Simple strategies to detect and prevent financial leaks

by Junna Base November 11, 2024

Have you ever wondered where all your money goes? Financial constraints could be the cause of your bank account dwindling. Learn about common financial leaks and how you can avoid them with good financial habits.

What are financial leaks?

Financial leaks are small expenses that you often don’t notice until they add up over time. Leaks such as unused subscriptions, additional payments for delivery services, or late fees incurred can accumulate and lead to overspending. If you get rid of bad habits like impulse buying and develop good habits like: Such as regularly checking your subscriptions to make sure you are still using them, you can avoid the consequences of unintended spending losses.

Frequent financial leaks

Here are some of the most common categories of financial leaks and tips on how to monitor them and curb spending.

Subscriptions

You sign up to a streaming service to watch a newly released show and forget to cancel after watching it multiple times in a weekend. The gym membership seemed like a good motivation to work out, but you prefer walking around your neighborhood. Ad-free music is a nice perk, but when you add up all those subscriptions you’ll be shocked at the total.

You’re not alone. A recent CNET survey found that “U.S. adults spend an average of $91 each month on subscription services, and nearly half signed up for a free trial of a paid subscription and then forgot to cancel.” That adds up more than $1,000 in subscriptions per year.

Keep track of your subscriptions! Review your bank and credit card statements and cancel any unused credit cards. Monitoring programs like PocketGuard or Experian can track them and alert you. Rocket Money will even cancel subscriptions for you. Are you having a hard time giving up the subscriptions you enjoy? Try switching services like streaming accounts or temporarily canceling them to see if you really miss them.

Delivery services

What’s more convenient than having groceries, groceries or household items delivered straight to your door? But have you checked how much you’re spending on these amenities? According to a recent Lending Tree survey, the average delivery service customer spent $407 per month in 2023, up from $157 in 2021. That’s almost $5,000 per year! The online grocery delivery market is predicted to grow from $3.7 billion in 2023 to $90.3 billion in 2030, which, if you’re not careful, will create even more temptations and stresses for your could mean wallet.

Does your delivery spending align with your budget and life priorities? Treat yourself to food delivery occasionally, as long as you keep track of your spending and stay within the budget you’ve set. Try meal planning for easy-to-prepare dinners and be careful before clicking “Buy Now” when shopping online.

WiFi plans

For many of us, staying connected is a costly endeavor, with the average “American spending $1,342 per year on cell service.” Add smartwatches, tablets and other cell phone plans to the mix and this cost category can quickly spiral out of control. Ways to reduce costs include:

Find out about cheaper options.
Opt for family plans.
Choose data limited plans instead of unlimited plans.
Remove unnecessary devices from WiFi plans.

Photo: tinydevil via 123RF

Fees

Overdraft fees, late payments, ATM withdrawals, or annual credit card fees can be more than annoying. They can add up without having anything to show for the money spent. According to a Bankrate survey, the average total cost of an out-of-network ATM withdrawal is $4.77 and the average overdraft fee is $27.08. Minimize this financial leak by finding banks, credit card companies and other accounts with low or no fees. Avoid overdrafts and late payments by setting up low balance alerts and automatic bill payments.

Impulse buying

Have you ever bought something and immediately regretted it or felt like you had to hide it from your partner? This is probably a sign of impulse buying. When we make impulse purchases, we often don’t consider our budget and financial goals, which leads to further loss of money.

It’s a challenge to resist all temptations: snacks at the checkout, friends inviting us to go out after work, and deals at our favorite stores flooding our inboxes and social media scrolls. Plus, it can make us feel good, at least in the short term.

It’s helpful to understand what typically leads to impulse purchases so you can better control them. If you’re shopping on a bad day, what can you do instead to feel better? If you find yourself overshopping at the supermarket, consider ordering online instead. Give yourself a monthly fun money budget. We’re more likely to stick to our spending limits if it doesn’t feel too restrictive.

Now that you’ve identified your spending gaps, are you ready to close them? You can bet on it!

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