With the list of reasons to save money growing every year, budgets have become an increasingly useful tool for families. The issue with budgeting, as many have noticed, is that most are hastily assembled and almost never get followed, mainly because of money pits.
Money pits are expenses that seem reasonable but become a waste because of lifestyle choices. Ultimately, consumers are putting money into something that they are not taking advantage of, essentially losing money and causing unnecessary stress to their budgets.
These pits are a common phenomenon that every family faces, and everyone’s are different. From unused memberships to pointless everyday transactions, there is always an opportunity to trim the fat and increase your family’s budget. Here are the 8 most costly money pits and some strategies on how to eliminate them.
1. Entertainment Subscriptions
Among the most common money pits for almost all families is entertainment subscriptions. From subscriptions for streaming services such as Hulu or Netflix to music streaming such as Spotify and Apple Music, almost every family has at least one subscription they can think of.
When first subscribing, these services may seem reasonably cheap. $10 a month is not a terrible investment, but having too many of these services definitely adds up. There are definitely ways to save money and prevent this from becoming a money pit.
For one, don’t subscribe to the same type of service twice. Though they may provide different shows, one family does not need to subscribe to Netflix, Hulu, AND HBO Go. Pick the best service and stick with it. Also, make sure to keep all your subscriptions in check so that you make sure you are using everything you are paying for.
2. Irregular Payments
Irregular payments are basically items that should figure into your monthly budget but most families can’t fit them in because they happen at an irregular rate. These payments can be large expenses like Auto Maintenance to smaller ones like haircuts or lawn care.
To prevent these items from being money pits for your budget, you should try to estimate the expenses long term and divide them out over the year. That way, you can make the necessary adjustments to your families expenses so as to avoid any hits on your savings.
Some of these items may be hard to estimate the cost of, such as auto maintenance. One strategy to use is looking at last year’s expenses on auto maintenance and adding a bit more to that. If you don’t end up spending this money, that’s more money that can go straight to your savings when all’s said and done.
3. Old Cars
Though your old vehicles may have a lot of sentimental value to you, they ultimately don’t contribute much financially. That is because as cars begin to lose their value, they also begin to become more of a cost burden and a new money drain that is completely unnecessary.
If you begin to realize that the cost of maintenance of your vehicle is suddenly more than the sale price, it may be time to sell it off. You may also want to keep in mind that maintenance costs will begin to add up as your vehicle gets older. Though you may not be spending a lot all at once, the maintenance may add up to outweigh your vehicle.
To avoid these costs, considering talking to a mechanic and seeing if you can get a diagnosis of your car’s future. Also, be sure to pay attention to your car’s warranties and free maintenance periods. Many cars simply aren’t worth keeping when these guarantees are gone.
4. Gym Memberships
When you first got a gym membership for your entire family, you may have seen it as an investment for your family’s overall health and well-being. Unfortunately, many families are simply wasting money on their gym memberships, which have become one of the largest money pits in America today.
You need to ask yourself some important questions regarding your family’s gym membership. For starters, is the membership being used by everyone? Is your family finding other ways to stay fit? Do you still need to pay for a full family plan? The answers to these questions may determine the fate of your gym membership.
Keep in mind that there are many ways to save money on gym memberships without fully canceling them. Having a gym membership is great, but you want to make sure you’re getting the full bang for your buck. If you aren’t it is definitely time to make some changes so that your budget can breathe.
5. Having Pets
While it may be a tough realization for many families, having pets is not possible for everyone. Between food, medical expenses, and other sacrifices, pets can definitely be a strain on any family’s budget. Whether you’re deciding to buy a pet or wondering if it may be time to give Fido away, money is an important aspect to consider.
Pets cost, on average, $1000 to have in a home. Though their emotional capabilities and loving nature are amazing, not every family can afford to spend that kind of money, especially as medical bills pile up. It is not unreasonable to think that some other families may benefit more from a pet than yours.
Ultimately, it is important to remember that pets are living things, and it is hard to think of them as money pits. For many, they are members of the family, not simply assets. But, it is a good idea to consider your expenses on your pet, and potential places to save, when crafting an ideal budget for your family.
6. Higher Education Expenses
It’s no secret at all that college is becoming more and more expensive, nor is it stopping enrollment rates from increasing. Before focusing on your career path or finding the perfect one for your son/daughter, it is important to consider the cost of a college education, and how often it becomes a money pit for families.
Especially with long careers, college becomes increasingly expensive and an increasingly riskier expense. When you or your children are planning on going to college for extended periods of time, you must keep in mind what kind of return you are getting on your investment. If the returns aren’t enough, a different path may be the solution.
While it is hard for any parent to deny their child of the ideal career path, this is another case where sacrifices need to be made. With the extent of student loan debt and fluctuating job markets available, it is definitely a good idea to think long and hard before committing to a career path that becomes a money pit for your entire family.
7. Tiny Expenses
Mindless microtransactions are the most common of all, and one that every family falls victim to. From basic expenses like vending machine sodas or a movie on demand, these are costs that almost no one budgets for, but everyone ends up spending on.
Fortunately, there are many ways to save money on these microtransactions. These solutions range from simply not spending the money, to finding better ways to get your fix. For example, if you need a cup of coffee every morning, consider buying a coffee machine rather than driving to Starbucks every day.
While these microtransactions may seem like a pointless focus, they can make a huge difference. For example, if you buy a soda from the soda machine at work every day, you’re spending $10 a week on soda, which ends up being $520 over the course of the year. This, along with other transactions, add up to become the definition of a money pit for every family.
8. Insurance Changes
Insurance is crucial for every family, and everyone has various different kinds: homeowner, auto, life, and health insurance at least. Unfortunately, there are very few personalized insurance policies. Most, in fact, are cookie-cutter policies that may have aspects which you simply can’t use.
In order to avoid the insurance money pits, you will definitely want to review your insurance policies. See if a large part of your policies are useless to you or your family, and see if other, cheaper policies meet all your needs. Though the difference may not be monumental at first, this will quickly add up.
Saving on insurance is a great way to adjust your budget, as so much of it goes into your insurance expenses. You may want to consider switching insurance companies as well if a company can offer you insurance that you can adjust as you see fit.
Do You Have Money Pits In Your Life?
Budgeting is crucial to the financial success of any family. Unfortunately, money pits make it very difficult to budget accurately and may be the hidden reason behind your lack of savings.
Luckily, there are ways to adjust your expenses to avoid these money pits, and the ones we highlighted today are just a few of many! If you need more help with managing your family’s finances, be sure to spend more time on the finances category of our blog.