Watch Out For Budget Vampires
Prior to my career as a financial planner, I had a variety of jobs over the years. One of the most interesting positions I had was that of an Energy Manager. I worked for the second-largest school district in Michigan. My job was to monitor the energy consumption at each facility and look for opportunities to cut the budget. With nearly 50 buildings in the district, it was a challenging position!
When you think of a large school building, imagine all of the utility demands needed to run the facility. Here in Michigan, you deal with all four seasons. It is necessary to cool in the summertime and heat in the winter. There are a lot of moving parts in managing the demands of a large building.
One of the concepts I learned quickly was that little things added up quickly. In addition to all of the large utility demands, there were hundreds of electronic devices at each location. With everything from cell phone chargers, space heaters, and computers, all of those small devices required power.
When you added them all up, you realized they consumed a significant amount of electricity each year. We referred to these devices as power vampires because they slowly drained electricity without much thought. By carefully managing their use and reminding the staff to turn things off, the school district saved a lot of money.
Let’s apply that same concept to your monthly spending. You likely pay close attention to the large items like your rent or car payments. You probably have a certain amount that is due every month on regular expenses. However, you need to beware of all of the small items that can add up quickly. I want you to constantly look for opportunities to save money.
If you do not manage these things, they can quickly destroy your monthly expenses. We will call these budget vampires. They may seem small and insignificant, but they all add up. Here is a list of a few items that I have seen over the years that end up draining budgets. See how these things affect your spending and look for ways to scare off these vampires!
Alcohol can drain your budget faster than you can order a round of drinks. When at the bar or dining out, drinks are usually expensive and most people have more than one. Even if you drink at home, take a close look at how much you consume and how much per month. Buying a round for friends is mighty generous, but can blow your monthly budget if you do not plan ahead.
Cable and Internet
Cord cutting has become a popular thing since Cable TV prices have risen steadily year after year. Most people pay for premium packages full of channels they never watch. Companies raise prices after contracts are up and people continue to pay without questioning or renegotiating. The internet is necessary for most of us, but don’t pay for a faster connection speed than you need.
Car Insurance is an extremely competitive market. You should shop insurance prices from reliable companies – ideally every time you policy is up for renewal. This is especially true if you receive an increase in your premiums. If you can get the same coverage for less, why pay more for something you hope to never use?
Cell phones are another highly competitive marketplace. Remember, shop around! If you are happy with your carrier, negotiate the best price you can for your next contract. Do not overpay for unlimited calls, minutes, and data plans. Most carriers have eliminated these due to competition but if you are on an old agreement make sure you address it – some people go month to month after a contract and do not adjust their plan.
The $5 latte may not be the evil that some financial people make it out to be, but it has been vilified for a reason. If you have one every day of the work week, it will cost you $100 a month. If you can afford them, by all means enjoy! However, if you are short on cash or floundering in debt, you may want to evaluate. The dollar menu coffee may not taste as good, but you might need to treat yourself less.
Eating is convenient and a nice break from cooking, but it is probably the area of most savings opportunity for the majority of people. When I started tracking expenses, I was shocked at how much we spent on eating out. Eating out was probably my largest budget vampire. Track this area carefully and see how much you are currently spending.
Review your current memberships and see if you are getting value. Even though this is Build Financial Muscle, do you have a gym membership you simply do not use? (That means you are working out at home, right?) Do you have a membership level that could be downgraded to save money? Unused memberships are definitely budget vampires!
Snacks are another area you might be able to save some money. Instead of buying from expensive convenience stores or vending machines, can you plan ahead and buy in bulk? It may seem small, but it adds up!
Subscriptions are just like memberships – you should evaluate all of your subscriptions and see which ones you really use. Netflix, Hulu, Prime, Magazines, Websites, etc.
If you leave your thermostat at a set temperature during the day while you are gone, you are wasting money on gas and electricity. Adjust it when you leave and then turn it up or down when you get home. Setting back a thermostat even two degrees can save you a few dollars every month. The comfort level will adjust quickly – get in the habit of doing this!
Chase Away the Budget Vampires
I hope this gives you some ideas on how to save money every month. All of these things add up quickly if you do not manage them. Many people charge these items on their credit card every month and do not pay attention. Every $10 you spend counts the same as every other dollar. Make sure your hard earned money does not go to waste! Watch out for the budget vampires in your life. If you manage these things carefully, you will see a huge impact on your bottom line.