15 Ways to Plug Leaks in Your Budget

I don’t know about you, but I sometimes feel out of control financially. My spouse and I both have tried to make good financial decisions (worked hard to pay off our student loans, drive modest cars, etc.). But I often feel uncertain. And for a long time I’ve felt as though we should be doing better controlling our household finances than we are.

So when I saw a colleague was leading a presentation on household budget leaks in January 2020, I knew that I needed to check it out.

Eva Johnston, a senior economic education specialist at the Federal Reserve Bank of St. Louis, shared a list of household budget items—including insurance, retirement, utilities and more. The goals were to:

• Get a better grasp on where your money is going.
• Identify actions you can take to find monthly or yearly savings.

Americans Could Save $600 or More a Year on Average

A budget leak is defined as money for which you cannot account. Johnston wanted to make sure participants knew how much they’re spending on things like TV/entertainment, or even simple indulgences like an iced coffee.

“Just do the math,” Johnston explained, “then you get to decide if it’s worth spending. You just want to be aware.”

Johnston received the list of budget items from Josh Hayes, an AP (advanced placement) economics instructor in Spokane, Wash., who shared this session at the St. Louis Fed’s 2019 AP Conference. He created the list and went through this exercise with his colleagues.

On average, they saved about $600 per year when they started digging to find leaks.

A poll of 2,000 Americans commissioned by life insurance company Ladder showed the “average” American in their April 2019 survey spent about $1,497 per month on items like impulse purchases, paid apps, subscription boxes and more. That’s almost $18,000 per year. I knew there were leaks in my family budget, as well. So with the assistance of my spouse, we compiled how much we spend on our regular bills—including phone service, internet, insurance, television, mortgage and more. I was determined to plug some leaks in my budget.

Would I be successful? The short answer: Yes.

How do I feel? Better. But I also feel like there were/are a lot of leaks in my budget …

How to Identify Common Budget Leaks

Before sharing what my family was able to save, here’s my take on 15 budget items to investigate as you attempt to plug leaks in your budget. I’ve compiled the initial budget items provided by Johnston, made a few tweaks and added some information:

1. Cell phone – What carrier, data plan, number of devices do you use? What’s your total bill?
2. Internet – What carrier and speed do you use? Are you renting a modem or router?
3. Automation – Make a list of all your bills. How many are automated? Do you have any automatic payments for services you no longer use?
4. Television – Do you have cable, are you streaming, or do you use an antenna? How much do you pay per month? What channels do you watch? Do you use a DVR or recording device? Other must-haves? What are you paying for that you don’t watch?
5. Power – How much do you pay on average? If you own your home, do you have a smart thermostat? What is the age of your furnace, water heater, heat pump, AC unit?
6. Car insurance and renters or homeowners insurance – Who are your carriers? How much do you pay? Have you considered alternatives? Is your insurance bundled?
7. Life and disability insurance – Do you have it? If so, how much?
8. Banking – With whom do you bank? Do they charge any fees? What is the minimum balance, if applicable?
9. Taxes – Are you withholding the right amount? Check using the IRS withholding calculator.
10. Retirement – What is the right percentage for you to be saving? If applicable, are you getting the complete match from your employer?
11. Credit reports and scores – When was the last time you checked your score? Check out this video on FICO scores from the St. Louis Fed’s economic education team.
12. Credit cards – Review all the cards you have. Do they provide a return of at least 2% back (or the equivalent) on spending? What about purchase protection (including return protection and extended warranty) and price protection?
13. Splurges – Are you buying indulgences or impulse-buying more often than you realize? How much do you spend?
14. Other services – Is there a pest service or yard service that regularly treats your yard? What about getting your hair and nails done? Do you need all those services as often as you’re getting them? When was the last time you looked into pricing options? Is there a better price out there or can you negotiate a better rate?
15. Other memberships and subscriptions – Do you pay for a weight-loss membership? Do you pay a monthly gym membership? (And is that business a national chain or locally owned, as that might factor into your decision to retain it during these times.) What about the big box grocery chain that requires a membership? Do you have any print, online or home delivery services? Magazine or monthly “treat box” subscriptions?

Lower Pricing, Alternate Options: Work with Your Providers

From my gym to big box grocery chain to professional organizations, I had to take stock of what I belonged to, what price I was paying and if I thought it was worth it.

In short, the changes I made involved my cell phone, internet, television and some home services. With a handful of phone calls and a lot of patience, here’s the breakdown of how much money I’ll be saving over the next 12 months:

• Phone service. After contacting my provider, I’ll be saving $324.
• Internet. I doubled my speed, got a new modem and will save $120.
• TV. Since we doubled our internet speed, my spouse was more open to cutting the cord and switching to a streaming service. After one phone call and three internet logins later, we dropped our satellite television service, started using a streaming service for our basic viewing, canceled one of our streaming services and added another. Total savings over the next year: $1,186. (We did purchase three universal remotes to make the streaming options a better fit for our household; this cost us $54.)
• Satellite radio. After digging into what we were paying, I’m saving $310.
• Memberships. After downgrading our warehouse store membership, which had automatically renewed at a higher price than we realized, we’re saving $55.
• Services. After re-evaluating some lawn care, home and other services, we’re saving $429.

Total: $2,424 - $54 = $2,370

After working with several of our service providers, we’ll be saving $197.50 a month, or $2,370 over the course of the next year. That is saving off bills that we would have been paying had we not reached out to change services or inquire about lower pricing options.

And that savings comes before I’ve touched our largest items—mortgage and home and auto insurance. (I’m interested in investigating some of those options, but have not yet done so at the time of this writing.)

Make Informed Choices with Your Money

Reminder: The point of this exercise is not to stop spending, but identify how much you’re spending in specific areas. If you want to pay for extra entertainment and have access to cherry pit spitting via The Ocho, go for it. But be aware of how much you’re spending and look for leaks—places where you may be spending more money than you’re aware or that you’re comfortable with.

“Make informed choices,” Johnston clarified. “It’s your choice. It’s your money.”

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