The word budget is such an easy word to define yet the most complicated to apply in real life. Have you ever wondered why? Well for one, the most obvious reason (why it still remains a term) is that, people do not really care about spending habits but will one day wake up being broke (and this is the only time BUDGET will have meaning and value).
Experience will tell that when one is in bounty, there are unnecessary expenses that are slapped straight into the face, yet it’s literally ignored because of the belief that it is not that much (in amount). Period. Consequently, when life seems tight, human nature will push us to just whine and complain and then engage in the same cycle over and over again. While some people are stuck in this life trap, others are right down the drain with a zero or even a negative balance.
But, life is not the cruel. The good thing is that there is still hope in the word budget. With the help of simple arithmetic, budgeting will clearly bring you to your goal of having a positive balance come month end. The trick is, identify small expenses (as these are the felon why balance is almost zero) and you will know how and why money is leaking.
Below are five (5) seemingly little expenses which are actually slowly killing you and your budget. Grab your calculators first before indulging.
1. Dining Out
This is the habit of take outs, desserts here, drinks there and just eating everywhere. This sometimes may be small in amount but if done on a daily basis will surely take a big chunk on the budget line. The culprit why nothing is left in your wallet after a week of payday. This habit is not only a waste of money but is definitely a cause of becoming unhealthy in the long run. (Oh, imagine the calories!)
Let’s put numbers on this. If you do not pack your lunch and spends a minimum of P100.00 every day, weekly expenses-P500.00, monthly-P2,000.00 and annual is a whooping P24,000.00. This is only for lunch -- snacks, beverages, water and even dessert are not yet included, just simply include their numbers if you want a better figure on how much you spend regularly.
Thus, it is always a good thing to tag along a snack, your lunch and even water in your bag going to work. Anyway, this is not much of a demand if you think about it.
2. Coffee (and Sweets That Go With)
The rise of coffee shops all around is not only causing traffic in the city but is also slowly the one killing your wallet without you knowing it. Other budget gurus call this as the "Latte Factor". This means that a cup of coffee is just the tip of the iceberg, a cake, a donut or something sweet is usually coupled with this great tasting aroma. Thus, if you factor this in, it can be a big (negative) factor in expenses.
Now if this becomes a daily treat, the end result is surely horrible. Imagine this: average price of (cheap) coffee is P100.00 (Starbucks-P150.00) x 3days/week = P300.00 x 4 weeks = P1,200.00 x 12 months = P14,400.00. You do the math and think about your child’s education.
3. Impulsive Buying
Doing grocery and even shopping requires planning. But most of the time the list just remains a list. Our personality changes the moment we step inside any store for that matter. The word SALE is the stimulus that swallows us and in just a snap, we are easily swept by the discounts in the price tags and that we give in naturally. Hence, cash intended for essentials are automatically disregarded and shifted to those cheap stuffs with little or no use at all (if you really think about it). There goes the spending leak. If this happens every week, surely budget will crash. So, be wise, just focus on the basics and take the alternative - window shopping. Anyway, it is also a form of therapy.
4. Card Charges
This does not only apply to credit cards but also to debit or ATM withdrawals from other banks. It may be very minimal (you would assume) but try to add all of it and the amount can (even) pay one laundry day. Terrible, right? The best way to avoid all of these is to practice buying in cash. List all probable expenses for about a month and strictly allot money for it. . Take note of due dates and small charges. Read your bills, and identify free payment centers. Convert these charges into savings and you will never know how it can bloat your savings, the one you can easily use for when rainy days come.
5. Unnecessary Subscriptions
This is a lot if you think about it. Landline phones, cable televisions, newspapers and a whole lot more. In this age of digital information, everything can be downloaded by just a click of your fingers. The only basic thing you need in this world nowadays is internet connection and your world will surely revolve. This does not only revolve on tech subscriptions. Membership dues like a club or even (expensive) magazine subscriptions also add up.
If you do the math again, the things you spend in these unnecessary subscriptions can surely save your retirement and your assets in general. For example, an (unused) gym membership can average up to P2,000.00 a month. 12 x P2,000.00 is already P24,000.00 a year. That is enough to pay mortgage for two months for a decent sized home.