But the expenses that actually derail most people’s finances aren’t the big, obvious ones. It’s the small, recurring costs that slip by unnoticed month after month. Death by a thousand cuts.
These “invisible” expenses don’t seem like much individually. A few dollars here, ten dollars there. But they’re going in the wrong direction, quietly siphoning off money that could be building wealth instead.
Here are five of the worst offenders (and how to get rid of them.)
Automatic billing is a beautiful thing for businesses and dangerous for consumers. Once you sign up, charges will continue to accrue until you actively cancel. And most people never cancel.
Streaming services, gym memberships, software subscriptions, recurring deliveries, premium app tiers: these are piling up faster than you think. The average American spends more than $200 per month on subscriptions and most underestimate their true number by 50%.
The solution is simple but annoying. Review your bank and credit card statements and write down all recurring charges, both monthly and annually. You’ll likely come across services you forgot you signed up for, trials you never canceled, and memberships you haven’t used in months.
About that gym membership…be honest with yourself. If you haven’t been at least three times a month for the past three months, cancel it. You don’t pay for fitness. You pay for the illusion that one day you will start. Earn the right to a new membership by first building a habit, using free YouTube workouts or outdoor running.
With every subscription, ask… “Is there a free alternative?” Borrow ebooks and audiobooks from digital libraries instead of paying for Audible. Watch ad-supported shows on Tubi or Pluto instead of another streaming service. The money you save could potentially amount to thousands per year.
Delivery apps have made it dangerously easy to avoid cooking. A few taps and the food will be at your door. But you pay a high premium for that convenience.
When you order meals through an app, you pay the restaurant surcharge, delivery fees, service charges, tips and often high prices during busy hours. A $12 meal becomes a $25 expense. Do that twice a week and you’ve spent $200 a month on $50 worth of groceries.
Grocery delivery isn’t much better. Costs pile up, items get replaced or forgotten, and you lose the ability to make smart decisions in the moment (like grabbing what’s on sale or skipping what’s too expensive).
I’m not saying you should never have food delivered. The solution is simply to be conscious about it. Consider it an occasional luxury and don’t default to it just because you might feel a little lazy. Cook in batches on weekends and keep simple backup meals in the freezer. Make cooking the path of least resistance.
Chips, cookies, candy, popcorn…these aren’t really “food” in the nutritional sense. They are cheap everyday luxuries that add up faster than you might think.
A $4 bag of chips here, a $6 box of cookies there. Multiply that over a month and you might be spending $50-100 on food that provides no nutrition whatsoever and is actively harming your health.
Don’t you believe me? Keep track of what you actually spend on them for a month. The number will probably surprise you. Then determine whether that money would be better spent elsewhere… such as in investments that actually grow.
Yes, the “latte factor” has become a cliché in personal finance. But clichés exist because they are true.
The average Starbucks latte costs about $5.50 before tax and tip. If that’s a daily habit, you’ll be spending more than $165 a month, almost $2,000 a year, on coffee that you can make at home for a fraction of the cost.
Bar drinks are worse. A $12 cocktail twice a week is another $100 a month if you leave the house.
Again, I’m not saying you should never buy a cup of coffee or a drink. Make your daily coffee at home or in the office. Save the Starbucks run for when it’s actually a treat, not a reflex.
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