Everyone’s got them no matter how focused you are. In addition to annoying, money leaks are slow, steady drains on your wallet. And if you pop them into a calculator and figure out how much that money could be in retirement it will just drive you nuts. So how can you spot and plug them?
Here are three common culprits using examples from my own life:
- Memberships. These are the definition of leaks. If you don’t use them, lose them. Even if there’s an early termination cost, if you’re not using them a cancellation fee might just be “the cost of doing business” or saving money in the long run. If it’s an auto-renew membership, there’s no telling how long it will be before you cancel. So don’t let the cancellation fee, alone, delay you. I’m going to cancel one of my memberships today. $200 per year. I think it was worth it, but “worth it” is not good enough. “Necessary” is the standard. I’m sure there are more memberships I can cancel. I’m going to check my bank statements this week to try and get this category up to $500 for 2012.
- Lunch. Lunch is the toughest meal of the day for me to be frugal. Lately I’ve been slipping, too. I work in NYC so a typical lunch is anywhere from $6.50 – $12.00. Even at $8 that’s $40 per week or roughly $2,000 per year (assuming working 50 weeks per year). Why do I do it? Combination of things. But that’s a lot of dough, and the time I spend at lunch usually eats into my evenings with my family (no pun intended). I think I can easily save at least $1,000 per year on this. I don’t have “the” plan yet, but my options include: Limit times per week to go out, limit amount spent per day or week, limit amount spent per year. I’m leaning towards the third option because it gives me the most flexibility and I can break it down into smaller chunks (i.e. monthly) to check on my progress. It’s also risky, but I think I can manage it.
- Not taking advantage of gym reimbursement. In short, my insurance (and yours, too, probably) gives me $600 per year if my wife and I go to the gym 100 times each during the year. We both go that many times (usually) yet we hardly send the forms in. Can you believe it?!?! We just get so distracted by the daily grind that we forget. So I’m setting a calendar reminder to remind us to do it this year. $600.
Now the fun part: What am I going to do with the $1,800? I’m not sure yet. For now I’m going to park it into an online savings account as I save it. I’ll likely eventually spend a few of the dollars on something small, but symbolic, and then invest the rest.
What about you? What’s your worst money leak? Can you save $1,000 in 2012 by plugging any of them? Try it and let me know!
Until next time, put your credit card down and slowly step away from the mall!
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