Do you get frustrated when unexpected expenses pop up out of the blue?
Doesn’t it seem like just when your money picture is starting to improve, some hidden monthly expense comes up and ruins your budget?
There is hope.
There is a way for you to take control over these expenses so that you can continue to improve your finances.
And I am going to show you how.
In this post, I share with you the 10 biggest hidden monthly expenses and the action plan you need to take so they don’t affect your budget.
In the end, you will not only know how to handle these surprise bills but also have a better understanding of how to cut your monthly expenses for good.
Let’s get started!
10 Hidden Monthly Expenses You Need To Cut
1. Cable Bill
The most frustrating thing about this monthly bill is all of the fees that get tacked on to it.
I remember calling to negotiate my cable package a few years ago.
I was quoted an excellent price for bundling my cable and internet plans together. I was expecting to pay $125 a month when I opened my first bill.
But I didn’t pay that amount. My bill was $160!
I was furious! What happened? I was ready to call them up and tell them my bill was wrong.
But then I saw it.
Broadcast fees. Cable box rental fees. Regulatory fees. Taxes.
It all added up to $35 and made me mad.
As annoyed as I was, I learned from this experience. Now I am no longer surprised when a bill comes in the mail.
Your Action Plan: Whenever you are negotiating your cable bill or any other service, make sure you end the call or conversation by asking what the ending price will be, with fees and taxes included.
This will help you to avoid surprises and build a better budget for expenses.
If the company tells you they can’t give you that information, it should be a red flag. Any reputable company can quote you the total price.
There are times, like in home renovations, when something might happen that causes the total to increase.
But again, good businesses will add in a buffer for these issues that cover any surprises most of the time.
2. Cell Phone
Your cell phone is another monthly expense that can easily surprise you when you get your monthly bill.
The main culprit here is going over your allotted data plan.
In my case, I am lucky that our daughters don’t have a cell phone, so I have not encountered this surprise bill yet.
But I am sure the day will come. And from talking with others, I know the pain from this bill is real.
Your Action Plan: There are ways you can limit the impact of data overages on your cell phone without much effort.
For starters, make sure you are connected to Wi-Fi as much as possible. This will limit the use of your data plan for the times when you are not on Wi-Fi.
Next, monitor your data usage and set alerts. You can do this by downloading free apps. As you approach the data limit that you set, your phone will alert you.
Finally, adjust your settings for the data hogs that run in the background. One of the biggest ones is updating your email accounts.
Change the settings to fetch new mail less frequently, which will reduce your data usage. In the event you are waiting for an important email, just open your mail app and manually refresh it to pull in any new emails.
3. Impulse Purchases
Probably the most damaging hidden monthly expense in your budget is from impulse buys.
You know these all too well.
You are out at the grocery store and see a bag of your favorite chips on sale.
You don’t need them. Otherwise, it would be on your shopping list.
But you convince yourself to buy them because they are on sale.
Sadly, impulse buys happen a lot, and as a result, they can quickly destroy any good budget.
Your Action Step: To overcome impulse buys, you first need to shop with a list.
Using the example of a grocery list, not only will sticking to a list limit impulse buys, but you also are more likely to eat healthier as well.
And the healthier you eat, the better health you tend to be in, which means lower health-related expenses now and in the future.
But lists aren’t perfect.
You still will have the urge to buy on impulse.
To get around this, I like to play a game. Before I put anything in my basket that isn’t on my list, I have to ask myself a few questions first.
- Do I really need this?
- Why do I need this now versus later?
- How will I pay for it?
I rarely get to the third question on the list.
Most times, the second question forces me to admit I don’t need the item right now, and I put it back.
4. Paying Full Price
Most people might not think of paying full price as a hidden monthly expense.
But it is when you consider the many ways you can get around paying full price for items.
In fact, it is rare that I ever pay full price for things. With a little bit of effort, you can get discounts on just about anything you buy.
