Spending leaks are often the hidden enemy of sticking to a budget and saving money. Here we show you what they are and provide you with some tips for tackling spending leaks.

What are spending leaks?

Spending leaks are simply expenses that can sap money from your weekly budget without you really noticing. They're often incidental items which may seem small in themselves, but which nonetheless add up over time. For example:

• a daily take-away coffee
• buying your lunch at work every day
• incurring avoidable bank fees (e.g. overdrawn account fees, or fees for using "other bank" ATMs)
• avoidable utilities expenses caused by leaving lights on in unused rooms at home, or not fixing dripping taps
• impulse buying at the supermarket (e.g. magazines at the register).

Identifying the culprits is half the battle when it comes to plugging the hole in your budget once and for all and converting a spending leak into a savings windfall. Here are some tips to help you do just that.

1. Keep a spending diary
   
   Try filling out a spending diary over the course of a fortnight - or even a month if you can.

   Record every purchase and payment you make over the period you've chosen, whether it's an electricity bill, lunch at work, a cup of coffee or a mortgage payment. Try dividing your diary into categories to make it a little easier to assess at the end of the period. For example, "food and drink", "bank fees", "household bills", "debts" etc.

   At the end of the period, go back over your diary and find out where your money goes. While items such as mortgage payments or school fees may be essential, you may find that some avoidable items make a regular appearance, and these are the ones you need to identify. Pay particular attention to incidental items such as take-away food and drinks, or magazines etc.
   
   

2. Count the costs with our Spending Leaks Calculator
   
   Once you've identified the items that you think might be hurting your attempts to stick to your budget and save, do some rough calculations and work out what they're costing you over time. Use our Spending Leaks Calculator (XLS 41kB) to help you count the costs, and then work out how much more you can be saving if you can plug the leak.
   
   
3. Take action!
   
   Now that you know what your spending leaks are, it's time to tackle them once and for all. The following tips might help you in your quest to plug those leaks...
   • Be a little flexible
     
     If your spending leaks tend to be along the lines of regular treats for yourself (such as a daily coffee or a few magazines at the supermarket register each week), remember that it's still okay to treat yourself every now and then. Try sticking to a coffee one day a week rather than buying a coffee every day. Or try selecting one or two magazines that you like and perhaps buy them once a month rather than every week.
     
     
   • Think ahead
     
     Sometimes, plugging a spending leak can be helped with a little forward planning. Rather than buying your lunch at work every day, think ahead and prepare your lunches at home. While you'll still have to buy the ingredients, this will work out much cheaper over time than spending $8 or more five days a week on bought lunches.

     Or if you travel on public transport every day and buy daily tickets, investigate whether weekly or even monthly tickets might be a cheaper option.
     
     

   • Do some detective work

     Spending leaks aren't necessarily always luxuries - sometimes they're costs that you could reduce simply by paying a little more attention to your habits.

     Have a look at your utilities usage at home. For example, do you leave lights or appliances on when you're not using them? Do you have a dripping tap that you've never had fixed? Or do you have old or faulty appliances that guzzle water or power? All of these things can result in you paying more for your utilities in the long run than you really need to. While fixing them may cost you money in the short term, over the long term the savings are likely to be worth it.

     Detective work can also pay off when it comes to your bank fees. Take a look at your bank statements and identify whether you're spending money on avoidable bank fees, such as fees you are charged if you overdraw your account (careful budgeting and account monitoring can help you ensure you don't do this), or fees charged when you withdraw money from another bank's ATMs (consider using only your own bank's ATMs, or consider withdrawing cash in tandem with a regular EFTPOS transaction, such as when you pay for groceries via EFTPOS).
     
     

   • Don't give up
     
     If you go off track for a couple of days (or even a week), and spend a little more than you'd allowed for, don't throw up your hands and throw out your regular budget and spending plan at the same time. Tomorrow is another day - get back on track. Remember your savings goals and keep up the good work!

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