Another way, though, might be to just keep more of the money you already have. In fact, many people don’t realize that they might be losing money while they sleep! Here are four areas that can drain your finances without you even realizing it.
#1: Credit Cards Interest Rates
If you carry a balance on your credit cards, you are literally losing money every second of the day. Why? Because most credit cards charge exceptionally high interest rates on any balance that is not paid off each period. Just a few thousand dollars can cost you considerably each month.
The solution? Pay off all credit card balances as quickly as possible and avoid charging any amounts that you can’t pay in full by the due date. If you use a credit card to buy something that involves a promotional period with little or no interest, be sure to understand the timeline for full payment and meet it.
#2: In-App & In-Game Purchases
Apps and games are everywhere. We download them to our smart devices and our computers and let our kids have access to them too. Many are free or very inexpensive and provide hours of entertainment. The problem, though, arises when we give in to the temptation to start spending real dollars. Whether you are buying in-game coins, upgrading a character, or adding a cool skin, these digital purchases can add up quickly. They can also be addictive.
The solution? Choose only games that are truly free or that don’t require any additional purchases to be fun. If you find yourself swiping to buy, it might be time to remove that game from your device altogether.
#3: Auto-Renewing Subscriptions & Memberships
Have you ever opened your bank or credit card statement and found that you are STILL paying for that gym membership you haven’t used since last year? Or maybe you just haven’t got around to cancelling that online game membership or streaming service that your child hasn’t shown interest in for months. Don’t feel bad; we’ve all been there.
The solution? Spend some time going through your statements and making a list of any auto-renewing things that you no longer really use. Then, take an hour or so and cancel them all! Oh, and the next time that “free trial” with auto-renew pops up, consider saying no.
#4: Insurance Coverages You Don’t Need
Insurance is awesome. But only if you really need it. Otherwise, it can be a money sucker. Insurance can be complicated, too, so many people don’t take the time to understand what coverage they have compared to what they need. This can be especially true as life changes happen and people’s needs change over time. For example, if your employer offers a small complimentary life insurance policy, you may be able to cancel the one you took out independently.
The solution? Go through all your family’s insurance coverages and be sure you aren’t double covered, over-covered, or paying for a policy addition you really don’t need. Then, pick a date on the calendar and review your insurance coverages each year at that time.
The Bottom Line
Even small amounts of money that you can keep from disappearing while you sleep can help you have more ability to build wealth for yourself and take control of your financial future. So invest a little time and effort to be sure you aren’t falling prey to these common money traps.
At CleveDoesMore, the best part of our job is helping people make informed choices to minimize their risk while building equity and wealth for their future.