See if this sounds familiar…
You setup a budget and think you have EVERY possible expense listed only to find out STILL that more money is going out than coming in.
Sounds frustrating, doesn’t it?
It is and I know all about it because my family lived it for years before figuring it out.
Want to know what is going on? Simple — you have what I call “money leaks!”
What’s a money leak?
A “money leak” is an often small, unnoticed expense that can add up to BIG MONEY AND HIDDEN SAVINGS over time and diverts funds away from your family’s essential needs and priorities.
For families who already face additional costs (i.e. therapies, out of pocket medical expenses, or specialized equipment, etc.) due to having special needs loved ones to care for, these expenses can REALLY drain the funds dry.
In this guide, we’ll explore how to identify where these leaks can occur so you can plug those leaks faster than you can say “Show Me The Money!” 😊
1. Understand What Money Leaks Are
Money leaks are small, recurring expenses that may seem minor individually but add up significantly over time.
These expenses are often unnoticed because they are irregular, are untracked, or don’t represent a large upfront cost.
However, over weeks, months, or years, they drain resources that could otherwise go toward higher priorities.
Why Money Leaks Matter for Special Needs Families:
For families managing special needs, every dollar … no, every PENNY counts.
Money leaks can take already tight budgets and further limit you from paying critical medical expenses, mortgages, utilities, and even food.
When left unchecked, these small costs can significantly impact the family’s ability to make long-term financial plans like saving for retirement, college educations, etc.
Money leaks are literally “death by a 1,000 cuts!”
2. Identify Most Common Money Leaks in Special Needs Families
If you’re struggling to figure out where to start looking for leaks, here are a few places you can start looking over TODAY!
Unnecessary or Underused Subscriptions & Memberships:
Many of us subscribe to services that we rarely use.
Audit your subscriptions to identify any that can be canceled or downgraded.
Not sure where to start looking?
Here are a few examples:
- Streaming services you don’t use anymore BUT get charged for them.
- Gym memberships that seemed great when you bought them but have only used once in the last 6 months. How many of us have been there and done that?
- Apps you signed up for that charge you monthly fees instead of using free apps versions.
If this sounds like you don’t fret…We have ALL done this at one time or another!
I had an expensive gym membership that I kept for over a year and never used it.
I kept telling myself, “I’ll start again next week” only to keep having “life happens” moments that constantly delayed my intentions.
I had several apps and subscriptions that I THOUGHT I cancelled but never followed up to make sure it happened.
These unused apps / subscriptions ending up costing me about $100 a month, and thousands in total before I finally plugged the leak!
High-Interest Debt:
Credit card interest can literally suck your funds dry if not careful.
Those 17-28% monthly interest rates can accumulate quickly, especially if you’re only making minimum payments.
This money leak ties up funds that could otherwise be directed toward savings or necessary expenses (you know dumb stuff like food in your refrigerator, hot bath water, medical expenses…. Lol 😊).
For my wife and I, credit card interest was the bane of our existence for several years.
At one time, we were literally paying more in minimum credit card payments each month than our mortgage! And that was just the minimum payments!
Can you believe that $h!t… true story! 😊
At that time, we were up to our ears in medical bills from our girls’ health issues. We just tacked it on the ol’ CC since we were flat broke!
It was a necessary evil for us and we paid the price for it.
However, if I had to do that all over again, I would do it again since our girls are doing SO much better today because of those choices and going through that financial hell!
So when I say I have been in your shoes, believe me I have. And if I can get out of that financial jam so can you… trust me! 😊
Bank Fees and Penalties:
Overdraft fees, ATM fees, and late payment penalties can add up and often go unnoticed.
Switching to a bank with no-fee accounts or setting up automatic payments can help avoid these charges.
If you think these fees are minor, think again.
According to this article from Next Gen Personal Finance, the average person spends the following in overdraft, service fees, and ATM fees per transaction:
Overdraft: $27.08
Monthly service fee: $15.45
Out-of-network ATM: $4.77
So for example, if you spend $15 a month in service fees for your accounts, that is $180 a year.
That might not sound like much until you realize that can buy groceries for a family of 4 for a week!
Get the picture? 😊
Impulse Purchases:
Impulse buys can accumulate quickly.
Especially for special needs families on constrained budgets, impulse purchases can quickly and silently leak money even while being justified as “needed.”
Want to know a trick to overcome this?
Developing the habit of waiting 24 hours before purchasing anything unplanned can help reduce unnecessary expenses.
Lifestyle Choices:
Whether you want to hear this or not, your lifestyle heavily dictates your spending patterns and provides very easy ways to leak money out of your account.
