Speed Up Your Savings Goals by Defragging Your Budget

Photo (cc) by nfspw

Back in the ’90s, home computers seemed to finally hit the mainstream. While our family had a Commodore 64 (remember RUN magazine, anyone?) followed by an Amiga, it wasn’t until my senior year in high school that we upgraded to a PC and finally used one of the AOL CDs that seemed to arrive in the mail on a near daily basis.

I take this little stroll down memory lane because with the PC, I discovered the defragmenter function. Every so often, you’d need to defrag the hard drive to eliminate gaps in the memory where files had, for whatever reason, been moved or erased or where they were no longer needed.

The screen would show a series of colored blocks that would rearrange themselves into neat, complete lines. It was quite mesmerizing, and I would secretly want to create and delete files just so I had a reason to run the program again and again. Yes, it was a riveting life I led in high school.

Those blocks were eventually replaced by lines, and today your computer probably defragments itself all on its own without you ever knowing it, depriving millions of children the joy of watching pixelated lights flashing on the screen. Still, the end result is the same: a computer that runs faster and more efficiently.

By now, you’re probably wondering what on earth this has to do with personal finance.

Let me tell you.

Or better yet, let’s have Money Talks News finance expert Stacy Johnson tell you in the video below. Click play to see the connection between computer defragging and your budget, and then read on for more details.

Bloated budgets mean money down the drain

Just as computers can slow down if not properly maintained, even the best budgets get bloated over time. You may sign up for a service, slowly stop using it but keep paying for it. Examples include movie and streaming services, menu planning sites and cloud storage. Typically, these expenses are small, which is why we let them slide for so long.

Once, I signed up for a website offering DIY legal forms. I only wanted to download one template document and fully intended to cancel the service before the one-month trial expired. Of course, I didn’t, and a small monthly fee showed up in my checking account. It was a small amount so I wasn’t horribly concerned, but by the time I got around to canceling, that template document had cost me about $80.

We would all do well to heed the advice of Benjamin Franklin, who famously said in his Poor Richard’s Almanac, “Beware of little expenses. A small leak will sink a great ship.”

Use an app to analyze spending

The question becomes: How do we find those little leaks?

You could go through your bank and credit card statements each month looking for them, but a more convenient option may be to use an app or website that will analyze and categorize your spending. Then you can quickly see where the most money is draining from your wallet.

We’re partial to PowerWallet if you want to use a Web-based program to monitor your spending, but there are also a number of mobile apps designed specifically to work with your smartphone. Over at Our Freaking Budget, you can read one blogger’s take on the best free and paid budgeting apps for 2014.

Budget hacks to avoid excess expenses

Now it’s time for the rubber to meet the road.

Once you’ve looked at your records and considered your overall spending in broad categories, it’s time to start the defragging process.

The low hanging fruit is, of course, all those services you signed up for and don’t actually need or use. These may include:

  • Gym memberships.
  • Credit monitoring.
  • Duplicate movie streaming services.
  • Premium cable channels.
  • Free trials you forgot to cancel.

Then you need to consider which part of your budget is out of whack. Although every budget situation is unique, you can compare your percentages with the national average to pinpoint where you may be overspending.

You can use any number of budget hacks to help get that spending under control. Here are some sample ideas that will save you money on a monthly basis:

  • Cook meals at home rather than eating out.
  • Use the library for entertainment, magazines and movies.
  • Do your own landscaping and basic home maintenance.
  • Cancel your cable TV.
  • Avoid out-of-network ATMs.

Here at Money Talks News, we’ve got plenty of details on these hacks, as well as other money-saving tips. You can search the site for specific advice or start with these recommended articles:

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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