We've written a great deal about the importance of budgets and financial planning and now we want to show you the math behind our reasoning.
Think about how frequently you go out during the week, whether you're heading to work or going out on a Friday night. Do you bring your own food and beverages with you? Do you purchase food or drinks while you're out as you want them? Try to remember all of the purchases you've made for items under $5 in the past month (without cheating by logging in to your online banking!) Cross reference your memory with your actual bank statement. You may be surprised by how many small purchases you make without realizing it. When we make small purchases, we often think that a $3 cup of coffee is so inexpensive that the purchase is meaningless to our finances. We call these purchases "money leaks" because as they add up, your cash supply gradually dwindles.
Budgeting is the best way to avoid these money leaks. If you leave your apartment or dorm with a weekly, set amount for things like food or coffee, you'll be more conscious of where your money is actually going. Try keeping only cash in your pocket when you go out and limit yourself to spending only your cash. As conscious spending becomes more of a habit, you'll likely start to look for more ways to control your cash outflow. Whether it's packing lunch, carrying a refillable water bottle or brewing your own coffee, you'll gain more control over your finances once you patch up your money leaks.
- Savvy Student
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