How often do you think, “Where does all of my money go?!?”  If you think this then chances are you have money leaks in your budget.  What’s a “money leak”?  Think of it this way.  Imagine a bucket that is being filled with sand, but there is a hole in the bottom of the bucket.  Therefore, regardless of how much sand is poured into the bucket, the bucket never stays full because the sand is flowing out of the bottom.  Your bank account is similar.  There will always be money flowing out of your bank account because of your monthly expenses, but there are other costs – money leaks – that may cause your bank account to deplete faster than you expect.  These leaks are unplanned expenses and you may not even realize that they exist.

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  1. Track Your Spending.  Tracking your spending is so crucial because if you don’t track where your money goes then it will be difficult to know how you spend.  Be especially mindful of how you spend your cash, because that is a little harder to track.  If you spend cash, then keep a spending journal to track what you spent and where.
  2. Estimate your top spending categories and then register for an online service like Mint.com to see how well you estimated the spending.  One of my favorite activities to do with my clients is to ask them to estimate how much they spend by category and then register for Mint.com, categorize their transactions, and then compare it to their estimates.  Areas where they underestimated their spending provide a good indication for where they are spending money without realizing it.
  3. Look at where you are spending less than $5 – $10 without thinking.  I swipe my debit card so often for charges that only cost $2.  My father sometimes looks at me and says, “Really.  You don’t have $2 in cash?”  I don’t like to keep cash because it’s way harder for me to track it.  However, sometimes the act of swiping makes you forget that you are spending.  Also, I’ve noticed that if I do have cash and I break a larger bill it’s easier to spend the smaller bills.  Think about what you are spending money on, that doesn’t cost a lot.  Remember, even just spending $5 everyday is $1,680 over the course of a year.
  4. Look at your interest rates.  Interest rates are the cost to borrow money, and are determined by your credit score.  If you focus on increasing your credit score, then it will cost less for your monthly car note, mortgage, and even credit card payments.

Thinking about where you spend money without realizing it will position you to keep more of your money.  Once you know where and how you spend then you can begin to analyze whether those expenses are really needed, and if not you can begin to make the behavioral changes needed to minimize those transactions.

Be sure to leave a comment to let me know how it goes.

Aisha Taylor is a #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle”, the Founder of FNPhenomenal (Frugal –n- Phenomenal), and creator of The Live Phenomenal ProgramThe Live Phenomenal Program is a program designed to give you the tools that you need to totally transform your finances, and stop living from paycheck-to-paycheck. It’s time for you to be Financially Phenomenal!  Join now at www.FNPhenomenal.com/live.

 

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