Building wealth shouldn’t be difficult. You organise your life so that your outgoings are smaller than your income. And over time, you’ll build a big chunk of money to save an invest. Simple right?

kermit the frog
image source

The problem with this mechanical approach is that it ignores the psychology of money. Yes, we could all act like robots, making sure that we have ten per cent of our income left over at the end of each month, but that’s not how it plays out in the real world. All too often, we live for the moment, wanting money in the here and now, rather than putting off spending into the future.

Money sinks are a big part of the problem: drains on our finances from one month to the next which are usually entirely unnecessary. Money sinks create issues in the future because they eat up precious capital today which could grow into greater wealth down the road.

things that are draining your money

So what are these money sinks, and what can you do about them?

Rolling Subscriptions

Big business, especially the tech industry, realised something over the last couple of years. The best way to make money is to get people to sign up for subscription services. Take Microsoft, for instance. The tech giant, famous for Windows and its data services, is now offering Xbox players the chance to sign up for a monthly subscription to get access to over 100 games which they can play whenever they want. It sounds like a good deal, but when you compare the cost of the subscription to the amount that players would spend on games over the course of a year, you soon find out why Microsoft made the business move. Overall, people pay more when on subscription than otherwise.

Netflix does the same thing. Low monthly payments entice customers who then become dependent on the service for their entertainment needs. It’s excellent value for money, so it seems worth it, and the spending continues.

No individual subscription is a money sink. But when taken together, subscriptions can damage your finances. It’s not uncommon for a family to spend upwards of $100 a month on various subscription services, which can seriously eat into their disposable income over time.





Expensive Credit

The Credit Counselling Society’s free and confidential debt help service is designed to assist people in financial difficulty. But they’ve found that it’s not so much the debt itself, but rather the interest that needs to be paid on the debt that causes problems. Just as savings growth compounds every year because of the magic of interest, so too do debts. If left unpaid, they grow larger and larger as time goes on, eventually becoming unsustainable.

The most significant debt sinks for the average consumer today are unsecured debts since these come with the highest interest rates. Credit card debt interest and obligations on personal loans can eat up big chunks of disposable income, leaving families impoverished.


Food And Drink

In the past, the average family spent most of their food budget on food to be prepared in the home. But as the convenience of eating out grew, expenditure flipped. Although the cost of food eaten at home dropped in the last three decades, the overall proportion of family budgets spend on food grew, thanks to the growth in eating out.

It’s not just money spent at restaurants on a Friday night which eats into budgets. It’s all those little and unnecessary transactions throughout the week. Chocolate from a dispenser, cans of drink, and coffees all soon add up.

Today, the average person spends just as much on food eaten out as they do at home, meaning that most spend more today on food than they did more than thirty years ago, despite falling prices overall. The most insidious expenses are small and regular, such as a $1 candy or $2 energy drink bought on a daily basis.

Because around 20 per cent of income gets spent on food, it’s a big money sink. Being frugal means sticking to home cooked meals and avoiding restaurant markups. Freshly prepared food is best, not only for your wallet but also for your health too.


fun times


Entertainment takes up about 10 per cent of the average family’s budget. Because it’s wholly discretionary, it makes an excellent target for anybody looking to save money. Instead of taking the family to the cinema at the weekend, have a family movie night, or go out on a weekday when prices are lower. Or, instead of going to an expensive theme park, try a hike in nature instead.

*collaborative post



  1. November 6, 2018 / 11:17 pm

    I SO needed this post! Rolling subscriptions are the worst for me, but it’s so hard to cancel them! No to no Netflix haha.

    Have a great week 🙂
    Amy x Wandering Everywhere

Leave a Reply

Your email address will not be published. Required fields are marked *