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Home Budget 101: The Little Things That Cost You Big

This summer, Canavan Financial Group is developing a new service to help our clients track and analyze where their money is going. Our intention is to create a product that will help our clients achieve their personal financial goals, whatever those may be; taking a vacation, paying off debt, or buying a new home, for example. As part of this, I'll be writing a series of blogs (starting with this one) aimed to help you start to take control of your personal finances.

There are many different philosophies that people employ when it comes to managing their money. Some people (like myself) prefer to stash every penny away for a rainy day, because we know that someday it's going to rain and we don't want to be caught without a financial umbrella. Others subscribe to the philosophy that we work hard for our money so that we can enjoy it, and that we should spend it when we have it. There's nothing inherently wrong with either of these philosophies, however I believe that it is important to make deliberate choices about how we budget and spend our money in order to ensure that our actions are in alignment with our short and long-term goals.

Regardless of what your financial philosophy is, or what your goals are, below are just a few things that I find people are often spending more money on than they think. If you're trying to change the way you handle your money, you might want to take a look at the following items:

Dining Out

Whether we're talking about a fancy night out on the town, or hitting the dollar menu for lunch, dining out if one of the first places I recommend that people cut their spending. In my experience, almost everyone under-estimates how much money they are spending each month on going out to eat. While you may think it's just $8 here and $15 there, the combined total you spend at restaurants can quickly and easily add up to HUNDREDS of dollars each month.

Budgeting Tip: Take a month to track how many times you pay for food other than at the grocery store, whether it be going out for a sit down meal or pulling through the drive through for a quick bite. Next month, try to cut that number in half. You'll find that you don't feel totally deprived because you're still going out occasionally, but I'd be willing to bet you'll see a difference in your bank account as well.

Late Fees

We've all been there; you're super busy and you forget that you haven't made your credit card payment yet. It happens to the best of us. Problem is, almost everyone that you have an account with will charge you a fee for paying late, and over time those can really stack up. Unlike going out to eat, it's rarely the case that these fees are going to cost you hundreds of dollars a month, but over the course of year they can be quite a bit. Additionally, sometimes paying late can mean more than just a one time fee; paying late on some accounts can cause your interest rates to increase, which will cost you more than you think.

Budgeting Tip: Most accounts have the option for you to setup automatic payments with a credit card of your bank account. If you know that you are going to have the cash available come bill time, setting up automatic payments will save you on fees and take one item off your to-do list every month.

Buying A Lot When You Need A Little

Don't worry, I'm not talking about buying in bulk. I have no problem with the savings that come along with buying 900 rolls of toilet paper. I'm referring to your three disc-at-a-time DVD rental subscription, your unlimited everything cell phone plan, or the 15 magazines you get each month.

If you really do sit down frequently and plow through all three of those movies in one day, keep your rental subscription the way it is. I've got a bad habit of binge watching shows on streaming and letting the discs they've mailed me gather dust, and if that's true of your habits too then you might consider cutting your plan down to one disc at a time. Also, when was the last time you looked at how many cell phone minutes you're actually using, or how much data you're actually pulling down each month? It's entirely possible that you can cut back on that unlimited plan because your needs just aren't that robust.

When we sign up for services like this, often times the company providing the service points out that a higher priced plan offers the "best value" because you get more bang for your buck. Things is, though, what if you don't actually us all the bang? If you're only watching two movies a month on disc, it doesn't matter that paying for 3 at a time is the best value... it's just costing you more than you need to be spending.

Budgeting Tip: Keep track of how much you're actually using the things that you subscribe to each month. Do you actually read those magazines? Are you actually watching those movies? If not, cancel the subscription or cut back to a less expensive plan.

Bars and Nightclubs

Go ahead, call me Captain Buzzkill. I know you want to, because I'm picking on the things that you enjoy. Trust me, I'm used to it. I've already told you that you go out to eat too much, and now I am gunning for your bar tab.

On this one, I am going to be quite direct; if you go to the bar or club more than once a week, you're spending a ton of money there.

Fact of the matter is, most bars charge the same for one beer as a liquor store charges for a six pack of the exact same beverage. I totally understand going out occasionally to see your favorite band or have a karaoke night. On the flip side, if you're going to the bar as just something to do when you're bored, for the love of your wallet, go to the liquor store and invite your friends over instead.

Budgeting Tip: If you just love the social scene of going to the bar, I have two words for you: Happy Hour.

Buying Stuff You Don't Really Need... Or Even Want

If you need new shoes, buy new shoes. If you need new dishes, or a few new scented candles because you went through all of the ones you have and you really enjoy them, go ahead, get them. I'm certainly not suggesting that you deprive yourself or your family from necessities or the occasional luxury.

Have you ever found yourself at a friend's house for a "party" that's actually a sales pitch for over priced makeup or jewelry? You don't really need or want anything, but you feel the pressure of the social situation so you buy a couple of things? Stop it.

What about when you just stopped in to a store to pick up one thing, but the sales clerk points out that if you spend another $25 then you get the free gift with purchase, so you go for it? Stop. It.

Succumbing to social pressures to purchase things that you don't want or need is understandable, but at what cost? Personally, I would rather go on vacation than get that free gift at the cosmetic counter. Most of the time it's not even anything I want anyway.

Budgeting Tip: Remind yourself that it's alright to say "no" when someone offers you a deal. As a former salesperson, I can assure you they are used to it and you're not hurting their feelings.

In summary...

Changing your spending habits is hard, especially when your money philosophies have been the same for a long time. My recommendation would be to spend some time thinking about your long-term goals, so that when you're tempted to spend more than you should you can remind yourself what you're sacrificing for.

Also, don't try to change everything at once. If you're used to going to the bars twice a week, don't say to yourself "as of today, I'm never going to the bar again." Instead, set some short-term, achievable goals for yourself and reward yourself when you attain them. For example, cut down from twice a week to three times a month. That's a huge step, but not quite as dramatic cutting out the bar entirely.

Finally, it can be helpful to communicate with your friends and family why your habits are changing so that they can be supportive of your new goals. If your friends are used to going out for dinner with you all the time, they might look at you sideways when you ask if they'd like to come to your place for dinner instead. Simply saying, "I'm trying to save up to pay off some debt" can help change your loved ones from bad influences into big supporters.

Do you have tips and tricks for saving money? We want to hear them! Comment below to keep the conversation going, or email me at

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