In 2016, lots of different kinds of people are starting to manage their money better than ever before. Maybe it’s having lived through the international finance crisis of the past decade. Maybe it’s knowing that a glorious career is something hard to find for most people. Maybe it’s the desire to get out of the rat race as soon as possible. Whatever the reason, people are starting to pay attention to their finances closely, even if they don’t have remarkable income or family resources. Call it frugality, making the most of what you have, living between your means. People are starting to realize what conservative investors have known for years: the more you can avoid spending, the more financial freedom you will have for life.
Knowing this, people are starting to look at their finances under a microscope. It’s a kind of hyper-budgeting that’s very inspiring for personal finance bloggers and the like. Careful examination of personal finances is difficult at first, but it’s worth it. It’s this kind of micro-budgeting that often reveals interesting ways to save money, which may not even be that hard to implement. Here are a few examples.
- Leftover Subscriptions. A couple of years ago, subscriptions to goods and services took off in a way we’ve never seen before. Part of that is due to Amazon, who allowed customers to subscribe to retail goods, like shaving cream and peanut butter, all delivered to their doors at regular intervals. The same is true for entertainment services like Hulu. These payments are often set up to draft from checking accounts automatically. The problem is, many people forget about them and don’t use them after a certain time, though they keep paying for them.
- Sneaky Frauds. A large number of people will find payments they don’t recognize when they explore their personal finance statements. A PPI claim can be filed just for this reason. PPI is an example of a legitimate service that was sold fraudulently. In this case, it’s insurance for consumer repayments for loans. The problem happens when it is sold to consumers without their knowledge and against their will, as happened thousands of times in the UK over the past few years. Most people didn’t discover the unfamiliar payments until they looked carefully at their financial records.
- Runaway Spending. When people keep track of their spending in their head, it is likely that there are mistakes being made. All of us have been here. We like to have fun and enjoy life with our money, even though we know that saving would be better for our budgets. We let ourselves have treats and “cheat days”, keeping track of how much it is costing us in our heads. We run into trouble when we don’t realize how much we are spending. Careful personal accounting can reveal just how much we’re blowing our “mental” budgets.
There are lots of places that money slips away from us. Without becoming careful managers of our money, we’ll never spot these payments slipping out the back door. Start becoming more rigorous with this, and you’ll save hundreds or thousands every year.