How to Fix a Leaky Budget

Do you ever make it to the end of the month feeling a little disappointed with how much money is left, even though you feel like you were quite conservative with your spending? If so, you may have a leaky budget! Quite often, the bulk of our unnecessary spending doesn’t come from one or two big purchases, but is actually made up of lots of sneaky little transactions which build up over time. I’m going to share with you how to spot your leaks and a couple of tips for how to manage them.

Assess your spending

Step one is to look at and critically analyse your own spending. I would recommend using a spending tracker to simply write down for a whole month every time you spend money, cash or card. Make sure to include what you bought, how much it was, what category it falls into, and any notes or insight you have as to why you spent the money. Was it a need, a want, or a panic purchase? Don’t forget to look at your bank statements so you don’t miss any direct debits or subscriptions.

Plug the Holes

Everybody’s lifestyle and budget is different, but I’ve put together a list of common leaks from my own experience, why they happen & how to fix them to help you with your own assessment.

1. Convenience food. Whether it’s buying a sandwich at work, drive-through meals on the way home or ready meal dinners, the cost of convenience can really add up over time. Doubling up your meals when you cook and putting the second portion away in the freezer is a great way to reduce your reliance on expensive ready meals. Throwing an extra snack in your work bag for the ride home can really help to cut down on hunger induced impulse spending. Making lunch prep part of your night routine rather than doing it in the morning will help to give you more options for your work lunches & eliminate the daily sandwich spend.

2. Panic purchases. This category includes anything that I have to buy immediately because I wasn’t prepared or because of something unforeseen. Usually it’s something like running out of shampoo, needing something that I forgot at home such as water, an umbrella, tissues or, more often than I’d like to admit, a last minute gift or card. Packing my bags the night before is something that eliminates 90% of my panic spending. Whether I’m travelling away from home or just going out for the day, it’s always the same 10 things I wish I had! As for home based items, waiting until you’re almost out of something before repurchasing may seem frugal, but more often than not I’ve found that it leads to me paying more than I need to for things. Giving yourself more time and buying common items well in advance means you can shop the sales and take advantage of different store discounts.

3. Auto renew. Subscriptions are everywhere these days and they can really sneak up on your budget. Nothing stings more than when that free subscription you signed up for rolls over into its first billing period even though you only used it for 2 days. Keeping a master list on google sheets, excel, or even on paper of all of your subscriptions, their fees and their renewal dates is imperative for ensuring you don’t get caught out by the auto renew. Add to it every time you sign up to something new. Make it a habit to check in once a week and cancel anything you’re no longer using or don’t have room for in the budget.

These are just a few ideas to get you started thinking about what systems you can implement in your own life to stop your money running away from you.

Reinvest & save the difference

If you find that you have a little bit of spare money after plugging the holes in your spending, it might be a good idea to use some of it to invest in ways to be more financially resilient in the future. Having an emergency fund is always non-negotiable, but having a ‘minor inconvenience fund’ is something that is often overlooked.

Let’s say you’re out at an event or had to stay late at work, the weather is bad and all the public transport has been cancelled. Your only option is to take an uber, but now that has blown all of your fun money for the month, or maybe even eaten into your grocery money. Sometimes, we do just need to throw money at a problem, but it’s not emergency fund worthy. That’s where a ‘minor inconvenience fund’ comes in. It’s money that you set aside for all of those little surprises that can soon add up to quite a big chunk out of your budget!

Saving money to have just in case is great, but if you’re anything like me, you’ll also have a huge list of ‘nice to haves’ - items that would make a world of difference to you being able to save more money in the long run. Recently I saved up for these amazing soup cube moulds for the freezer that allow me to save portions of chilli, bolognese, chicken pot pie and, of course, soup, to be reheated later on. They were quite a pricey item for me at the time, but when I crunched the numbers I found I was saving up to £2 per meal when compared to their convenience food versions so they soon paid for themselves! It’s definitely worth looking around your home to see if there are any money saving upgrades you could invest in.

You can do it!

Best of luck with your budgeting! If you’ve tried any of these tips or have any of your own you’d like to share I’d love to hear about it over on instagram @prepandpages