Latest / Talking FACS / Stop the Drip: Plug Your Spending Leaks

Transcript

Stop the Drip: Plug Your Spending Leaks · Talking FACS

• 0:01
  Welcome to Talking FACS what you need to know about family,
• 0:05
  food, finance, and fitness.
• 0:07
  This nationally recognized, award-winning podcast is hosted by the University
• 0:12
  of Kentucky Family and Consumer Sciences Extension Program.
• 0:16
  Our educators share research knowledge with individuals, families,
• 0:20
  and communities to improve quality of life.
• 0:25
  Herbert Hoover once said, "About the time we can make ends meet,
• 0:29
  somebody moves the ends."
• 0:31
  Hello and welcome to MoneyWise on Talking FACS, where we share practical information
• 0:37
  that is research-based to help you strengthen your family, improve your life,
• 0:41
  and build a better Kentucky.
• 0:43
  I'm your host, Mindy McCulley, Extension Specialist for Instructional Support
• 0:47
  with Family and Consumer Sciences at the University of Kentucky.
• 0:50
  Maybe it is the daily coffee, food delivery fees, streaming subscriptions,
• 0:55
  or those quick online purchases that seem harmless in the moment,
• 1:00
  these small expenses, often called spending leaks, can quietly drain our budgets
• 1:05
  and keep us from reaching our financial goals.
• 1:08
  Today, I'm joined by Dr. Nichole Huff, Assistant Extension Professor and Extension
• 1:12
  Specialist for Family Finance and Resource Management.
• 1:16
  And she's going to help us identify common spending leaks, understand how small
• 1:19
  purchases add up over time, and share practical tips to take control of our
• 1:24
  spending habits. Welcome, Nichole. I'm so glad you're here.
• 1:28
  Hi, Mindy. Thank you for having me.
• 1:30
  What are some tips you have for identifying those spending leaks that seem to creep into our budgets?
• 1:38
  Yeah, well, I think you really describe those spending leaks well.
• 1:41
  And, you know, just like a leak in a faucet, you know, it's easy to equate it
• 1:47
  to a faucet or a drain, but like a slow leak, right?
• 1:50
  It takes you a while sometimes to identify where it is or even that it is there.
• 1:55
  But a leak unidentified can, you know, cause some trouble.
• 1:59
  Like if we're talking plumbing or in your home. And so it can cause trouble in your budget as well.
• 2:05
  And so those spending leaks, those small, you know, seemingly one at a time,
• 2:11
  innocent, seemingly innocent purchases, but that over time can really,
• 2:16
  you know, drain, drain an account.
• 2:17
  So, Nichole, spending leaks are something that many people have to deal with.
• 2:23
  But how can we really identify those little dribs and drabs that are coming
• 2:28
  out of our budget that maybe we haven't thought about before?
• 2:32
  Yeah, because they can be so hard to spot, it's important that we pay attention.
• 2:38
  People always ask, where does my money go? I don't know where my money goes. Well, look.
• 2:43
  So take a look at.
• 2:46
  Your bank statements, your credit card statements, take a, you know, save your receipt.
• 2:50
  So if you are not in the habit of tracking your spending, and it can be hard
• 2:55
  to track our spending because we are often spending in so many places.
• 2:59
  And so we may have one-click purchases or the automatic pay buttons on our devices
• 3:07
  and our phones that, you know, with one click we can make a purchase.
• 3:10
  And so we have to track them from multiple places sometimes.
• 3:14
  And so beginning to look at all those places where you have money coming out,
• 3:20
  your different accounts, and what are you spending your money on?
• 3:24
  Where is it going? And so I challenge people, if you're not in the habit of
• 3:28
  tracking your spending, track it for a week to a month to a couple of months
• 3:32
  just to see how much am I really spending on specialty coffees?
• 3:37
  How many times am I really going through the drive-through. How many one-click buys.
• 3:42
  Am I purchasing to see, you know, where we are spending the money from.
• 3:47
  And so tracking your purchases is a simple way, but the best way to start to
• 3:54
  find out where your money goes, because you have to identify them first.
• 3:59
  Once a spending leak is identified, challenge you to add up what you are spending
• 4:06
  if that is a recurring purchase.
• 4:08
  So, for example, with streaming services, we may have a few.
• 4:13
  We might even pay for online gaming, online entertainment. Subscriptions are really big.
• 4:17
  And so if you are spending, if you just have a couple and they may have,
• 4:22
  you may have gotten in at an introductory rate of $9.99, right?
• 4:26
  That after those first three months, it increases to $14.99 or $19.99 or some
• 4:32
  of these streaming services will automatically raise the rates if you don't switch a plan or if you.
• 4:38
  They may charge you more for ads or not ads or those kinds of things.
• 4:42
  And so do you have a grasp on how much you're spending? And so if you spend
• 4:49
  even just $10 a month on a subscription, well, that's $120 for the year.
• 4:54
  If you do that for multiple ones that you're not using, you could easily spend
• 4:59
  thousands of dollars on just unused services.
