If you have a 'rough idea' of how much you spend, the chances are your finances look very different to your expectations at the end of each month. But why is that? And just where does all your money go?
According to This Is Money, Britons are underestimating household bills like electricity, gas and council tax by an average of £467 per year. 26% of people questioned admitted they just don't read their bills properly, while others revealed they no longer open letters from their utility providers.
If your life goal seems distant right now, there's no harm in plotting short-term goals in the meantime. It's also important to feel like your goal is realistic and achievable.
Delusive direct debits
A big reason for those unread bills is the tricky direct debit. It's estimated that these payment shortcuts are to blame for 50% of overpayments to utility companies, and mobile bills have also come under pressure for levying unexpected charges.
The good news about cash disappearing this way is that you can ask for it back. It's far worse, though, to forget to cancel direct debits when you stop using a service. MSN Money found that this oversight affects around 6% of households in the UK. To stop this happening to you, take a look at our quick guide.
Big spends like a broken boiler or new laptop are easy to account for, but those regular, weekly spends on household essentials tend to mount up in unexpected ways. The most recent survey of shoppers found that around a third of people didn't budget for these purchases in advance, leaving them surprised at the end of the month.
More surprisingly still, those shoppers that did have a plan were still coaxed into spending an average of £27.42 more than expected every time they visited the supermarket. Special offers and crafty product placement take some of the blame for impulse purchases and overspends, but shrinking product sizes are also subtly making it necessary to visit the supermarket over and over again.
The boom in shopping online may have pushed prices down in the grand scheme of things, but it's easy to neglect these added costs when budgeting. Postage is the most common cost, but buying internationally can result in a currency conversion cost if you pay by card. Customers buying clothes online may find themselves stung by postage costs if they have to return ill-fitting garments, too. All of these things are easy to miss in a budget.
And it's not just buying online that can lead to an under-estimated bank balance. Selling online can come with fees too, with the likes of eBay, Amazon and PayPal all taking their cut. This means you won't necessarily generate as much extra cash as you first thought.
Keeping track of your finances is the only way to take control of your money and monitor your spends. It's easier than you might think thanks to our free money management software, which automatically collects and tags your spending. Just fill in your account details and our secure, read-only database will gather your transactions in one place, giving you a clear view of your finances.
Posted by Marc Murphy, Marketing Manager at Money Dashboard.