How to Stop Spending Money: Where is All Your Money Going?
Written By Jay
Learn how to stop spending money by tracking, lean operations and starting a budget.
Has this happened to you? You think that you have x amount of money in your account and you go out shopping. Maybe you’re at the grocery store getting groceries.
You get everything rung up, pull out your debit card to pay and the dreadful words appear, or worse, are relayed to you by the cashier out loud: declined.
What happened? There should be plenty of money in the bank. Your mental tally of transactions couldn’t possibly be wrong, and yet, you are out of money.
Thankfully, this hasn’t happened to me in a long time, and the reason is that I have learned from my mistakes and you can too. If this isn’t a problem for you or have never experienced this, good job. This is an all too easy situation to fall into and the way to avoid it can benefit even those who have never experienced it.
How to Stop Spending Money: Table of Contents
Track Your Spending
This is an eye opener. Tracking your spending can take as little as a few minutes and will change how you see you’re finances. In the past, after dealing with the payment of my groceries being declined I headed home to find out what happened to all my money.
What I found surprised me.
As my eyes scoured my checking account transactions, there was nothing that stood out. No big purchases that I couldn’t remember, no surprise bills, no free trials that I forgot to cancel. What I found was much more simple.
So what exactly did I find? I found a whole lot of seemingly small and insignificant purchases that added up to a lot of money. They almost felt sneaky, like they were hiding amongst more justifiable purchases like gas for my car and groceries.
A recent trip to get coffee, $10.00. A snack at a vending machine at work, $4.00. Or, if you’re really sneaky like me, buying snacks at the gas station and counting it all as gas money.
These are just a few of the ways that we throw money away without even realizing it.
At first it didn’t seem possible for so much money to come from such small amounts but the more I thought about it the more it made sense.
A trip to get a coffee for my wife and myself was only ten dollars, give or take, or much more if we got hungry while waiting in the drive through. We’re already being bad, we may as well get a little extra and really make it worth it (more on that later).
A little quick math and it all starts to add up, pun intended. I’ll keep the amount at ten dollars for simplicity and to underscore just how much we end up using conservative figures. Ten dollars, let’s say three days a week for a month comes out to a hundred and twenty dollars!
Now, just between us, I’ve gotten coffee more than three times a week and I’ve succumbed to the drive through impulse buy on more than one occasion as well so this is definitely a conservative estimate, and I’m sure I’m not the only one. Let that sink in. I did.
Now that our accounts are over a hundred dollars freer and we haven’t even hit the vending machine or the extras at the gas station, we should probably figure out a way to put an end to this waste right?
It is easy to see where hundreds of dollars can go without any big, memorable purchases.
Lean Operations
What are lean operations and why does it sound so…spartan? Don’t worry, lean operations just means eliminating waste, and life can be lived fully and satisfactorily with little to no waste.
In fact, you may be surprised to find that not only do you have more money each month, but you will likely be able to enjoy much of what you enjoyed before plugging up all of the money leaks.
Yes, you can still get coffee sometimes but this time you will know where that ten (or fifteen) dollars went.
Now that we’re on the topic of eliminating waste and plugging money leaks, I’d like to talk about some other common ways that we create “waste.” But before I delve into some seemingly obvious and perhaps cliche sounding ways of saving money, remember this: It really does add up.
Free Money (the Basics)
We’ve all heard it. I’m almost embarrassed to mention it but it bears repeating. Imagine, if you will, me channeling authority figures from your childhood but this time take it seriously. Seriously. “Turn off the lights when you leave the room!”
Sorry, not sorry.
I realize and accept that exceptions must be made after watching favorites like Paranormal Activity and the like but for all of the other restful nights, there is no need to have the lights on in the kitchen, the living room, the bathroom, and the entryway all night or all day for that matter.
By the way, yes, I am guilty of all of these and no, the lights don’t need to be on during the day with some obvious exceptions (bathrooms with no windows, for example).
This next one I am probably the most guilty of and it is a struggle for me every summer. As much as I would love for our place to be a frigid 60 something all day and night, my wife and our utility bill say otherwise.
Actually, I am sure our energy provider is more than happy to charge me for that extra ten degrees and normally I’d be happy to pay it but it can get really expensive, especially when it’s 110 outside. This is when compromises must be made.
When I was younger I remember my parents’ house’s air conditioning unit being out of commission and summers were particularly hot, to put it nicely. Anyway, we got really good at employing some techniques to maximize coolness wherever possible and they still come in handy.
Leaving the windows open at night with fans if you have them. This works best if you have screens so you’re not inviting in all of the six legged neighbors, who just happen to be attracted to lights (and you sleep better with no lights, and you won’t have to replace them as often, etc, etc.).
