At one point in our marriage, we realized our budget was stuck in a rut. We were living frugally and saving money, but, It felt like we were pressing the gas and not getting anywhere. If you’ve ever lived in the Midwest, you know exactly what that’s like. Your tires are spinning in the snow, throwing it everywhere, but the car isn’t moving an inch. That’s exactly how our finances felt. When we dug deeper, we discovered the problem: small expenses were adding up to more than we expected.
Those little purchases didn’t seem like a big deal. They looked pretty inconsequential. Together, though, they were effectively draining hundreds, or even thousands, of dollars from our budget every year.
We started reviewing our monthly expenses and found money we didn’t even realize we were wasting. Suddenly, it became much easier to make progress toward our financial goals. Here are eight of the biggest offenders we found, and how you can avoid them.
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Snack Money You Don’t Track
The first leak we discovered was snacks. The funny thing is, the snacks themselves weren’t expensive. The problem was that we weren’t tracking them.
Larry used to work in a building with vending machines. Almost every day he’d grab a candy bar or a soda, because the expense seemed harmless. When I finally asked him how much he was spending each month, he looked at me and said, “I don’t know. I just keep a few dollars in my desk drawer and use the money from there.”
That was the problem.
Since those purchases were small and made with cash, they never made it onto our budget. Once we started tracking them, we realized they were costing us far more than we thought.
Our solution was simple. We started buying snacks at the grocery store instead. They cost less, lasted longer, and, best of all, they were easy to budget for.
Free Trials and Forgotten Memberships
We’re actually big fans of free trials. They’re a great way to test a product or service before deciding whether it’s worth paying for.
The problem is that they’re designed to be forgotten. We’ve all had that moment where we look at a charge on our bank statement and think, “Wait…what was that?” Then we remember we signed up for a free trial weeks ago and never canceled it.
Annual memberships can catch you the same way. A year sounds like a long time when you sign up, but it goes by quickly. Before you know it, the membership renews and you weren’t expecting the expense.
We’ve learned to put both trial expiration dates and annual renewal dates on our calendar. If a company requires you to wait before canceling a free trial, set a reminder for that date. If you cancel, save the confirmation number in case there’s a problem later.
Taking those few extra steps keeps another one of those small expenses from becoming a permanent monthly bill.
Banking Fees
We have an interest-bearing checking account, and we love it. There’s just one catch.
We have to keep a minimum balance in that account to earn the interest. We knew that rule when we opened the account, so we make sure we never let the balance fall below the required amount.
Every bank has different rules. Some charge monthly maintenance fees. Others charge ATM fees if you use a machine outside their network. There are paper statement fees, minimum balance fees, and, of course, overdraft fees.
Those fees don’t improve your life in any way. They’re simply money leaving your account. Asking a few questions before opening a bank account can eliminate many of these small expenses before they ever happen.
Coffee, Breakfast, and Lunch
Let’s face it, eating food that we didn’t have to prepare is not only convenient, it’s fun. But, it’s also far more costly than you might imagine.
You grab a premium coffee on the way to work because you’re running late. Someone suggests going out for lunch, and you don’t want to be the only one staying behind. It doesn’t feel extravagant because it’s only twenty dollars.
Then you do the math.
Buying coffee every workday can easily cost more than $600 a year. Breakfast adds several hundred dollars more. Lunch is where things really get expensive. Spend around $20 a day, five days a week, and you’re looking at roughly $5,000 a year.
Now, turn the equation around. If you bring those same items from home instead of consuming them at a restaurant five days a week, you could save nearly $8000 a year.
Whenever we’re deciding whether an expense is worth it, we multiply it over twelve months. Looking at the annual total makes it much easier to decide whether we’d rather keep buying lunch or use that money to reach one of our financial goals.
Phantom Power
Larry loves figuring out how things work. A few years ago, he did a deep dive into energy usage and discovered something I’d never really thought about. Anything with a remote control continues using electricity even when it is turned off. It’s sitting there waiting for you to press the power button.
Televisions, stereos, gaming systems, and even microwaves quietly draw electricity around the clock.
No single device uses much power by itself. The problem is adding all of them together. If your goal is to lower your monthly energy bill, start by taking a look around your house. You may be surprised by how many things are using phantom power even when you aren’t actively using them.
Energy experts estimate those little amounts can account for as much as ten percent of your monthly electric bill. Unplugging electronics you aren’t using or plugging them into a switched power strip can reduce that hidden expense.
Paying Monthly Instead of Annually
Our youngest son recently bought his own car.
Yes, he paid cash. Yes, his car is newer and nicer than either of ours. (We’re still trying not to think about that. LOL!)
When he called for insurance, the company gave him two prices. One price if he paid every six months. Another if he chose monthly payments. Paying every six months was cheaper. He chose the lower-cost option and set up a sinking fund so he’d have the money waiting when the bill came due.
Years ago, we made the same decision with our life insurance and saved nearly ten percent just by paying annually.
It’s worth asking whether any of your regular bills offer a discount for paying less frequently.
Overpaying for Your Cell Phone
Years ago there were only a handful of national cell phone companies.
Like most people, we assumed those were our only choices. We paid the bill every month because that’s just how it worked. It’s also worth remembering that the advertised monthly price usually isn’t what you’ll actually pay. Taxes, fees, and phone payments can make your bill much higher than expected.
Then we discovered Mint Mobile, which uses the same 5G network as another major provider but charges much less. Switching was surprisingly easy. We pay once a year. We pay once a year, and our total bill from Mint Mobile is just over $200 for 12 months of cell service. We’ve saved a huge amount of money over the years.
Taking a few minutes to compare providers every couple of years can eliminate another one of those small expenses that’s draining your budget.
Over Time, Small Changes Create Big Results
Remember that car spinning its tires in the snow? That’s exactly what these small expenses were doing to our budget.
We were working hard. We were trying to make smart financial decisions. We just weren’t getting anywhere because we had dozens of tiny leaks we weren’t paying attention to.
Once we found those leaks and started tracking them, our budget finally found traction.
Small expenses may not seem important on their own, but together they can make the difference between feeling stuck and finally moving forward.
Your Turn
Now it’s your turn to do the math. Pick four small expenses you regularly spend money on and figure out what they costing you over an entire year. Were you surprised by the number? Tell us what you discovered in the comments!
Hey Guys. I did the math on me paying the Mr. Car wash a month as $39.99 and it came too well close to $480 a year. Yikes…..!! I canceled that right away. It will cost me hardly nothing to go somewhere else for much less. And I don’t have to pay a membership to get the low price…
Great tip. Doing the math is always eye opening.