One of the most difficult steps to achieve financial freedom is stopping the money leaks. This could be because you are not realizing where to start and how to control and plug them. In here, find the basics of money leaks and some financial freedom tips to plug these leaks:
What all comes under money leaks?
Has it ever happened that you spend a certain amount on purchasing something and then don’t remember where you spent it at the end of the month? Well, that is exactly what a money leak is! A money leak is expenses that can’t be remembered when reviewing your debit card/credit card statements. Of course, you can find it after doing in-depth research. However, the expense made is for something trivial that you don’t identify what you spent it on in the first place.
Money leaks are not good for your financial well-being. They are generally the cause for you not having enough money at the end of a month. Moreover, they are also the major blockers for saving money.
Here are a few freedom financial tips that can help you achieve financial freedom:
-
Save all receipts and evaluate where your money is going
The first step to stop your money leaks is by evaluating where is your money going. One easy way of doing it is by saving all receipts and identifying where the leaks are happening mostly. Collect all your receipts from any store you visit and make sure you save them for later evaluation. If any receipt is not clear about the transaction, write the ‘where and why’ at the back of your receipt.
At the end of the month, go through the receipts and which can be classified as essential receipts and which cannot be. You can simply check the recurring expenses to find out your fixed expenses and therefore figure out your spending mistakes.
-
Use your credit with discretion
Any form of credit is helpful for an individual and can be a savior in times of financial needs. That said, credit can be dangerous if not used properly. For instance, having a credit card is great as it gives more rewards but if not used with caution can lead you into a debt trap.
Use your credit with discretion to make the most of the benefits associated with them. Take a more discerning approach with your card by planning the expenses. You can use your cards for your recurring expenses so that automation is easier.
As Warren Buffett said, “ Do not save after spending but spend after saving”, your spends can sometimes go beyond the limits. And honestly, sometimes it is okay too. However, when it quickly becomes too much, it can destroy your long-term goals.
In such cases, what you should do? The clear and simple answer is ‘BUDGET’. Budgeting can help you see where your money is going and is one of the best ways to stop your money leaks. You can start by allocating a certain amount of your income to free spending. Once that money is spent, there will be no more until next month. See, it’s simple.
-
Find out your leaky places
When you are evaluating the receipts, you will be able to identify all the leaky places. This can vary from person-to-person depending on the nature of their expenses. For example, if a person loves eating and spends a significant amount on restaurants, the leaky places could be any restaurant.
The simple way to stop money leaks and one of the great financial freedom tips is to avoid these leaky places. Find alternatives instead. For instance, if you love purchasing books, try visiting the library instead. And, instead of partying outside, host lunch and dinner parties at home.
-
Adopt some smart money saving tips on food
With so many food options out there, most of our income is majorly spent on food or dining. Which is why it is important to adopt some smart money saving tips on food. Again, this varies from person to person. Try with simple saving tips such as not buying the canned beverages and implementing one meal per week rule. The one meal per week rule is an easy way of saving money on dining. All you need to do is plan a meal in a day that you’ll have from outside. The rest of the meals should be from home.
-
Delete your payment information from all the websites
The advancement of technology has made our lives so much easier. Nowadays it is easy to purchase anything with just a click. However, these are the easiest kind of money leaks that you can possibly think of. When something you like is shown multiple times, you might end up buying it.
However, the best way of dealing with such money leaks is by deleting your card details from every online website you often visit. This will, of course, not stop you from purchasing there. But this will prompt you to think if the expense you’re about to make is a necessity or not. You can also stop saving passwords for the frequently used websites. That way, you are one more step away from making an online purchase. The purpose to do is to make such money leaks less tempting and less convenient.
Summary
All in all, here are the ways to stop your money leaks and can also be considered as financial freedom tips:
→ Save all receipts and evaluate where your money is going
→ Use your credit with discretion
→ Budget every spends
→ Find out your leaky places
→ Adopt some smart money saving tips on food
→ Delete your payment information from all the websites
Having too many money leaks in your finances can actually make your personal finance confusing and hopeless. One of the reasons is because you will never be able to identify where your money went. Don’t let this happen to you. Follow the steps given above and in no time your money leaks will be plugged up and you will be on the road to becoming wealthier.
