You will have a tough time managing your finances if you are burning a big hole in your budget. The health crisis could have forced your employer to tighten the company’s finances. This could result in lay-offs or workers being furloughed for the time being. With this, the last thing you need is letting your income slowly bleed out.
In the past, you might not pay such close attention to these small expenses. There are a lot of reasons for this such as a solid income source. You might even have some financial goals in the past which took precedence. Maybe you did not mind the small expenses because the comfort that they provided you was far more important.
Now, you need to stop burning a big hole in your budget because of the health crisis. Job security now becomes questionable as the health crisis affects several industries across the country. Businesses are slowly adapting and instituting changes to help them survive and even thrive. But this does not mean that you will become complacent with your budget again.
In fact, this crisis should make you appreciate your finances more. The need to budget and ensure that you are able to meet your financial responsibilities should be more evident now than ever. The health crisis should make you realize how important it is to track your spending now. Here are a few budget holes you might want to start looking into.
Paying for gym memberships and not using it
One of the reasons why you might be burning a big hole in your budget at the moment is your unused gym membership. Since the start of the health crisis, a lot of establishments where people congregated were closed down. This included gyms across the country. This was done to help contain the spread of the novel coronavirus.
As a result, most gym establishments were forced to shut down and has remained so for the last few months. CNN even shares that 24 Hour Fitness has filed for Chapter 11 bankruptcy and closed 100 locations across the country. If you haven’t already, it is high time that you pause the automatic payments you are making on your gym membership.
During these trying times, your health is a top priority. You can still do that without a gym membership. You can look at exercises you can do at home using your own body weight. More importantly, you should be more conscious of the food you take. Being healthy is not just what you look from the outside but a lot of it has to do with your food intake.
Burning a big hole in your budget by throwing money away
Forbes shares that US households waste a third of their food every year on average. This can be anything to spoiled food to overlooking what you have in the fridge. This can also include what you cannot finish on your plate every mealtime. This is money you can save by simply being more aware of your food situation at home.
One way to get ahead of this problem is to understand the eating habits and patterns of your family. Is there a specific type of food they like? How much food can you store without them going bad? You have to plan every grocery trip around these questions. You might be able to save when you buy in bulk but if you end up throwing away food, you are actually losing money.
Forgetting about unused appliances
One of the reasons why you could be burning a big hole in your budget is forgetting about the unused appliances at home that are plugged in. NRDC shares that “always-on” electricity can take up to 23% of the total electricity consumption of a household. That is a lot of savings if you get to pay closer attention to how you use your electricity.
It is not that hard to do because you just have to make sure that you unplug your appliances when not using them. Not only will this help keep your electricity costs down, but it is also a lot safer for your household. When you get into the habit of unplugging your appliances, you lower the chances of overloading the appliances which can cause electrical fire at home.
Shopping for brand-names only
You might not realize it but you could be burning a big hole in your budget when you choose shop only brand-names. This can be anything from medicines to groceries and even wardrobe. There is nothing wrong if you are buying branded names because you know for a fact that that quality is far better. But in today’s time, there are generic items that are almost equivalent to branded products.
There is a fine line between being frugal and cheap and you should also be careful in treading the line. Just because one item is less expensive does not mean that you can opt to buy it over what you are used to. Check for reviews and compare the two in order to make sure that you are still purchasing high-quality items.
High interest credit card debt
A big reason why you are burning a big hole in your budget is that you are not being proactive with high interest card payment. During this time, you might not be able to stay away from using your cards more than you want to. The pandemic has affected a lot of businesses and the company you work might be trying to cut costs which can affect your income.
But using your high-interest credit cards should not put you in the red. There are a few options you can look into in order to manage the repayment better. One option is to pay more than just the minimum on your credit card. This will help you pay it down a lot faster without sacrificing payments for other credit card accounts.
Debt consolidation is also a great repayment strategy to help you get ahead of your credit card payments. If you can consolidate using a 0% card then that would give you a great advantage, You can pay down your balance a lot faster. Just take note that 0% cards come with a specific time limit. Once you reach that limit, the interest rate can go back up.
No automatic savings
You need to consider that you could be losing money because you are not putting the in your savings account. There might be times where you think you have an extra amount not knowing that it was supposed to go to your savings. What you can do is automatically transfer that amount every month to your savings account even before you spend it.
Once you get the hang of it, you can do it for other accounts as well. While you have your savings on auto-pilot, you can also do the same for your retirement fund. Consider also your emergency fund and if you can do the same thing with it. If you have recurring payments as well every month with the same amount, you can also apply the same concept.
There are a number of ways how you can avoid burning a big hole in your budget especially with the health crisis. You just need to make sure that you focus and identify the areas that are causing you to bleed money from your finances.