Finances FYI Presented by JPMorgan Chase
Even if you’re a savvy spender and follow a strict budget, small daily spending habits can really add up.
Here’s how you can spot these financial pitfalls and keep your monthly budget in check.
Stored Credit Cards
Storing your credit card number online — even with sites or search engines you trust — makes it too easy to mindlessly overspend.
Avoid this issue by declining to save your card information online. Next time you’re tempted to check out on a purchase you might not actually need, the extra step of retrieving your credit card from your wallet will give you enough time to pause and consider whether the purchase is truly necessary.
If you need to keep your credit card number stored online for other reasons, set up a required password you must enter to access or autofill your payment information. One more barrier between you and your purchase will give you more time to consider your spending.
Free Trials
Free trials are one of the seemingly innocuous drains on our money each month. After all, free sounds great, right?
These trials for streaming services, apps, or memberships are helpful if they snag you a discount on a service or item you would purchase anyway.
Unfortunately, free trials require you to enter your payment information upfront and will charge your card if you forget to cancel by the trial’s expiration date. With all the subscriptions and accounts you have to keep up with, these companies are betting that you’ll forget about theirs.
If you think the free trial is worth it, set a calendar reminder to cancel the service the day before the trial is up to avoid unexpected charges. You can also use a service like Rocket Money to find and cancel subscriptions that you’re no longer using (or that you forgot you were paying for in the first place).
Foregoing a List
Going shopping without a list is one of the classic reasons for overspending. Even if you know what your pantry is missing, take a list to the store and don’t deviate from it.
If you come across items you regularly use but can’t remember whether you have more at home, don’t stock up during that trip — wait until you’ve checked your home supply.
The other pitfall to shopping without a list? Getting seduced by deals. An item marked with a 20% off sticker can look so enticing, even if you don’t actually need it. If you shop with a list, you’re less likely to add that unnecessary $10 or $15 to each grocery trip.
Annual Price Increases
Subscription price increases are tricky for everyone’s budget.
Companies are required to notify you before they increase a subscription price, but they’re not required to ensure you’ve read and agreed to the new cost. Even if each subscription price increases by only a couple of dollars each year, it can greatly impact your bottom line.
The best way to handle this concern is to avoid auto-renewing your subscriptions. This extra step will require you to check the cost and actually decide whether it’s worth another year of the service.
Dining Out
Buying coffee and lunch out can get you into financial trouble at the end of the month if you’re not careful.
Patronizing local businesses and saving time in your workday are worthy causes, but extra add-ons at cafés and restaurants add up quickly.
To avoid overspending in this category, set a monthly budget and spend in cash. You’ll be less tempted to buy an extra dessert or upgrade your drink if you can hold the money in your hands and see how much is left.
Many establishments no longer accept cash, so you can also try setting this monthly budget in a separate checking account and using a linked debit card to stay on track.
“Simple” Returns
Buying things because you “can just return it if it doesn’t work” is a quick way to get yourself into a financial pickle.
Many of us shop online, making it hard to tell whether a piece of furniture or clothing will work for us. Thanks to the seemingly simple return options many companies offer, we feel comfortable shelling out the money and getting a refund if things don’t fit.
However, many people underestimate their commitment to taking the time for a return. They end up keeping the item past its return window and having to adjust their budget accordingly.
To avoid this problem, measure for fit before you buy, whether you’re taking your own measurements for a new shirt or determining whether a couch will wedge into your living room. Immediately after you hit “purchase,” set a calendar reminder to return the item the day after delivery.
Emotional Shopping
Shopping when you’re tired, bored, or hungry makes you more likely to overspend or add unnecessary items to your cart. This unplanned spending can make your monthly finances unstable.
To avoid emotionally driven spending decisions, make sure you don’t use shopping to combat uncomfortable feelings. Always eat before you shop and don’t scroll shopping apps when you’re in bed at night. Deleting shopping apps from your phone also makes it easier to avoid this temptation.
Follow these simple tricks to avoid unexpected low balances at the end of the month.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