Eating out, ordering takeout, spending on entertainment, and buying lavish cars or super-sized homes are all examples of lifestyle choices that, while enjoyable, may not be essential.
Evaluate these choices and consider reducing or substituting for more affordable options.
A great example of this is how my wife LOVES to shop and find “the best deal.”
It got to the point where she would overspend and stockpile several months’ worth of groceries because the deal was “hard to pass up.”
She saw it as saving money over the long run and I saw it as several hundred dollars a month being wasted when we were up to our ears in credit card and medical bill debt.
Know how we fixed this problem?
We used a cash budget for groceries. I found out (the hard way 😊 love you honey! Lol) that my wife needs to actually touch the money to understand how much we have to spend.
Once we did this, problem solved. (woo hoo! 😊)
Unoptimized Medical and Therapy Costs:
Uugh… medical bills.
For parents of special needs children, medical bills are as essential as breathing.
Why?
Based on my experience, the REALLY good doctors and therapists who can help your child get to the next level do not take insurance.
We had to suck it up and pay those high bills out of pocket (OOP) because it was the only thing that helped my son.
In the end, for us, it was worth it.
However, if that is not an option for you then look for as many affordable alternatives as possible.
Look into the best generic medications, in-network providers, and tax-deductible healthcare expenses you can find, and do whatever else you can do to lower your OOP costs.
3. Track Your Spending Patterns
Now that we have learned to identify where money leaks most commonly occur, the last step to identifying where YOUR money leaks are is to track your spending.
Now before you say “Uugh!”, let me explain.
By tracking where your money goes, you can identify which expenses are necessary and which are avoidable.
Tracking can be done by hand on a written budget, through budgeting apps, using spreadsheets (my favorite! 😊), or even a simple spending journal.
Apps like You Need A Budget (YNAB) and Personal Capital can provide insights into your spending habits and categorize expenses automatically.
If you prefer a manual approach (like me!), use a spreadsheet or a notebook to document each transaction.
Need Help? Here are my FREE budget trackers!
Nothing outlandish yet simple to use!
Also if you want to scour your taxes for hidden money to lower your tax bill, Zeke and I just finished building a tax prep checklist with a HOW TO video that walks you through how to use it STEP BY STEP!
For the cost of lunch at McDonald’s it can help you TODAY to organize your expenses that special need families accumulate and find some hidden gems to write off on your taxes!
Even if already submitted your tax returns, Zeke and I share a little-known nugget that can still help you save money not only for this tax season but the 2 previous seasons as well!
The point here is not which type of tracking method is best for you, but rather that tracking expenses enables YOU to take ACTION!
Analyze Spending by Category
Once you have chosen a method and started tracking all your expenses, next you’ll need to categorize.
Group your expenses into categories such as:
- Household: Rent/mortgage, utilities, groceries, gas, car repairs, etc.
- Medical/Special Needs: Therapy, medications, doctor visits, special equipment.
- Lifestyle: Entertainment, dining out, hobbies, things you do to “recharge”.
- Extras: Subscriptions, streaming services, convenience fees, etc.
Identify Recurring Expenses
Why should you focus on this 1st?
Recurring expenses such as monthly subscriptions or memberships are common money leaks and are “quick wins” for right-sizing your budget.
Review each item to determine if it’s still necessary.
Many families find they’re paying for services (sometimes A LOT of money) for things they don’t use regularly.
Differentiate Essential Costs from Others
For special needs families, it’s crucial to separate essential costs that support your daily health and well-being such as food, housing, car payments, medical / therapy expenses from nonessential costs.
Why does this matter?
Because these essential costs set the “floor” of your budget and is the absolute minimum you need to survive on.
All other costs are used to set the “ceiling” of your budget and represent potential things that can be reduced or eliminated from your budget to stop the money from leaking out.
Conclusion
Managing finances in a special needs family requires more diligence and care than your traditional family.
Identifying and plugging money leaks is essential for any family, but it’s especially critical for families managing the additional costs of special needs care.
By tracking spending and making necessary adjustments, you can identify the money leaks that are hemorrhaging from your budget each month and use these funds to support both immediate and future needs.
Careful planning and discipline will help create a financial structure that empowers your family, ensuring you can meet your unique circumstances and continue to thrive.
But wait……
Once you identify the money leaks how do you decide what to get rid of?
Don’t worry — that will be the focus of next week’s article!
Until next time,
Live The Life You Love, Want, and Deserve! 😊
Do you need 1 on 1 coaching and guidance?
Schedule a call with my friend Zeke Zimmerman here!
