3 Ways Your Pocket is Leaking Cash
You might not even be aware of these quiet money traps.
Making money is hardly easy, so it’s only natural to want value for every dollar we spend. However, we sometimes make decisions that create a hole in our pocket, with little or no value in return. These decisions might also be slowing us down from reaching our financial goals.
In a moment, I’ll give you three examples of preventable ways you might be losing your hard-earned cash. The goal of this article is to make you aware of these areas of your spending, so you can be intentional about what to do, going forward.
If you’re ready, let’s get started.
1. Unused subscriptions
This is as straightforward as it gets. With more consumers embracing the subscription model and our lives getting busier by the day, we’re highly likely to have subscription services we rarely use or don’t use at all.
This is a certain amount of money guaranteed to come out of our bank accounts typically every month, which otherwise could have been deployed in other areas of our lives.
Imagine what you could do with the cash equivalent of your unused subscriptions? You could save it, invest it, pay for a great experience with it or even use the money to fund your personal development.
Whatever you do with this extra cash, it’ll likely be better than just letting it leak out of your bank account every month.
I guess it’s time to review your subscriptions and stop the payments enriching providers, whose services you don’t use.
2. Too much house
Buying a big house can be tempting. But do you really need one?
Apart from being less environmentally friendly and the possibility of wasted rooms and empty spaces, big houses can be a huge financial burden. While you might be able to get a mortgage to buy the house, paying it back is usually not as easy.
When you add your monthly repayments to the enormous utility and maintenance cost plus taxes, you might be haemorrhaging a lot of cash with a huge opportunity cost.
So, before you buy that big house, think about the extra money you have to spend on the extra square footage you’ll barely use, and what else you could do with that cash.
3. A brand new car
This is a fascinating one. Do you know that most brand new cars lose around 10% of their value as soon as they’re driven from the dealership; and a further 10 to 20% by the end of the year? That suggests that the very first trip of a car you purchased for $40,000 will cost you $4,000 — irrespective of the distance! According to AA, an average new car will have only 40% of its original value after three years.
The interesting thing is that if you bought this car on credit, while the car value depreciates, your monthly repayment remains the same.
Having said that, you might decide to buy a brand new car for strategic purposes, especially as a business. However, as an individual, you might want to think twice the next time you take a trip to the dealership.
Final thoughts
Nobody wants to create a hole in their pocket. However, we do exactly that in many ways, without even realising it. As a result, we trudge towards our financial goals, taking longer than we should.
Fortunately, it’s never too late to take stock and fix this leak. To help you through this process, you can do the following:
- Grab your account statements to see where your money is going
- Determine whether or not you’re getting value for your payments
- Consider the impact of these spendings on your financial goals
- Be intentional and decisive in your response
It’s time to take control of your finances and keep more of your hard-earned money.
