No money left? Plug those spending leaks now

If you find yourself to be short of cash every month, then most likely you have some spending leaks that you need to identify and put a plug to it. Having no money left can be very troublesome as you never know when a financial emergency might hit you. It is best to do a financial check-up every quarter to determine if you are living from paycheck to paycheck. This may help you to identify some common money mistakes and spending leaks.

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1. Lifestyle choices

Why are so many of us living life from one trend to another? I’ve personally thought about this issue a lot whenever I go back and forth hitting the ‘Pay’ button online. Most of the time, we buy things with money we don’t have, to impress people who don’t care.

I don’t know who needs to hear this, but this is for you if you need the reassurance. The hard truth is – nobody really cares if you have that latest Chanel bag. Sure, your friends might be envious the first time, or even the second time. And that’s it. It sounds harsh, but more often than not, we do a lot of unnecessarily foolish money mistakes just for the ‘Gram’ (Instagram).

Consider these before you hit the ‘pay’ button next time:

  1. Would I get into (more) credit card debt by swiping for this purchase?
  2. Would this extra cash saved from not purchasing this item be necessary for other expenditure? (Please, please reconsider cutting down on daily necessities like eating healthy and nutritious food just to buy a luxury item or go for an expensive trip. I know people who would skip lunch every day at work just to pay for their impending overseas holiday). Is it worth it? Only you can decide.
  3. Last but not least, even if it’s counted as “disposable” income to you – by putting this extra cash into a savings account or an investment will benefit you more in the long term than splurging on something you do not need.

But let’s be practical. It doesn’t mean you should never, ever buy something you really like. You’re not bringing your money to the grave and life is too short for you to just waste it by living on bare necessities.

Get your priorities in check and manage your cash flow well. You know your mum was right when she told you to, “save money, and don’t simply buy things!”

2. Credit cards

Do you know who wins at this game with the use of credit cards? The banks. Not you, not the retailers. Maybe that’s how we end up with RM 37 billion of credit card debt in Malaysia.

Unbelievably easy money, right? All it takes is a simple swipe and you can have the world at your fingertips. It gives us a false sense of security and a false sense of wealth. A lot of people know that credit card is not free money, but only realize it when it’s too late.

Newsflash: You have to pay ALL of it back. The minimum amount for repayment sounds doable, but bear in mind – banks are not charity organizations. They are a business. They charge you an interest rate for every cent you borrow from them. The longer you pay the minimum charges just to avoid defaulting, the more your debt snowballs.

But what about those zero-percent installment pay schemes? Yes, that too is nothing but another illusion the banks sell you. Even with their so-called zero percent installment scheme, your credit limit is still being deducted at full price. And if you don’t pay your monthly installment on time, guess what happens? You’re still being charged 15-18% daily interest rate on that purchase which you thought was INTEREST FREE.

Now it doesn’t sound that sexy anymore.

Of course, if you have the means to pay it all off, and you’re using the easy payment scheme for an extra discount or other credit card related perks – sure. This zero percent installment scheme is not entirely bad per se. It benefits those who manages their money well, but it backfires on those who don’t.

Personally, I treat my credit card as a debit card. That way, I’ll never spend more than what I have budgeted for the month. Credit card is a tool for us to manage our money, and it should never be the other way round. In short, do not let a piece of plastic control your life.

3. Be stern

Maybe this is not the majority, but there are people in this category, believe it or not. I have personally known a friend – a very nice, generous and sociable young man. Whenever we go out as a group, he’s always volunteering to pick up tabs and insist that it’s a “treat”. Every. Single. Time. And you’d think he has a money tree growing in his backyard, but no – it was far from it. To cut a long story short, we soon realise that it was becoming an unhealthy trend and we told him to stop doing it. It pays to have genuine and well-meaning friends as it could potentially make you or break you. If this is you, you know who your true friends are if they aren’t stopping you. Yes, I’ve opened the Pandora Box…so have a think about it.

You see, you don’t have to be a party pooper and count every cent when you are out with friends, but you also don’t have to pick up the bill or give away money to be well-liked. If you have the habit of picking up tabs and spending money on bills that should be split among friends and family then the spending leak might be your attitude towards social spending. When out with a group, it is socially acceptable to split the bill or to pay for what you ordered for. Remember, after you do it a couple of times – expect them to keep expecting the same treatment every time you hang out. And unfortunately, that’s when relationships go sour.

4. Spending on entertainment

I remembered when Joker first appeared on the big screen a couple of weeks ago. I’m one of those people that will only pay for a movie ticket when there’s a popular film or blockbuster on air. Otherwise, it will be just me and my Netflix subscription. So I went online and looked up for the next ticket. It says RM 22 for a regular ticket in one of the popular cinema chains here in Klang Valley.

It’s not about affordability, but RM 22 for a 2-hour show is not my idea of “value for money”. My personal take on this is – even if you can afford it, doesn’t mean you should. Feel free to agree or disagree. But again, value in itself is subjective. What may be of value to you may not be to me, and vice versa.

The bottom line was – there’s no way I’m paying for that. The next thing I did was to open one of my e-wallets, redeemed two tickets with my reward points, and voila. Free tickets to Joker 2019. #mylifeisnolongeracomedy

Instead of curbing entertainment entirely (what joy would there be?), finding ways to redeem vouchers, coupons or discounts for entertainment would save you some serious cash. In my case, accumulating points by paying with my e-wallet for things that I need anyway has saved me RM 44 (for two tickets).

5. Eating out, Ordering In

For some of us, the majority of our money flows into eating out and dining in expenses. Services like GrabFood and Foodpanda only make it easier for today’s consumer to order food in. But is it really worth it? And in case you’re not aware, certain restaurants DO NOT CHARGE THE SAME as their in-store prices.

Case in point:

Restaurants with “in-store” prices are indicated as above

And then we have those that sell you at a higher price than their in-store prices.

Such as this one.

The take-away from this? (Pun intended) Watch out for restaurants that charge you more for delivery items. Interestingly, this article here highlights the percentage of price inflation when you pay for convenience a.k.a food delivery vs eating in-store. With that said, eating-in store is still significantly more expensive than cooking on your own.

If your eating habits consist of ordering food in or dining out then you should look into simple and fast ways to prepare food at home. This can save you a lot of money spent on delivery fees, marked-up food prices and it can also be healthier for you and your wallet in the long run.

What’s next?

If you can’t seem to pinpoint exactly where your spending leaks are, do consider a money management system. It can help you track your spending, see exactly what you are spending on and plug those spending leaks. A good management method can ensure you are spending money on things that are required, and it can also help you to start saving for a rainy day.

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