Your Leaky Money Bucket

Share This
Share on facebook
Share on twitter
Share on linkedin
Share on email

Money always seems to disappear faster at holiday time. Most people are short of money not because they buy big expensive things but because they spend little bits here and there. This kind of spending is what I call ‘Leaky Bucket Syndrome’. Imagine your bank account is a bucket into which your income is paid. Now imagine your bucket has many tiny holes in the bottom of it. Spending your money in lots of small amounts – $5 here, $20 there and so on – is like money leaking out of the holes in your money bucket. This kind of spending can add up to hundreds of dollars each pay day.

You can plug the holes in your leaky bucket by finding out where your money is going. This is a little tedious but necessary. Gather up your bank statements and credit card statements for at least the last three months. Make a list of headings of essential spending, for example rent or mortgage, insurance, rates, groceries, phone, power, medical expenses, petrol, car maintenance, etc and work out how much you have spent on each. Now add up how much you have spent on non-essential and personal items such as entertainment, gifts, haircuts, beauty treatment, clothes.

Compare your total spending to your income over the same period. You’ll probably find that there’s some money you can’t account for! The leaks in your money bucket will be spending that you can’t account for or money you have spent on non-essential items. The best way to plug your leaks is to have a separate bank account into which you put money for spending on your non-essential items. By keeping within the limit of that account your spending will be easy to control and you should always have enough for your essential expenses.

Related Articles

Investment
Liz Koh

Responsible Investing

There is a worldwide trend for investors to want to make a positive contribution to the world by investing in companies that are socially and environmentally responsible. If you are passionate about the effects of climate change, the scarcity of food and water, and social or environmental policies in general, then you will no doubt wish to ensure that the companies in which you invest are going about their business in a manner that is consistent with your views.

Read More »

Stay in the loop

Keep up to date with the latest developments from Enrich Retirement