No one taught you how to be an adult.
I know people claim that they taught you how to do long division, or how to diagram a sentence, but I didn’t learn how to make my bank account shrink month after month, even when I’m not buying anything.
And that’s the basic premise of being an adult: things are going to cost you. Sometimes they’re going to cost you a lot.
But other times they’re going to cost you little things here and there that will add up. It helps to know what those little things are, ahead of time.
Most people think of food, of housing, of entertainment when they think of budgeting.
Few consider the long tail of “small” monthly expenses that can add up to so much, before one even realizes it.
It takes some diligence to uncover these, but doing so will save a lot of time and stress in the long run. I wish someone had explained these to me when I was younger.
The Deposit You Forgot About
Everyone usually focuses on the security deposits for a place to live, but that is not usually the only upfront charge when moving to a new location.
Also, most utility companies require a deposit if you have no established credit in that city, and some internet providers charge an installation fee that is rarely mentioned until you get on the phone with the company to set up your service while you are in the middle of unpacking your boxes.
So here’s the deal with these costs.
They’re generally not huge individually, but in the end they add up to a fair amount in a single month when you’re moving to a new place.
When I made my last move, I took a rough total of the costs of setting up the new place and was shocked by how much it actually was.
It is also very important to ask each time whether a deposit/fee is due before you sign a contract to pay for something.
At first, it can feel a bit embarrassing or even awkward to bring this up, but after a while it becomes second nature.
And as you start to save money by knowing whether a deposit or fee is required beforehand, you will start to appreciate asking the question.
Subscriptions You Forgot You Had
Charges from subscriptions you didn’t know you had: Free trials that automatically become paid subscriptions, memberships to gyms or clubs that you sign up for with the best of intentions but fail to use, and the many subscriptions to on-demand streaming services for TV and movies that you sign up for to watch a single movie and then proceed to pay for 8 months afterward.
Of course, even when we add up the charges from all these subscriptions, they still amount to a significant amount on our bank or credit card statements, even when each service charges only a small amount each month.
Reviewing your bank statements and canceling any recurring charges for services that you’re not using and no longer need is simple but easy to neglect.
This is because the effort required to locate and review your recurring charges and cancel those you no longer need is trivial, but less than the effort required to locate and deal with any charges that are currently unexpected.
Insurance That Grows With You
This category of cost changes often without your real knowledge, as you continue to pay the same premium without understanding that things have changed since you last investigated whether or not you were getting the best price for your money.
Of course, we’re talking here about security, health, car, home, or life insurance, for example.
That’s why you must keep an eye on the details of your insurance policy from time to time and run a few comparisons if your circumstances have changed in any way.
Don’t believe what your current insurance company is telling you without double-checking the details of other comparable policies available on the market.
This is where things get clever. Instead of waiting until your policy comes up for renewal, compare different car insurance providers and get a few car insurance quotes when your circumstances change.
Not only will this reveal any potential savings your existing provider may be missing, but it will also take only a few minutes and will have paid for itself by then.
There are few financial checks as quick as this.
The Maintenance You Can’t See Coming
Once you move, your car or apartment rarely requires a big, costly repair.
More often, there are smaller costs for regular maintenance that you should set aside each month.
The air filter in your apartment may need to be changed, or the smoke detectors may require batteries.
Your car will need the occasional oil change, or new tires from time to time. Building a small fund to cover these eventual costs is better than facing a repair bill for which you’re unprepared.
The trick to paying for maintenance is to save a small amount each month for unexpected repairs to avoid going into debt to pay for car repairs or paying hundreds of dollars for air filter replacements in apartments when they are needed.
Saving a fixed amount each month for anticipated maintenance and repairs can make unexpected problems that require repair much less stressful but much easier to deal with.
The Emotional Cost of Not Knowing
This anxiety often is priced at way too high a cost in relation to what it’s worth.
The unknown costs of overpaying for a service or not having enough money saved for the future can weigh heavily on a person.
But the reality is that everyone is figuring this out as they go.
Most people are not as put together as they seem, and the ones who are were likely just a few years ahead in learning.
And that’s the point.
Most adults are trying to figure out how to become financially independent.
There is no quick fix or secret. If someone appears to be financially independent, they are probably just a few years ahead of you.
Building the Habit of Checking In
The through line here is the same.
Small, regular check-ins on your expenses, whether it’s your subscriptions, your insurance, or your maintenance fund, prevent the slow leaks that quietly drain a budget.
None of these simple-to-understand expenses need you to have, as a grown-up, to pay for a finance degree.
If you treat them all with respect by paying them regularly and by regularly examining them for reasonableness, they can be an expense that grows with you and that you deal with as you go along.
And they really aren’t that difficult.
The way to start getting a grip on the hidden cost of things is to pick a single category, any single category, of your personal finances and do an annual audit of how you spend money in that area and make a couple of decisions about it.
Your first decision is how you’re going to monitor it, and your second is what you’re going to do with the results.
