​Finding Your Money Leaks

We often blame our income for our lack of savings and investment. "I earn too little" is an all too common phrase, no matter how much we earn.

The harsh reality is that our spending habits is often the culprit.

Here are (sometimes not so) small ways we drain our finances, and how to plug them.

The Coffee Addict

kopi bisa membuat Anda borosAyomi, 28, considers the coffee shop her second home. In a day, she must drink two cups of coffee, one in the morning and another one during the day in her spare time.

“I am a coffee addict,” says Ayomi.

She spends at least Rp30,000 every time she enjoys a cup of cappuccino at a coffee shop. This habit does not include the money she spends on things she does while enjoying her coffee.

“For example, after buying a book, I think ‘it’s great to read this book while enjoying coffee’, so I go to a coffee shop to read it,” Ayomi explains.

After calculating, she was surprised to find out that she at least spends Rp900,000 per month just for coffee.

Plug the leak: Ayomi doesn’t need to give up coffee altogether. She can allocate a fixed amount and buy a prepaid membership card, such as a Starbucks Card, so she can track her expenses and limit her coffee habit.

Mini-Markets, Mega Spending

Going to a mini-market with shelves full of brightly colored packs and goodies is the ultimate temptation for little children.

Maya, 30, says she spends more than what she plans to when shopping with her 5 year old son. “Every time we go to a minimarket, he always wants to buy Kinderjoy chocolate. It’s not cheap,” says Maya. In addition, every time he goes to a minimarket, he always wants a coloring book.

Plug the leak: Limit your visits to mini-market to, for example, once a week. Then, give your child a budget that he or she can spend, for example Rp20,000, then ask him to think about what he wants to buy, even before going to the store.

To avoid overspending yourself, bring a shopping list (and stick to it!), a limited amount of cash, and leave that debit card at home.

Sale Hunter

Rizky, 30, can go out of control when he sees sales and promotions. He admits, “I feel I’m missing out on something if I don’t buy when there is a sale.”

This does not only happen when he is at the mall, but also at supermarkets. If he sees a promotion for food and bathing supplies, he feels an “obligation to buy”, even though he does not really need it.

“Once I came very early in the morning to a store that offers a special discount for 20 first customers, although I already have four of the exact same products at home,” says Rizky.

In a month, he admits to spending at least Rp700,000 to satisfy his craving for discounted items. “I’m already holding myself back from buying those discounted items, but I haven’t done my best,” says Rizky, who works as an employee.

Plug the leak: Avoid going to malls or supermarkets at the end of the month, as this is the time when most sales and promotions happen. Also ask yourself, "Would I buy this item if it were not on sale?" If the answer is "no", then let it go, no matter how big the discount is.

[Watch video: Control Your Spending While Doing Grocery Shopping]

If it is about missing out or losing out on something, then it may indicate that you have a competitive nature. This is not necessarily a bad thing. Channel it into something more productive, like learning a new skill or competing in a sport.

The Biggest Leak of All

While the above items do take its toll on our finances, this last one is, by far, the biggest hole in our financial life. This first place position goes to (drum roll, please) credit card interest payments!

33-year-old Lina – who has been keeping credit card interest like her BFF for the last three years – argues, 

"But... but ... these small amounts seem innocent enough. How can 2.9% possibly hurt me?"

The injury and pain comes from the fact that this 2.9% is applied monthly. It also compounds, meaning that it applies to the original balance plus the interest. So if one only pays the minimum amount, the 2.9% is applied to a number that gets bigger and bigger.

In one year, this harmless 2.9% becomes 40% disaster!

Plug the leak: Don’t leave any balance on your credit card. Pay off the entire amount every month.

Read also: 4 Top Tips On How To Negotiate Your Credit Card Debts 

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