Pro tip: try to create a cross breeze by opening windows across the room from each other. When you wake up, cover the windows and close the place up to trap in the cool and keep out the hot sun.
This works well in conjunction with air conditioning and fans but for extra cost cutting, the air conditioning isn’t needed.
This sort of works in reverse during the cold months but without opening up the windows and of course, no fans. The good thing about the cold is that you can layer up and get cozy.
Basically, try and maximize comfort for the times you are awake to enjoy it, and this goes for lights, temperature, etc.
Water is the next utility to tackle and a great way to reduce water consumption is by switching to a lower flow shower head. Note, this doesn’t have to be something comically powerless that drools out teaspoons of water.
I get it. I’m not small and there is a certain level of coverage necessary to get all of the suds. A little goes a long way here and a surprising amount of water can be saved by a slight, probably imperceivable, decrease in flow rate.
Many utility companies have tracking tools on their websites to show utility usage over time so you can see how much you are using month to month and it is really neat to see this drop along with your bill.
Turn it into a game and have fun with it, just try to remember to not get too carried away.
The idea of lean operations applied to everyday life really comes down to minimizing what you need, maximizing what you get out of something, and using it when you need it and not when you don’t.
Reducing Your Bills
When thinking about where your money is going each month, the first thing that probably comes to mind are bills.
We just talked about the obvious ways to save money by trimming the fat, so to speak, but have you actually thought about reducing your rates? There are a few ways to do this and the savings can be substantial.
Just like with anything else, shopping around for the best deal also applies to things like car insurance and cell phone service providers.
For example, how much do you pay for your cell phone service? Probably more than you want.
A lot of people don’t realize that you don’t have to pay over $100 a month for a quality phone service. There are other options out there.
Mint Mobile, for example, has unlimited talk and text as low as $15 a month with customization options so you get exactly what you need at a great price. Check out my post here about Mint Mobile.
The same goes for car insurance. Many of us are leaving money on the table, either by not shopping around for a better rate elsewhere or by not utilizing all of the discounts that are available to us.
Things like bundling home and auto insurance, multi car discounts, and memberships with certain organizations can save you money.
And of course, make sure to revisit the nitty gritty of your policy like deductibles and coverage amounts. I’ve spent more time than I care to admit playing with this stuff and it can definitely be worth it, even without a huge time investment.
Maybe you’re happy with your current service providers. I completely understand and it’s one of the reasons I’ve stayed with my car insurance company for so long. Maybe it’s loyalty (another discount factor, by the way), maybe it’s risk aversion, but either way they’ve got me for as long as I need them so why not maximize savings with who I’ve already got?
How, you may ask? There are services that will negotiate lower prices on your behalf and I agree, it sounds pretty great. How do they make money, you may ask? Simple. A portion of what they get taken off of your bill goes to them. This incentives them to secure lower rates for you and everyone walks away happier.
If this sounds like a good deal to you, that makes two of us. Look out for my upcoming post and review of Billshark.
Create A Budget
Of course this is where we would end up. The most important thing you can do to keep track of your money and to keep on track with your financial goals is to create a budget.
When you create and use a budget you will:
- Know exactly how much money you have
- Know exactly how much money you don’t have
- Know where your money is going
- Be in control
I remember one time seeing my brother in law get back from picking up some food and as he sat down, before even touching his food, he whipped out his phone and started entering numbers from the receipt.
At the time I couldn’t help but think it was a little ridiculous but he was doing the right thing.
Perhaps there are more elegant ways of going about it but he knew what he was doing and most importantly, he knew exactly how much money that sandwich cost.
I can almost guarantee that if I were to ask him right now how much money he had available for “extras” he would know, and I know for a fact that if he didn’t know all he would have to do is look.
That, my friends, is the power of the budget. Knowledge is power and a budget provides knowledge of your finances.
To summarize: A budget = financial superpowers, and I’m only kind of kidding.
Get Back to Living
Applying everything we’ve gone over can potentially save you a lot of money. So what now? Treat yo’ self, within reason.
Now you can head to your favorite coffee place knowing how much you can spend and when it comes time to pick up groceries toward the end of the month, you won’t have to worry about that dreaded “d” word being an issue.
Budgeting and managing your finances is really about being able to live a quality life and reaching your goals while actually having the money to splurge and not have unwanted surprises. That’s what I call a win win.
Is there anything that I missed? Give us your best tips below in the comments.
DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS AND/OR PAYED PLACEMENT. PLEASE READ MY DISCLOSURE FOR MORE INFO.
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