And while saving 5% off your $20 might not sound like it’s worth the effort, after all, you are saving just $1, in time all these discounts add up.
Just stop for a minute and think about how many purchases you make in a given week. Let’s say it is 25 and the average cost is $20.
By saving just 5% on each purchase, you just saved $25. And many times, you can save more than just 5%.
Your Action Step: Take a few minutes to learn how to save money on everything you buy.
For example, when shopping online, you can use cashback websites like Rakuten or Swagbucks.
You can even use coupon sites to find other discounts.
Of course, learn to shop around too. Don’t make the fatal mistake of thinking Amazon always offers the lowest price. The truth is, they don’t.
When not shopping online, make use of digital coupons. Many online coupons have a bar code you can scan in-store for savings.
And don’t forget about the power of cash.
Many retailers will offer you a cash discount. By not using a credit card, you save the retailer 3% in merchant fees.
Lastly, always ask for a discount. When I buy something, I simply ask if there are any coupons they can apply to my order. Most times, the cashier finds something that works.
5. Credit Card Interest
Credit card interest is a killer. And it’s a silent killer.
When you spend using your credit cards, you don’t think about the added cost you incur if you don’t pay your balance in full each month.
With the average credit card interest rate at 18%, you are paying an extra $0.18 per dollar spent. So if you spend $100 on your credit card and don’t pay it off in full, you are paying an extra $18 in interest.
And you keep paying interest every single month going forward until your balance is paid in full.
In the end, most people end up paying much more for the items they bought, all thanks to interest.
Your Action Plan: The simple solution is to pay your balance in full every month. If you cannot do this, then you should not be using credit cards in the first place.
You need to be disciplined with credit cards to ensure you don’t go in over your head and get into debt.
Here is what I did after I paid off my debt.
I avoided credit cards entirely for close to a year because I was scared and didn’t want to end up in debt all over again.
When I finally overcame my fear, I started to spend again slowly.
I only used credit cards for groceries. This ensured my monthly statement was not a surprise when it came in the mail.
After a few months of this, I started to charge gasoline purchases. Again, disciplined spending so I keep my monthly payment from being a shock and avoiding debt.
6. Credit Card Fees
Related to credit card interest is credit card fees.
This usually comes in the form of late payment fees or balance transfer fees.
For late payment fees, you are on the hook for $29 or more if you don’t pay on time.
Balance transfer fees usually come in at 3% but can go as high as 5%.
In either case, if you are paying these fees, you are throwing money away.
Your Action Plan: Assuming you are rarely late on your credit card payments, if you get hit with a late fee, call your credit card provider and ask for the cost to be waived.
Usually, they will tell you they will waive it as a one-time courtesy.
But they will waive it in the future as well. I’ve been late making a payment a few times, and every time they credit the fee.
When it comes to balance transfers, you can ask for a lower fee as well. You just have to ask.
Simply tell them how much of a balance transfer you are looking to make and ask if they can lower the transfer fee.
According to Experian, 39% of people didn’t pay a balance transfer fee at all.
Many times credit card companies will waive or the fee because they know the odds are in their favor when it comes to paying off your balance.
Most balance transfers are not paid off during the promotional period, so the credit card company ends up making a decent income in interest charges.
Gifts can be an issue and ruin any reasonable budget.
For years, the holidays ruined my budget. To be fair, it was mostly laziness on my part, as this is something you can plan for.
But other one-time gifts can have an impact too, especially if money is tight.
You might have a friend who is celebrating their 10th anniversary and want to get them a gift.
Or you might want to say thank you to someone for helping you out by buying them a gift card.
Whatever the case, with a little planning, you can avoid this hidden expense.
Your Action Plan: As I mentioned, the best way to deal with gifts is to plan ahead.
Take some time to sit down and write out the names of everyone you buy gifts for. Make sure you write down the total number of gifts.
For example, you probably buy your sibling both a birthday and a Christmas gift.
Once you have everyone listed and the number of gifts, be sure to write down the amount you spend per gift.
