In domestic economics we tend, quite logically, to pay attention and plan carefully for big expenses: rent, mortgage, buying a car or vacations. However, every day, small amounts of money leave our pockets almost without us realizing it. At first glance, they may seem insignificant, but when they accumulate over weeks, months or years, these micro-spending can become a huge money drain.
Microexpenses are considered those daily consumptions that we make without thinking too much: a coffee in a bar, a monthly subscription that we forget to cancel, or a meal out from home. The sum of all these small expenses can become an obstacle to achieving larger financial goals, such as saving for a house, paying off debt, or building a savings fund for possible emergencies.
Why microspending goes unnoticed
One of the main reasons these ant expenses often fall off our financial radar is the psychology behind them. When the amounts are small, like one or two euros a day, the immediate impact seems irrelevant, and we do not record it, as is the case with higher expenses. Often, these expenses are related to habits or instant rewards that we feel we deserve, such as a candy bar from the office machine in the afternoon or a paid movie on a subscription. streaming. This effect is amplified because in general we do not usually keep detailed control of small disbursements, only large ones, which makes it difficult to see the total amount at the end of the month.
Furthermore, in the digital age, automatic payments and online purchases make these silent outflows of money even easier. Services such as subscriptions to platforms streaming, Purchases within mobile applications or fees for services that we do not use are clear examples of microexpenses that remain ‘hidden’ in the flow of monthly expenses.
The cumulative effect of microspending
The main risk of microspending is in its cumulative effect. Spending three euros a day on coffee, for example, may seem trivial, but at the end of a year it represents close to 1,100 euros. If we add other small indulgences, such as fast food away from home, mobile applications or extra electricity consumption from leaving devices on standby, the impact can double or even triple.
The most common microexpenses with the greatest cumulative impact tend to be those that go unnoticed. These are some of the most common:
- Coffee and drinks outside the home: a daily coffee in a bar or cafe, which can cost between one and three euros, is one of the most common micro-expenses. If we add an additional drink such as bottled water or soft drinks, the annual expense can easily exceed 1,000 euros.
- Meals between meals: sandwiches, cookies, or fast food that we buy on impulse are another clear example of microspending. Although they may only cost a few euros at a time, the accumulation of these indulgences has a considerable impact. In addition, they are usually associated with impulsive decisions and, sometimes, poorer health.
- Digital subscriptions: the services of streaming such as Netflix, Spotify, Amazon Prime or subscriptions to mobile applications and games can add up to a significant amount per month. Many people accumulate subscriptions that they do not use regularly, but which continue to renew automatically.
- Apps and microtransactions: in-app purchases, such as within mobile games (to advance levels, for example) or additional services (such as cloud storage) seem irrelevant at the time of payment, but they are more euros that periodically leave your pocket.
- Banking fees: account and credit card maintenance fees, fees for using other banks’ ATMs or payments for additional services have increased continuously in recent years and can amount to up to 300 euros per year.
- Unnecessary transportation: trips in taxis or VTC services when we could walk or use public transportation also add to the list of microexpenses. This includes expenses such as renting electric scooters or bicycles on routes that could be avoided.
- Food delivery orders: food delivery services respond to two primary sensations, hunger and laziness to start cooking. However, even if the cost of the meal is reasonable, additional payments such as service charges, tips and delivery charges can add up if we use them often.
- Electricity and passive consumption: leaving appliances on standby, keeping lights on unnecessarily or charging devices for longer than necessary are energy micro-expenses. Although small, the cumulative impact on your electricity bill can be noticeable.
- Impulse purchases: small purchases in physical stores or on-line, such as accessories, bargain clothing, decoration products or gadgets that we find in large Chinese distributors are expenses that we generally do not have control of.
- Expenses on ‘invisible’ leisure: going to the cinema, the theater or a concert are activities that enrich our lives and that we do socially, but there are other associated expenses that make them more expensive than expected, such as having a drink in a bar before or later, eat popcorn at the movies (at a great price) or a beer at a concert.
- Expenses on lotteries and bets: lottery tickets, pools or sports bets, although small in quantity, can represent a constant outlay with very low economic return.
- Unnecessary mobile phone and data rates: Many users pay rates that exceed their actual data consumption or additional services that they do not use, such as device insurance or insurance services. streaming included in the plan.
How to avoid microspending
Microspending, taken individually, may seem trivial. However, together, they represent a considerable amount at the end of the year. For example, let’s take just three:
- A daily coffee for two euros: 730 euros per year.
- Two subscriptions streaming at 10 euros per month: 240 euros per year.
- Two food delivery orders per month (about 20 euros per order): 480 euros per year.
- TOTAL: 1,450 euros per year
That money could be used to build a ‘cushion’ for emergencies, or even a vacation. Becoming aware of these micro-expenses and evaluating which ones they really contribute to us is an exercise that can be very satisfying. These are the steps to identify them:
- Identifying the origin of microexpenses: involves carefully reviewing bank transactions and keeping a record of all expenses, no matter how small, for at least a month.
- Apps financial management: these applications allow us to tag and analyze each expense, making it easy to identify patterns. They also allow you to set limits on these expenses and send alerts.
- Establishing priorities: it does not mean eliminating all the small good things in life, but consciously staying with those that give us true satisfaction. For example, if daily coffee at a bar is important to your routine and social life, it may be more reasonable to cut back on other expenses that you don’t use or benefit from.
- Automate savings: Instead of letting ‘excess’ money be diluted in small expenses, you can automatically allocate a part of your monthly income to a savings or investment account.
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