5 Things that Are Eating Your Money Away

There are so many things in life that you often overlook the silent culprits which are slowly eating away your hard earned money. This happens as sometimes the amount is simply so small that you don’t notice it in your regular bank statements. Over time these amounts take away significant part of your money.

We have developed our financial routine where we regularly look at our personal balance sheet trying to identify potentials for reducing our expenses. And these are 5 things that was eating away your money .

Without further delay let’s dive in and get rid of the 5 things eating our money away.

1. Subscriptions: The Slow But Steady Eater of Money

Even though you don’t have time to watch TV your are subscribed to AppleTV+, Amazon Prime, Netflix etc. Not going to the Gym but sincerely paying. You can listen one song at a time but still on Spotify, Apple Music, Youtube Music. Wanted to explore something new and signed up for the 7-day free trial 3 months back. Does it sound familiar.

In today’s world everything is a subscription, be it for health, entertainment, news, food or even softwares for work. You are asked to sign-up and subscribe. Luring you often with a free-trial and keeping the amounts so low that they stay under your radar. Before you know it you have been paying them for months if not years. And this adds up. For many it is the hassle of cancellation that they simply ignore the costs choosing a life of denial.

Subscription is not bad but we strongly advocate to keep subscribed to services that you regularly use and provide value to you. Go through your statements to make a list of all services you are currently subscribing for and get rid of the ones which are superfluous or not being used regularly. Add their respective renewal dates to your calendar so that you have a chance to cancel them or you can consciously choose to keep them.

There are some services out there which remind you based on your bank transactions and even provide you the option to cancel the services with a single-click.

2. Insurances: Making Money of Your Fear of Losing Money

Being insured against eventualities is a good idea. But sometimes we have the tendency of taking too far.

What do we mean by that? You do’t need insurance for risks which even if they occur can be paid off by your means. If you have valuables at home then insuring against theft is a good idea but you may not need a glass insurance for that one fruit bowl you got as a gift. As a rule of thumb, you should always insure yourself against risks and damages that can endanger your existence.

One more thing, read the fine prints extremely carefully when signing up for an insurance. People often overlook this part having full faith in their agents only to realise what all is not covered when the real damage happens.

We made a list of all insurances we were subscribing to, did a simple risk analysis based on the probability of occurrence versus the financial impact. And then got rid of many policies which we felt were not risks worth insuring. If you don’t want to go through this hassle, hire an independent financial advisor to help you. But please don’t go to an insurance salesman asking this question, you already know what the answer might be.

Lastly, track the premiums you are paying on an annual basis. They have a tendency of increasing stealthily, same as is case of subscription they will stay under the radar. Compare to see if you are still getting a competitive price.

3. Your Wardrobe: fast fashion burning fast holes in your Pockets

Now this quote below might not be one coming from a fashionista but today’s consume driven culture has definitely taken this quote to its limits. Fashion houses are introducing a new collection almost every fortnight. Then there is the convenience of browsing through all this new stuff from the comfort of your couch. Within two days your new wardrobe is at your doorstep. Even if you are not frequenting these shopping websites, influencers on social media are everywhere doing a fabulous promotion for the fashion houses.

„Fashion is a form of ugliness so intolerable that we have to alter it every six months.“

Oscar Wilde

Trying to look the current fashion and emulating the influencer on the web often drives us towards unnecessary purchases. We forget the fact that most of them have been paid to wear the clothes whereas we have to pay to wear them. We also are not free of sin, as a result do indulge in embracing the trends now and then, but we try to approach it in a very conscious manner. A good rule for this can be define the maximum number of pieces of clothing you want to own at a given time. Anytime you get something new, decide on what has to leave your wardrobe. Set certain rules like when will you treat yourself to something new. It will not only save you money but also allow you to cherish the new pieces.

4. Bad Investments: Buy Assets and Not Liabilities

One easy way of loosing money is buying bad things and then hanging on to them.

It is as true for financial instruments as for material possessions. This often happens when you are driven by impulse instead of need. Buying at impulse may lead to decisions which in retrospect could become regrettable.Simply try to suppress it. Always put some thought into what you really need, even if you are feeling impulsive just delay the purchase decision by a day or an hour or 5 mins. Take the time to reconsider then go for quality over quantity and function over brand.

For some purchases it may be worthwhile to wait in order to buy buy something better. Which will keep its value for longer and give you better feeling when in your possession. When I started wood-working as a hobby I bought many power tools, i wanted to quickly have the comfort and did not want to spend the money for the better ones. Now you can imagine what happened. Yes, I needed to replace most of them over time as either they did not perform well or didn’t perform at all after some time. I realised, I was buying liabilities and not assets.

5. Going Overboard: Cut Your Coat According to the Cloth

Lastly, we often end up committing to things which may be beyond our affordability. It happens when you are in group of people, when you want to look the part in place you may not belong to or just to impress your social circle. Everyone has their priorities, so do you. Spend where your priorities lie, for something that gives you value and an amount you won’t end up regretting later.

We don’t have much to say here, just know your abilities and limits. Keep your focus.