You may be surprised to learn that it’s not the big-ticket items that are likely to blow your budget. The real culprit is the gradual increase in your spending habits on the little, almost unnoticeable, things in life. Here are four common causes of “expense creep,” which can easily add up to more than $5,000 a year.
1. The $1,000 Cup of Coffee
If you’re “treating” yourself to coffee out every day, you might as well be drinking it out of a gold cup. According to a survey of American workers by Accounting Principals (2014), Americans who regularly buy coffee throughout the week spend an average of $1,092 on coffee annually. Start brewing your joe at home and you could reduce your monthly budget by just over $90 per month.
2. Hidden Costs on Your Cellphone Bill
When was the last time you closely reviewed your cellphone bill? You’ll want to make sure you haven’t been 1) incurring any data overage fees, and 2) that you aren’t being charged for parental controls you no longer need. If data overages are plaguing you, consider an unlimited data plan, or make sure your settings only allow you to stream music, videos, and games when you’re on Wi-Fi.
3. Unused Monthly Services
If you signed up for a gym membership back in January in an effort to reach your New Year’s goals, chances are you opted in to an automatic credit card deduction. But if you haven’t stepped foot on a treadmill in months it might be time to cancel that membership. An unused gym membership could be costing you $700 a year.
Also check your online subscriptions. It’s easy to sign up for an online monthly membership or for a service and not pay much attention to the fact that your $15/month online subscription is costing you $180 per year.
4. Carrying a Credit Card Balance
Look for zero percent balance transfer offers to reduce interest (assuming you can pay off the balance before that zero percent offer expires). In the meantime, start using cash exclusively so you don’t incur additional debt. If you’ve gotten out of the habit of paying off your credit cards in full each month, you may need to either rethink your spending or cut down on credit card use. Why? Because carrying a balance and paying interest could be setting you back more than $2,500 annually.
Managing costs like those I’ve listed above will help you ensure that you keep as much as your hard-earned money as you can. When your money is not sneaking out the back door of your financial house, you don’t need to have as much coming in the front door.