This Silly Money Mistake Can Slowly Drain Your Bank Account
Closely monitoring your regular spending can help you avoid costly mistakes.
Keeping a close eye on your bank account activity is a must, as it can help you spot unauthorized charges and unusual activity. Another reason to do this is to track your spending so you can see where your money is really going. If you don't keep a close eye on your regular spending, you may end up paying for products or services that you no longer need. You might also forget about some of your everyday expenses.
When was the last time you closely reviewed your spending? If you don't do this regularly, you may forget about your recurring charges, which can cost you money and drain your bank account. Find out more to learn how to avoid this silly mistake.
Forgetting about recurring expenses can cost you money
Recurring charges are expenses that are automatically charged at a set time. You can easily set up automatic payments for regular bills like your rent or mortgage and phone bill so you're automatically charged on a recurring basis.
You may also have other expenses that result in recurring charges. Expenses like meal delivery memberships, streaming services, gym memberships, online storage, software subscriptions, and premium phone apps are often automatically billed monthly or yearly. The smaller the charge, the easier it can be to forget about the expense because it's less noticeable than some larger expenses.
If you choose to pay for an expense yearly instead of monthly, you may get a cheaper rate. But since the charge doesn't occur often, you may forget about it until the following year rolls around. If you're not still using the product or service, that may mean you're stuck paying for something you don't need.
Some consumers also sign up for free trials, but most companies require you to enter payment information before signing up. This way, they can automatically charge you when the free trial period is over. If you forget to cancel the free trial before it ends, you'll be stuck paying because the company already has your payment details.
Tips to avoid paying for charges for services you no longer use
If you want to avoid draining your bank account and paying for products and services that you no longer use, here are some steps you can take:
- Regularly monitor your spending. There are many benefits to regularly monitoring your spending. Doing this can help you keep within a set budget. You can also get a better idea of how much money you're spending each month. But this can also serve as a reminder as to where your money is going. Review your bank account several times a month or look at the monthly statements.
- Mark all automatic charges on a calendar. As soon as you sign up for a new product or service with automatic billing, mark it on your calendar. This way, you can anticipate the next billing date. If you're happily using the product or service, great! But if you're no longer using it or don't like it, you can cancel your subscription and avoid being charged.
- Use a credit card. Linking automatic payments to your bank account can be dangerous, since one unexpected charge can drain your funds and put your account in the negative. When setting up automatic payments, link a credit card instead. This way, your cash is not directly impacted. If mistakes happen, credit card charges can be easier and faster to dispute than bank charges. If you're in the market for a new credit card, take a look at this list of the best rewards credit cards.
Keep a close eye on your spending, and don't forget about recurring payments. You can avoid being overcharged or spending more than you plan by regularly monitoring your spending. For more money management suggestions, check out these personal finance resources.
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