For our example, we will say it’s $25. For your sibling, this means you need to save $50 for their two gifts.
Do the math to come up with a total. Then take this total and add 10% to it to account for the one-off gifts I mentioned above.
The last step is to divide this number by 12 to get a monthly savings amount.
For example, let’s say your gift total before one-offs comes to $1,200. Adding 10% to this gets us to $1,320. We divide this by 12 to see we need to save $110 a month for gifts.
All that is left to do is to make a transfer to a dedicated savings account every month. Then when it is time to buy gifts, you have the money you need.
8. Auto Renewals
How many times have you signed up for something, either a free trial or a subscription only to forget about it?
When you do remember it, it is because you saw the recent charge.
Auto-renewals of magazine subscriptions, gym memberships, and others costs consumers a lot of money.
This is because the charges are usually small enough that they don’t get noticed when you are reviewing your monthly statement.
But by the time you did catch the payment, you have been paying this hidden expense for months.
Your Action Plan: The best thing you can do is not sign up for auto-renewal.
Even if the company is telling you that your subscription will be auto renewed, you don’t have to accept it.
This happened to my wife. She negotiated a lower annual subscription to SiriusXM radio. The customer service rep told her she would be auto-renewed after one year.
All she did was ask not to be auto-renewed. This meant SiriusXM would not keep her credit card on file and thus not be able to charge her again.
Another trick is to put in the renewal date in your calendar. I put mine into my phone to remind me. This way, I am never surprised by a renewal charge.
In fact, I put the renewal date a week before, so if I want to cancel, I can call before I get charged.
In times when you do want an auto-renewal, it makes sense to make a reminder. This way, you avoid paying an increased price by allowing you to negotiate for a better price.
9. Non-Regular Expenses
Non-regular expenses get many people and blow up their budget.
Usually, it is their insurance bill that causes problems, but there are others.
You work hard to set up your monthly budget, then one day, you get the renewal notice for your auto insurance.
You didn’t budget for the $800 expense this month!
Now you have to figure out where this money is going to come from.
If you have savings, you will take it from there.
But if you don’t have savings, you will end up putting other expenses onto a credit card and then have the burden of paying that off in the coming months.
Your Action Plan: Accounting for non-regular bills isn’t hard once you know what the bills are.
For example, with your auto insurance, you can take the amount you owe, divide it by the number of months it covers, and save that amount.
If your auto insurance is for $800 and is due every six months, divide $800 by six and this tells you to save $133 a month.
Now your non-regular expense has become a regular expense. When the bill comes, you have the money to cover it and not go into debt.
The challenge, though, is you have more than one non-regular bill so that you might have this problem for up to a year.
Of course, you could run through last year’s bills to see if you can identify these one-off bills now and start saving for them to lessen the impact on your monthly budget.
10. Children’s Activities
If you have kids, you know their activities can throw your budget for a loop.
Even the best budgeters will run into issues when it comes to their kid’s activities.
For example, we just had to sign our daughter up for preschool in the fall. I completely forgot about the registration fee we had to pay.
Before that, it was time to enroll our other daughter in a music class. There is an enrollment fee there too.
Even with some planning, there are kid’s expenses that pop up and impact our budget.
Your Action Plan: There are a couple of steps you can take to limit the impact of kid’s activities eating away at your budget.
The first is to build a buffer into your budget. Add in an extra $25 a month for random kid’s expenses that might come up.
Another option is to follow the plan I mentioned earlier with non-regular expenses. Identify the activities your kids participate in and figure out the registration fees and related costs.
Then total this amount and divide by the number of months until the bill is due.
Hidden expenses don’t have to ruin your budget.
With a little planning, you can avoid many of the bills that pop up out of the blue.
But with planning, you will reduce them, and as you strengthen your budget and your finances, the ones that do still surprise you won’t cause you any financial stress.
I encourage you to take the time to understand what expenses derail your budget and then take the time to plan, so they don’t cause issues going forward.