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See if this sounds familiar. You take $100 from the ATM on Friday but by Monday you can’t believe there’s only $10 left in your wallet. You remember a couple tips, tolls and those Girl Scout cookies, but surely that can’t have been $90? Or, your credit card shows five Amazon transactions but all you remember ordering this month was dog food. (And no, Amazon, 6C9DQ15X2 doesn’t jog your memory.) And then there are those Venmo requests. You pride yourself on paying them right after you go out for drinks or dinner, but how have they made such a big dent in your bank account? These are symptoms of what financial influencer Tori Dunlap calls a “money sinkhole” — an area of your spending where money seems to disappear as if by magic. Others might call it unconscious spending, budget leaks, or lifestyle creep/inflation. Sinkholes can make it hard to achieve your financial goals and can leave you feeling confused and guilty about your spending. In a worst-case scenario, you end up with what some call “more month than money,” meaning you regularly run out of money before your next paycheck. So what? It’s hard to keep tabs on all your spending, especially if you’ve got multiple bank accounts, credit cards, and payment apps. But just acknowledging that you’re falling into sinkholes is a good start down the right path. Here are three other steps you can take to become more aware of where your money goes:1. The right mindset makes it easier to carry out what’s known as "mental budgeting," where you classify and organize your spending in your head, as you make decisions. Research shows that mental budgeting helps people resist sales and notice price changes.
2. Track every purchase and payment — including all your cash — for just one day using your smartphone’s notes app or an old-fashioned pocket-sized notebook. This is a great way to learn about your patterns and specific spending triggers.
3. Create one spending picture using a free budgeting app that connects all your accounts in one place. (SoFi’s Relay tool lets you create your own custom spending categories if you have problem areas.)
Related Reading
• ‘The Dreaded B-Word’: How to Start Budgeting (The Guardian)
• Where Did My Money Go? (YNAB)
• How to Budget on a Fixed Income (SoFi)
photo credit: iStock/sesame
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