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6 Major Money Leaks In Your Life

Have you ever felt like the money in your bank account was disappearing faster than you could even keep track of?

There are plenty of things in life that seem to drain our wallets faster than than we can open them ourselves, but by knowing what some of the major sources are, you can save your self a good chunk of money every month.

1. ATM fees. Almost all banks charge a fee of $2-$5 for using a non bank ATM to withdraw money. On top of that the ATM you are getting money from will have an additional charge of the same amount. Let’s say you go out to eat with your friends at a place that only takes cash but you only have a card. You decide that you’re going to pull out $20 to cover the cost of your $10 meal. The ATM fee is $3 and your bank charges and additional $2.

Most people would rationalize the withdrawal by saying that the amount of the fee is so small that it is irrelevant, but I don’t know anyone who would purposefully make an investment that is guaranteed to lose them 50%.

Although you may have withdrawn $20, you only needed $10 and effectively spent $15 for a $10 item. Do yourself a favor next time and ask a friend for some cash. You’ll save time and feel a lot better for avoiding a guaranteed losing investment.

2. Late Fees. Late fees are one of the biggest money leaks that exist. A late payment on your rent or mortgage can cost you over $100. Hopefully you aren’t paying late every month, but if you are short on funds and can learn to live lean for a few days, you’ll avoid a late fee and come out $100 ahead for the following month. Better yet, learn to live a leaner lifestyle and see how much you can save over the course of a year.

3. Convenience Fees. One monthly fee that should immediately come to mind, but never does,  is your auto insurance premium. Most insurance companies charge around $5-$10 as a monthly convenience fee. If your six month insurance premium is $400 and you pay $30-$60 in fees over the course of six months, you just paid an additional 7.5%-15% on top of your premium. By paying your premium in advance, not only will you save that 7.5%-15% in fees, you will have one less monthly bill to worry about. Take it a step further and put the money you saved into a high yield savings account to maximize your savings.

4. Stamps. Stamps cost less than $0.50 apiece, but if you are someone with a lot of bills to pay or own a business that does a lot of purchasing, you can easily end up spending $5-$15 a month just by mailing checks. The vast majority of banks offer free online bill pay and by setting up automatic monthly bill payments you will again save time and money. It may not seem like a lot, but if you put that $5-$15 away every month you’ll have saved $60-$180 plus interest during the year. Find a few more areas in your life that you can cut back on and you can save close to $1,000 in a year.

5. Payment Processing Fees. Sometimes it might make sense to pay a processing fee, but more often than not they are a burden. Companies might charge a $10 fee for the ability to pay by phone or online. It’s up to you to decide whether you’d rather spend a minute writing a check and mailing it in for the price of a stamp or if your time is so valuable that paying a $10 fee for a 10 second time savings is worth it, although if you are making over $10 in 10 seconds you probably aren’t worrying about payment processing fees.

6. Interest. We all love buying new things, but saving up to buy an item can save you more than the entire cost of the item itself. Many people use credit cards like they were born with a magnetic strip on their hand. Don’t get me wrong, I’m all for utilizing credit cards to make money, but that sad fact is that most people do not know how to do this. The way many people use credit cards is to buy an item they can’t afford and make the minimum monthly payments until the item is paid off. In theory it may seem like a good idea, but with all the interest you pay, you can easily end up spending more than 200% of the sale price of an item.

What are some other money leaks in your life that can be easily avoided? Leave your ideas in the comments below.