Editor’s note: This article was first published in April 2018. Its figures are from 2018 in Spain: ATM fees of 0.60 to 1.80 euros at another bank’s network, and a 100-150 euro smartphone versus 700-800 euros for a flagship. ATM fee rules and phone prices have changed since.
Most people could save more than they do without any drop in their quality of life. We often keep certain avoidable expenses because we don’t set a budget. We don’t track our spending either, so we don’t know where our money goes. Where are we throwing money away every day or every week? What can we save a little more on?
Bear in mind that if we add up these small amounts and put them into a savings account or a savings and investment account, our money will grow over time.
Where are we throwing money away when we could avoid it?
Fees at ATMs outside our bank’s network
In Spain, at least, using an ATM from another bank network can cost anything from 0.60 to 1.80 euros, or even a bit more depending on how much you want to withdraw. The advice here is simple: if your bank network’s logo isn’t on the ATM, try not to use it.
Late payment charges
Late payment charges are a silly way to throw money away, and in most cases the only cause is leaving things until the last minute or poor financial planning. While late fees are a big source of income for the banks, they can also count against you if you ever apply for a loan or credit. That’s why we should try to stay up to date.
If for some reason you have payments you can’t set up as direct debits from your account, or you need to move money from one account to another every month, set a reminder in your calendar app.
Subscriptions you barely use
Whether it’s TV services, software, online services or magazine subscriptions that you don’t use as much as you planned, don’t hesitate to cancel. Your personal finances will thank you.
Trips to the bar and what you spend there
We’re not saying you shouldn’t have a couple of beers at the bar, or give up a mixed drink at the weekend, but do you really need to drink until you’ve had more than enough? Perhaps after the third drink, the next three are surplus. Perhaps two beers are enough and there’s no need for five.
After analysing the spending of different people who wanted to sort out their finances, the biggest expense we found was precisely the “bar” and “pub” category. Working all week only to drink away a large part of what you earn is a terrible deal, not to mention the effect on your health. If you manage to cut, limit or eliminate most of this spending, your personal finances will be transformed.
See also: Financial education in 15 points that are easy to understand and follow
The gym membership
Most of the exercises people do at a gym can be done at home. The most common excuse for going to a gym is often that paying a fee forces you to go. Sometimes going to the gym is purely about showing off. If Instagram didn’t exist, gyms would probably see a drop in members.
Of course, if having a trainer to guide you through the exercises really helps you, it is money well spent. Still, I’ll take the opportunity to mention an old saying that used to go round on Facebook and gives you something to think about:
“Something is wrong with a society that takes the car to go to the gym to get on an exercise bike.”
Buying too much food
The truth is that we tend to waste a lot of food, and sometimes we eat more than we should. Changing our diet would not only save us money but also make us healthier.
Keeping up with the latest technology
Most people would be well served by a 100 or 150 euro smartphone. Buying the latest iPhone, or another brand’s model that has us spending 700 or 800 euros on a mobile phone, is often more about whim than need.
In the same way, think carefully about what you need a PC for, because people sometimes buy very powerful “machines” for tasks that don’t require that much power.
Impulse buying
We have already explained some of the tricks shops use to make you spend more money. Avoid buying more than you need and start telling the difference between wanting and needing in everything. Whether we’re talking about clothes shops, supermarkets or electronics, controlling what we buy will save us a lot of money.
Housing
From a financial health point of view, the amount you can afford to spend on a mortgage or rent is around 30% of your income. If it goes above 50%, your finances could be at risk when life throws up something unexpected.
The car
Having a fancy car is often more a way of covering up low self-esteem than anything else. Let me take the opportunity to remind you that a car is the worst investment you will ever make. It is an asset that loses all its value. The problem is that cars are associated with social status (advertisers have done a good job there), so many people buy cars they can’t afford to impress others. But we have already explained why your expensive car doesn’t impress intelligent people.
We also gave our view on why keeping your old car or buying a second-hand one makes more financial sense than buying a new car. If we spread the cost of repairs over the months, it works out as a small monthly payment compared with buying a new car. Of course, everyone has to know what they need the vehicle for.
Further reading
Featured image: Tamorlan, CC BY 3.0, via Wikimedia Commons.
