If at the end of the week or month you check your bank balance and wonder why it’s so low, you could be experiencing invisible spend on your account. However, rather than this being any type of malicious activity, invisible spending is usually the result of not keeping track of your finances.
This can have a detrimental effect on your finances and cause you to go overdrawn or even miss payments on essential outgoings due to a lack of funds. So, if this sounds familiar whether it’s a personal account or a business one, how can you cut down on invisible spending?
Review your account transactions
The quickest way to find out where your money’s gone is to check your account statements online and review recent transactions. You should be able to identify every outgoing on there, but if there are any transactions you either don’t recognise or do not remember making, you’ll want to then start matching these to receipts you have either physically or electronically. Of course, if there is something there that is highly unusual, you may want to talk to your bank to find out more and possibly raise a fraud concern.
Check direct debits & standing orders
You’ll want to identify any regular payments leaving your account, so it is worth the time looking through your list of direct debits and standing orders. You should be able to recognise each one with the company or person you have set this up for, so for example, if you have repayments for short term loans online or other forms of borrowing, you can check this here. If it is a continuous payment authority (CPA) that has been set up, this may not show here and instead will be transacted from your card details each month. Your credit agreement will detail this and the payment amount. Checking your regular payments will also ensure you are on top of your essential outgoings which should always be the priority.
Review essential & non-essential spending
Whilst reviewing your accounts, it’s a good idea to compare your income and expenditure if you haven’t done so for a while. This will help to determine exactly how much of your outgoings is for essential purposes, such as mortgage/rent, loans, groceries etc, and how much is miscellaneous. If you have a lot of transactions which are just card payments or cash withdrawals, for example, this could indicate spending on non-essential outgoings. You should be able to match these transactions with the purchases you’ve made and determine whether a budget is needed going forward.
Budget to curb invisible spending
The best way to move forward and cut down on any invisible spending is to regularly review your balances and if need be, put in place a budget. This way, you can keep your spending under control by setting a limit each week that you can stick to that ensures your essential outgoings are always paid. You’ll then be able to set other goals such as saving more and determine how much you want to put aside each week or month.
Overall, being more aware of your outgoings will help you stay on top of any invisible spending. You may discover things you pay for that you no longer need that are still leaving your account, such as subscriptions to services. You’ll be surprised how quickly you can resolve any invisible spending and get your finances back on track.