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Tips and Tricks for managing your finances!

Is your budget leaking?

If you budget your expenses and manage the payment of your bills but at the end of the month you seem to always run out of money, then you probably have budget leaks! Budget leaks are similar to plumbing leaks they are wasteful, messy and hard to find. So what are budget leaks? When you use your debit or credit card to pay for daily expenses like coffee, drinks, dinners out, etc. and don’t put those expenses against your budget then you have a budget leak. It used to be, before credit cards and debit cards, people used cash for daily expenses and that gave them control over their spending. With the advent of credit cards and debit cards we have lost the spending control we had when we used cash. It is very easy to spend money but hard to account for it at the end of the month.

In our home we used cash to buy groceries every week. Then my wife decided to start using her debit card instead and found she was over spending the budget every week. A leak had developed in our finances, in order to fix that she needed to know how much money she had left every time she used her debit card to do that she had to write down what she spent each time.

I am not a fan of entering all my expenses into software just to balance my account! It is time-consuming and does not help change how I manage my money it has one goal and that is to balance my checkbook with my bank. When I saw that we needed a way to track these expenses I was wary of tracking all those details but, without it the leaks would never go away and we would never really have control of our finances! 

Then I discovered a simple Budget Leak resolution that allows me to control daily spending just as if it is cash yet provides all the great spending capabilities of a debit card! There are advanced prepaid cards  that can be refilled many ways (bank, debit, cash) and are low-cost, using these cards for daily bills and the debit card for monthly bills keeps them separate, and there is no real need to have software to pull those transactions in from the bank since the monthly bills are at the bank and the daily expenses are on the prepaid card. The key is to load the prepaid card based on the weekly budget so when money is needed that exceeds the budget we know about it and plan accordingly, this give us spending control. This is far better than accidentally spending more money and finding out at the end of the month!

One caveat is in using most prepaid cards to buy gas for cars, a lot of money is taken from the card initially for payment authorization purposes until the actual expenditure clears and so that money is locked up for at times more than a week. To fix this use a debit card for buying  gas for cars.