• 5:02
  And so check those auto subscriptions, those auto drive fees,
• 5:06
  check your monthly memberships. That's also a very hidden way to identify if
• 5:12
  there are some hidden spending leaks in your account.
• 5:16
  You know, Nicole, it seems like there are lots of leaks that are happening.
• 5:19
  And perhaps we just haven't taken the time to add them all up.
• 5:24
  Yeah, when we add up, so we talk about subscription services.
• 5:29
  But going back to fast food, that is another very common one.
• 5:33
  We're busy. We're on the go. Go, go, go.
• 5:37
  And so if you, like a family of four, if your family of four gets drive-thru
• 5:43
  at $10 a person, And you're honestly kind of hard-pressed to get drive-thru at $10 a person.
• 5:48
  But say you're ordering for a value meal just twice a week. It seems easy after
• 5:53
  work, a quick convenience for a family of four at $10 a person.
• 5:57
  That is over $4,000 for the year.
• 6:01
  And that's just two times going through a drive-thru. The same thing,
• 6:05
  and it's about the same thing.
• 6:06
  If you just go to a restaurant dinner once a week for a family of four,
• 6:11
  that is, and you're about $20 a person, that's over $4,000 for the year.
• 6:16
  And so, and that's for a family of four, like we're a family of five.
• 6:19
  And so it is, going out to eat is expensive.
• 6:23
  And so you're almost always going to save money cooking at home or really limiting
• 6:30
  those types of spending leaks.
• 6:33
  The cost of convenience is another spending leak.
• 6:36
  And so if you are doing any kind of delivery service to have your groceries
• 6:41
  or your fast food delivered, take a look at what you're being charged in delivery
• 6:46
  fees, tips, driver fees, convenience fees.
• 6:49
  It really adds up, adds up over time. And so, you know, specialty coffees.
• 6:54
  And so they're about $7 a specialty coffee for a medium or a grande.
• 7:00
  If you just do that a few times a week, three times a week, that's over $1,000
• 7:05
  for the year. And you don't think about it.
• 7:07
  And that's just for one person, you know, like on your way to work or on your
• 7:12
  out running errands and you get that specialty coffee, you know, $7 one pop.
• 7:17
  It doesn't sound like a lot, but over time, it really adds up.
• 7:20
  And so as you're tracking your spending, is that one of your soft spots?
• 7:26
  Once we've identified these spinning leaks, it's not enough just to know that
• 7:30
  they're there, but we have to do something about them. So what can we do?
• 7:34
  Yeah, right. No, awareness is always a good first step, right? But it takes action.
• 7:40
  We have to act in order to change behaviors. And so first, cancel those subscriptions.
• 7:45
  Sit down and talk to your family about how much, you know, you use them.
• 7:49
  And so I have two boys, and they love to game. And so one got a new gaming console,
• 7:55
  which then they pushed the monthly subscription.
• 7:59
  And so I said, you know what, we'll try it one month to see it.
• 8:02
  And that's $9.99 subscription.
• 8:04
  We'll see how much you actually use it. And so I set a reminder in my phone
• 8:09
  before it automatically renewed to cancel before that next payment was hit.
• 8:15
  And I monitored how much and it was just not worth $120 for the year.
• 8:21
  And so, and I'd have that conversation like, no, sorry, buddy,
• 8:24
  you don't use it enough. If you want to pay for that $10 a month,
• 8:28
  you can, but I'm not going to pay for it.
• 8:30
  So take time to assess and then cancel things.
• 8:36
  If streaming service isn't being used or do you need cable and streaming? Do you need...
• 8:42
  You know, these downloads. Disable one-click purchases.
• 8:47
  If I am doing some online retail therapy at night and I've got to get up from
• 8:52
  my comfy couch and walk across the house to my purse to get out my credit card,
• 8:57
  I am a lot less likely to buy that thing than if I could just double click the
• 9:03
  side of my phone or if it's automatically loaded into my account and I've got a credit card on file.
• 9:09
  So disable any kind of automatically loaded pay services or if you've got a
• 9:15
  card on file, because it will, it'll offer a buffer that is likely to keep you
• 9:21
  from making impulse buys.
• 9:23
  So those are, those are a couple ways. And then, you know, it is.
• 9:28
  It's really simple sometimes, but it's delaying that gratification.
• 9:32
  So you like specialty coffees, then get you a good creamer that you like at
• 9:38
  home, make some iced coffees at home, but ask yourself, like, is it really worth it?
• 9:43
  So my oldest, my oldest daughter, she is 19. And so she is...
• 9:50
  Beginning to appreciate the value of like an earn.
• 9:56
  So what she earns an hour at her summer job and what she can buy.
• 10:02
  So like, is it really worth an hour of work for a, you know,
• 10:06
  a venti coffee or a large coffee?
• 10:09
  And so I have started asking her those questions in terms of,
• 10:13
  is it worth working X number of hours for that thing, for that spending league?
