What are budget leaks and how can you spot them?

When it comes to managing your household budget, it can sometimes feel like an uphill battle. Between unexpected costs, varying expenses, and a flat tyre you could really do without, it can be a challenge to get the numbers to stack up.

But sometimes, the cause of your budget woes is hiding in plain sight. Budget leaks, like a dodgy pipe, can cause money to leak out of your account without you even realising. Here’s everything you need to know about identifying and rectifying leaks in your budget.

What are budget leaks?

A budget leak is an area of your spending or expenses that goes unnoticed. It might be masquerading as an essential expense, an automatic payment that you keep forgetting to cancel, or a series of small habitual transactions that add up.

The thing about budget leaks is that in isolation, they can feel insignificant. When your household budget is under pressure, it’s easy to overlook those smaller expenses. What difference could $4.99 make to a $400 problem, anyway? Turns out, quite a bit.

What are some common budget leaks?

Common budget leaks include:

• Extra visits to the supermarket during the week. You might pop in for one or two things and leave with an armful of specials that slip through the cracks of your budget without a second thought.
• Extra subscriptions. Streaming services and software have become commonplace in our budgets – but $10 here and $7 there really adds up.
• Convenience spending. Sending your kids to school with a lunch order, grabbing something on the go, paying a premium to get something delivered – convenience can be a great thing, but it comes at a cost.
• Habitual spending. Your morning coffee might be in the budget, but how often are you grabbing a second one? When expenses become a habit, they can compound into budget leaks.
• Small online orders. Jumping online to place an order for a replacement battery or a new lunchbox is part of life, but frequent online transactions for small knick knacks on sites like Amazon, Temu and TikTok can add up over time.
• Automatic renewals. When plans automatically renew, for example phone plans or insurance policies, you’re often left paying more than you need to when a better deal might be available.

How to identify budget leaks

Budget leaks are a unique budget challenge because they slide under the radar. While you might have other expenses that you’re aware you need to cut back on, budget leaks go unnoticed until you go looking for them.

The best way to identify them is to uncover your miscalculations with a litmus test. Choose a few categories in your budget, for example groceries/supermarket, food and drinks on-the-go, and Amazon orders, and note down an estimate of how much you spend in those categories each month.

Then, comb through your bank statements and establish the actual amount spent. If you find you’ve estimated less than your real spend, you’ve got yourself a budget leak. Don’t forget to check all your accounts, as some leaks might be lurking on that lesser used credit card.

How to fix budget leaks

Okay, so you’ve found a budget leak. What do we do now? The sneaky thing about leaks is that they go unnoticed, so we need to make them noticeable. Increase your awareness of your transactions by implementing a regular transaction review to see where your money is going. Then, take steps to mitigate leaks happening in the future. For example:

• Plan your meals and shop for everything you need at once, to minimise the need to pop back to the supermarket – and always use a list!
• Cancel your subscriptions and only resubscribe when you need them. You’d be surprised how many months can pass without you logging into a streaming platform.
• Check in with service provider plans regularly. Have you rolled onto an expensive phone plan when you could get a cheaper one for a fraction of the cost? When was the last time you compared car insurance premiums?

Lastly, refreshing your budget is a great way to avoid budget leaks and reorganise your family’s finances. Try our online tool to get started.