My December “Monthly Money Tip” was to review your spending over the past year and use that information to form a budget for the coming year. The reality is that most of us rarely do the most basic of financial management tasks: reconciling your credit card bill and your checking account. The bills come in, we pay them and get back to binge watching House of the Dragon or Wednesday.
An obvious result of us NOT paying attention is budget “leakage”. In a 2021 study by Chase, 71% of respondents estimated they waste at least $50 per month on unwanted or unexpected recurring charges. 55% of respondents admitted they have no idea how much is taken out each month in recurring charges. Wow… just WOW! These numbers are a bit striking but hardly surprising. We have moved into a subscription culture where it is easy to set up a recurring charge and then promptly forget about it. The only way people have no idea how much is taken out is when they are not reviewing their account statements.
Think about these questions:
- How many free trials have you signed up for and forgotten to cancel?
- Are you aware of the increases that have happened since you signed up?
- If you signed up for a monthly or annual fee that is supposed to save you money versus paying ala carte, are you using that service enough to warrant the fee?
Most often when you have water damage in your home, it isn’t because of some catastrophic event, but because of a small leak that damages the structure over time. The same thing is true with your budget. The damage that these small drip-drips of cash cause over time can be significant. I for one can find lots of fun things to do with an extra $600 or more per year if you handed it to me. But even if you donated that money to a worthy charity instead – it is worth more than the unused service.
I’m not big on New Year’s resolutions, but I am going to encourage this one for 2023. Take 10 minutes and pull out your recent checking account and credit card statements. Look for recurring charges and make sure you are using the services; cancel the ones you no longer use. Even if you aren’t going to check those statements monthly (as you should!), at least do it once a year and do a little house-cleaning. Check your pipes and patch a few leaks along the way!
Study from Chase: https://media.chase.com/news/survey-from-chase-reveals
Photo Credit: Drip by Jorn van Maanan, CC BY-SA 2.0