• 10:18
  Or what can you do with that saved money instead. And so,
• 10:21
  you know, you'll always, you'll save money by replacing those habits,
• 10:26
  packing lunch instead of going through the drive-thru,
• 10:29
  making those restaurant meals at home, saving the nights out for a special occasion
• 10:34
  or truly once a month and work those into your budget.
• 10:38
  But decide, is it worth it? Would I rather go through the drive-thru twice a
• 10:42
  week or would I rather put that $4,000 to paying down debt or towards a family
• 10:47
  vacation or towards a new furniture or anything, car, a down payment,
• 10:53
  the appliance that's probably going to break down or needs replacing in your
• 10:56
  house or the kid who needs braces.
• 10:57
  But is it worth it? And so people often don't think they, you know,
• 11:02
  I don't have the money to travel or I don't have the money.
• 11:05
  Well, you may have it, but is it being drained out of your account?
• 11:09
  So making some small swaps can really pay off in the end.
• 11:13
  I think all of this, as we implement some of these changes.
• 11:19
  Not only will we start to think differently about the spending leaks,
• 11:22
  but we might also start to think differently about those regular budget items
• 11:27
  that are discretionary in the,
• 11:30
  We can make some choices about, I'd rather spend more at the grocery store so
• 11:34
  that I'm not spending four times, you know, as much on a meal out.
• 11:39
  And even the grocery store, too, that can be sometimes when you make those big
• 11:43
  bulk purchases, you know, you throw things in the cart, too.
• 11:47
  And so taking a look at what are some of those big expenses and are there ways
• 11:52
  that you can save there, too? So are you making impulse buys at the grocery store?
• 11:58
  If you, are you, where are your, some of your biggest spenders and those small
• 12:05
  leaks, but taking a look at tracking that spending. But absolutely.
• 12:08
  Awareness is truly key, but then action and following up is,
• 12:12
  is where you're going to see change.
• 12:14
  And celebrate when you recognize that you've saved $120 because you weren't,
• 12:19
  spending that on a, on a gaming service.
• 12:23
  Pat yourself on the back. Now, don't go out and spend $120 on something.
• 12:27
  So, but definitely recognize and, you know, tell your kids, hey,
• 12:30
  we saved this because we didn't buy the stringing service or whatever.
• 12:34
  It's about, we only, money is finite, right? We only have a certain amount.
• 12:38
  And so, you know, we, you have to prioritize and you have to decide,
• 12:43
  is this somewhere I want my money to go?
• 12:46
  And so, but knowing where your money goes allows you to make those choices on where it's spent.
• 12:52
  And so, and really where the cost of everything is just so expensive,
• 12:56
  we have to prioritize and identifying spending leaks and adding up how much
• 13:02
  they cost and then asking yourself, is this truly worth it?
• 13:06
  Is this worth what I could do with it? The debt I need to pay off,
• 13:09
  the interest on a credit card, interest on and fees too are spending leaks.
• 13:15
  And so if you've got credit card balances or if you've got any kind of revolving
• 13:19
  debt that you've not paid off and you're getting interest,
• 13:22
  look at that statement to see that is a big spending leak where that money is,
• 13:27
  quickly can add up on unpaid balances on credit. And so...
• 13:32
  Awareness in action. There we go. As always, I am delighted to speak with you
• 13:39
  because I know that we're going to learn something and it's going to be valuable,
• 13:43
  both in terms of our budgets, but also just valuable information to have.
• 13:47
  Creating a healthier financial future doesn't always require major changes.
• 13:52
  Often it's the small everyday spending decisions that makes the biggest difference.
• 13:57
  By becoming more aware of where your money is going and making intentional choices,
• 14:02
  you can redirect those dollars toward the things that matter most to you.
• 14:07
  Thank you for joining me, Dr. Nichole Huff, for this episode of MoneyWise on
• 14:12
  Talking FACS. Thank you for having me, Mindy.
• 14:15
  If you need more information about personal finance, budgeting,
• 14:18
  or any of the topics that we discuss on Talking FACS, reach out to your local
• 14:23
  Cooperative Extension office or visit our website to learn more.
• 14:28
  And so until next time, thanks for listening to MoneyWise on Talking FACS.
• 14:32
  Remember, to receive regular updates about our content, you can subscribe to
• 14:37
  our shows from your favorite podcast provider.
• 14:41
  Thank you for listening to Talking FACS. We deliver programs focusing on nutrition,
• 14:46
  health, resource management, family development, and civic engagement.
• 14:51
  If you enjoyed today's podcast, have a question, or a show topic idea,
• 14:55
  leave a like and a comment on Facebook at UKFCSEXT or send us an email at UKFCSEXT,
• 15:05
  at UKY.EDU.
• 15:08
  Visit us online at fcs.uky.edu to learn more about the University of Kentucky
• 15:14
  Family and Consumer Sciences Extension Program or contact your local extension
• 15:19
  agent for Family and Consumer Sciences.
• 15:21
  We build strong families. We build Kentucky. It starts with us.