Here Are 5 Ways Your Salary Could Be Going Down The Drain

Though, sticking strictly to a budget might be too restrictive, ability to identify the unneeded money guzzlers will help in controlling unnecessary spendings.

A Nigerian financial analyst, Remi Olagunju, says families that maintain a budget and adhere strictly to it over a long period are able to save more and acquire wealth.

“When preparing a family budget to manage your personal finances, try not to underestimate the budget to save money, but ensure that it includes all important family needs that will make life worth living. Have the discipline to make it work and let your spouse agree with the budget, ” Olagunju told Punch newspaper.

In the same vein, certified financial planner, Jennifer Faherty, explains the need for a budget for general spendings.

Sometimes people don’t like the idea of budgeting because it feels so restrictive,” Faherty said.

Faherty noted that the ability to figure out how much money you can allocate towards discretionary spending, making sure each purchase fits into your spending plan, ensuring you need and will use each purchase and determining the value each purchase would provide you, given personal preferences and lifestyle will help anyone manage his or her income against spending.

To be sure you are on the right track with your finances, it means each of your purchase has value, you actually use it, and you can afford it based on your discretion as regards your spending budget.

Here are five of the possible salary drainers that you probably don’t know but have been doing.

The brand name drainer

Being a brand-loyal is nothing to be ashamed of neither is it bad but it should be up to the buyer’s discretion as regards the value derived from the product as against its price. From toothpaste to TV sets, people are loyal to some brands but Faherty said this is up to your discretion, provided that you derive some value out of using brand-name and can afford to buy them. Faherty also advised that it pays to ensure that you have your top financial priorities sorted before displaying brand loyalty in stores.

The short-term use drainer

Why do you need to waste so much on things you would use just once or stuffs your kids will most likely outgrow? Rather commit so much cash, it makes sense to limit those purchases to avoid overspending. Again, Faherty noted that if you have items that constantly need to be replaced like tissue papers, there isn’t so much need to splurge on them. In cases like disposable cups or cleaning items, you may want to upgrade to reusable items to save cost.

Duplicating item is a big drainer

From small items, like food or cooking implements, to some more expensive items, like clothing, there is no financial sense in duplicating what you already have at another cost. Oftentimes people spend money on things that they already have in the house. It happens more than you think, especially with couples who are just starting out. Olagunju says: “In order to do this, expense receipts of every item bought should be compiled including utility bills. This can be recorded electronically using an excel spreadsheet or in a special account book.”

The bank charges drainer

Bank monthly charges for reasons ranging from monthly transactional charges to SMS alert cost charges might look inconsequential but to manage your spendings, you might need to monitor these charges. On this money drainer, Faherty said many bank account fees, like overdraft and maintenance fees, can often be avoided through organisation. Ensure you know exactly all the charges your bank will deduct from your account monthly and when then ensure to automate your bills – cable tv subscription, PHCN payment, data recharge etc – so they come out of your account right after your account is credited with your salary. With this, you don’t get stuck when the bank deducts the monthly charges or fees.

The overpriced drainer

One easy way of draining your account is buying overpriced items when you can easily shop around to get same items at a much-reduced cost. For Faherty, while the situation might differ in different cases, you may be wasting your money if you could have gotten the same item at a lower cost just by shopping around. The financial budget expert further said calculating the financial value of your time can help you decide whether it’s worth it to visit a couple of other stores for the best price. If the extra time or hour does not affect your business or cost you more driving around or transporting yourself, it is wise saving some costs.

Credit: Pulse.

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