on your way home from soccer practice. It provides ease of bringing your lunch to work or coming up with snacks to keep hungry kids fed. And throwing a prepared, healthy dinner in the oven after a long day of work is a breeze if you’ve planned ahead.
Instead of going out with friends, invite them over. A big pot of soup is inviting and inexpensive. Make extras, and save any leftovers for lunch throughout the week.
If you don’t know how to cook, now is the time to learn! Instead of allowing your schedule, friends, or convenience to dictate your budget, plan ahead. If you’ve never cooked before, now is a great time to learn! There is a copious amount of free information and how-to videos on the Internet to help you learn. Start by making simple meals with simple ingredients.
2. Entertainment & Sports.
How much do you think it costs the average family of 4 to attend an NFL game? If you guessed over $500, you’re right! That includes four tickets, beverages, hot dogs, and parking.
Attending a National Hockey League or NBA game costs somewhere around $300’s, and a Major League Baseball game came in at just over $200.
In fact, a study conducted by CreditCards.com reveals that in a recent year, Americans spent $56 billion on sporting events, $33 billion on sports equipment, and $19 billion on gym memberships, totaling $100 billion total on sports alone.
Aside from sporting expenses, Americans love to spend money on entertainment. On average, we pay $78 a month on cable and will spend over $3,400 on various forms of entertainment throughout the year. This includes concerts, movie tickets, technology, and other events or activities. We are obsessed!
How to Avoid it
Of course, there is nothing wrong with enjoying an NFL game with your friends or family, but maybe forgo the 50-yard line tickets, and eat before the game.
Think simple. Be intentional with your family and spend your time wisely. Learn new skills (like cooking!) together, and don’t get caught up in the pressures of knowing the latest TV drama series. Read books, play board games, and enjoy nature. Rethink what a necessity actually is, and save yourself some money but cutting out extra expenses like cable.
3. Transportation.
Transportation takes up a surprising amount of money in the average American budget – over $12,000 a year, or 16% of your overall expenses.
This number includes a down payment on your car, monthly payments towards a car loan, gas, maintenance, and repair fees. Depending on where you live, these costs may instead consist of public transportation tickets, parking garage fees, or Uber/cab rides.
How to Avoid it
Take care of your car! Schedule routine maintenance, always keep your tank half full, and use the right kind of gas.
Try to plan your trips when you run errands to save on gas. Moms of school-aged children know the pains of driving a total of 3+ hours a day. Coordinate with other parents to carpool to sports or activities and share some of the burden.
Track Expenses with Budgeting Bubbles
The best thing you can do to find and plug your “financial leaks” is to track your expenses. According to a Gallup poll, only 1 in 3 Americans does this! AdelFi has helpful financial tools that make it easier to see where your money is going and how to budget more sensibly. Our Budgeting Bubbles tool, in particular, offers visual insight into your real-time financial progress. You’ll get immediate insights into how you're doing, and it’s easy to make adjustments as you progress. Try it today!
This article has been adapted for use by AdelFi for the benefit of its audience and in exclusive partnership with Crown Financial Ministries. This article was originally written by Chuck Bentley, CEO of Crown Financial Ministries and was posted to Crown.org. To learn more about Crown’s mission, go to crown.org.
