As part of our effort to be more intentional with our money, we’ve tried identifying our biggest areas of money leaks.
By doing his we hope to rope in our finances and our budget to try to squeeze all we can out of it without expending too much time and energy.
Currently, on the income side if things, we cannot make much more happen without a large increase in effort and time. We eventually want to put more of a focus on the income and become employers and investors, and watch our leveraged money grow.
However, right now we just need to focus on identifying our biggest money leaks and plug them up.
To identify these leaks, we have been keeping a closer eye on our Mint account and reviewing previous months’ expenditures. So far, we have identified a couple.
Our Money Leaks
Groceries
Overall, the biggest money leak for us is definitely groceries.
This is an area of our budget that we always go over on, or at least use it all up.
We always find a way to rationalize how much we bought or what we bought. We budget for $125/week in groceries and aim to keep it under $100.
When we started this summer, that $100 goal was easy. We were so busy with the new baby, we didn’t eat! But now that we are in a routine, we buy and eat much more junk food.
We lose about $100-200/month that I think we could be saving. This would add 2-4% more to our after tax savings rate.
Eating out
We often lump eating out and groceries in the same category.
We used to do it as a separate category and found that we actually spent more.
Knowing we planned to spend made it mentally easier to spend it.
When it’s combined, we look at each grocery store trip, take out, fast food and eating out trip as part of our overall food budget. If we eat out too much, we won’t have money for food at home.
We spend close to $200 more per month on eating out then we should. Like groceries, this could add another 4% to our after tax savings rate!
Weekend trips
I know, I know! So many people in the FIRE community love doing this and it’s a big part of the lifestyle when you’ve reached FI. But since we are not anywhere near close, this leak is hurting our ability to get there.
My wife’s family lives 3 hours away and about 175 miles away. We regularly make the trip about once per month. However, we used to make the trip almost every 2-3 weeks!
On top of that, we usually make a monthly trip or two to my parents who live an hour away (60 miles).
Together with gas and the unfortunate long car drive cravings, we spend about $200/month on these as well, and sometimes more!
There is another 4% for our savings rate gone down the drain!
Final thoughts
If we can wrangle in our money leaks, we could find a way to increase our after tax savings rate by 10-12% or more!
When working towards paying down debts and investing for the future, that 10% would go a long way.