In home economics, we tend, quite logically, to pay attention to and carefully plan big expenses: rent, mortgage, car purchase or vacation. Yet every day, small amounts of money leave our pockets almost without us realizing it. At first glance, they may seem insignificant, but when they add up over weeks, months, or years, these micro-spendings can become a huge money drain.
Microspends are considered to be 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 at home. The sum of all these small expenses can become a barrier to achieving larger financial goals, like 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 disappear from our financial radar is the psychology behind them. When the amounts are small, like one or two euros per day, the immediate impact does not seem relevant and we do not record it, as is the case for higher expenses. Often these expenses are tied to habits or instant rewards that we feel we deserve, like a candy bar on the office machine in the afternoon or a paid subscription movie. streaming. This effect is amplified because, in general, we do not control small disbursements in detail, but only large ones, which makes it difficult to visualize the total amount at the end of the month.
Plus, in the digital age, automatic payments and online shopping make these silent cash outflows even easier. Services such as platform subscriptions streaming, Purchases within mobile apps or charges for services that we don’t use are clear examples of micro-spending that remain “hidden” in the flow of monthly expenses.
The cumulative effect of microspending
The main risk of microspending is its cumulative effect. Spending three euros a day on coffee, for example, may seem trivial, but after a year it represents almost 1,100 euros. If we add other small pleasures, such as fast food away from home, mobile applications or the additional electricity consumption due to leaving devices on standby, the impact can double or even triple.
The most common microspends with the greatest cumulative impact are usually the ones that go unnoticed. Here 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 you add an additional drink like 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 impulsively are another clear example of microspending. Even though they only cost a few dollars at a time, accumulating these treats has a huge impact. Additionally, they are usually associated with impulsive decisions and, sometimes, poor health.
- Digital subscriptions: services streaming such as Netflix, Spotify, Amazon Prime or subscriptions to mobile applications and games can represent a significant monthly amount. Many people have subscriptions that they don’t use regularly, but which continue to auto-renew.
- Applications and microtransactions: in-app purchases, such as in mobile games (to progress through levels, for example) or additional services (such as cloud storage) seem unimportant at the time of payment, but it is rather euros that come out of your pocket periodically.
- Bank charges: Account and credit card fees, fees for using other banks’ ATMs or payments for additional services have been steadily increasing in recent years and can amount to up to ‘at 300 euros per year.
- Unnecessary transport: trips by taxi or VTC service when you could walk or use public transport are also added to the list of micro-expenses. This includes expenses such as renting electric scooters or bicycles on routes that could be avoided.
- Food Delivery Orders: Food delivery services cater to two main 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 fees can add up if we use them often.
- Electricity and passive consumption: leaving devices on standby, keeping lights on unnecessarily or charging devices longer than necessary are micro energy expenditures. Although minimal, the cumulative impact on your electricity bill can be noticeable.
- Impulse purchases: small purchases in physical stores or online, such as accessories, inexpensive clothing, decorative products or gadgets that we find among large Chinese distributors are expenses over which we generally have no control.
- “Invisible” leisure spending: going to the cinema, the theater or a concert are activities that enrich our lives and that we practice socially, but there are other associated expenses that make them more expensive than expected, such as taking a drink in a bar before or later, eat popcorn at the cinema (at a great price) or a beer at a concert.
- Expenses linked to lotteries and betting: lottery tickets, pool bets or sports betting, although few in number, can represent a constant expense with a very low economic return.
- Unnecessary mobile phone and data rates: Many users pay rates that exceed their actual data usage or for 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 insignificant. However, together they represent a considerable sum 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 (around 20 euros per order): 480 euros per year.
- TOTAL: 1,450 euros per year
This money could be used to build a “cushion” in case of an emergency, or even a vacation. Becoming aware of these micro-expenses and evaluating those that they really bring us is an exercise that can be very satisfying. Here are the steps to identify them:
- Identifying the source of microspending: involves carefully reviewing bank transactions and keeping track of all expenses, no matter how small, for at least a month.
- Applications financial management: These applications allow us to mark and analyze each expense, making it easier to identify patterns. They also allow you to set limits on these expenses and send alerts.
- Establish priorities: this does not mean eliminating all the little good things in life, but consciously staying with those that give us true satisfaction. For example, if daily coffee at the bar is important to your routine and social life, it may be more reasonable to cut other expenses that you don’t use or benefit from.
- Automate savings: Instead of letting “excess” money get diluted in small expenses, you can automatically allocate a portion of your monthly income to a savings or investment account.
