Your budget is like an old house in the winter. If you don’t keep on top of things and focus on being efficient, money starts leaking out every window and under every door.
Plugging the leaks in your financial life means taking a hard look at all your expenses and all your spending habits. Almost everything you spend money on can be a target for spending less. But some of the easiest ways to improve your household bottom line is finding the small amounts of wasted money in everyday expenditures. They can quickly add up to a big hit to your budget. The trick is to turn that around and add up the savings instead.
One example that almost everyone encounters is the price of gas. Your daily or weekly routine of stopping at the same station to fuel up may be costing you extra. Online resources such as Gasbuddy.com can help you locate the cheapest fuel on your route to work. Some offer promotions to earn prepaid gas cards if you’re willing to spot and report low gas prices in your area.
Bringing a bag lunch every day instead of eating out or getting takeout at work is a common piece of advice that can mean big savings. It’s also not always convenient or realistic for many people with a busy household in the morning. But you can still shave money from your daily lunches by tracking what you spend. If you find yourself spending $12 a day on lunch, set a maximum average budget of $10 and try to bring lunch once a week. Or skip the soda, juice drink, or bottled water a few days each week and use the water cooler or tap. That daily $2 savings is about $500 a year.
You could be leaving money on the table if you belong to a health club or gym and your employer or health plan offers reimbursement benefits. Insurers such as Blue Cross & Tufts typically offer an annual reimbursement of about $150 for qualified memberships. More and more employers, meanwhile, are enrolling in healthy living incentive plans through their insurers. Employees can qualify for hundreds in additional reimbursements by establishing a healthy living plan with their physician.
When it comes to auto insurance, make sure to review your coverage and deductible limits each year. If you have an older vehicle, a good driving history and no auto loan, you should consider saving money on premiums by increasing your deductible or even eliminating collision coverage.
Some of the biggest sources of money leakage are your monthly debt payments. Interest charges are great for the bank, but money down the drain for you. Consolidate debt where you can and establish a debt pay down plan that attacks either the smallest balances first, or the accounts with the highest interest. As you pay off one account, roll that payment amount into paying off the next debt on your list.
Think before banking. It’s the best way to avoid ATM and other fees. Be aware of your own bank’s policy on charging fees for out of network ATMs. Understand that a convenience ATM not affiliated with your bank is guaranteed to mean a fee of several dollars.
Overdraft fees are the open floodgates of money leakage. The average overdraft fee nationwide was just under $30 in 2012. Depending on how your bank orders the processing of transactions, one overdraft of just a couple of dollars can result in two, three, or more fees. Nothing is more demoralizing then incurring $100 in fees because a $5 debit transaction caused an overdraft, Understanding your bank’s policy is important. Keeping a close watch on your balance and close track of your transactions is critical.
Even your paycheck may be costing you money. Many Americans typically have employers withhold more than necessary for state and federal taxes. The big refund at tax filing time feels good and can be a useful windfall for saving or paying off debt. But the reality is by withholding too much, you are lending Uncle Sam money every pay period at zero interest. Even low-return government bonds and Treasury securities pay better than that!
So while you tighten up the seal on your household windows and doors this winter, make sure to plug the leaks that are draining money from your household budget.
Steve Trumble is President and CEO of American Consumer Credit Counseling and a member of the AICCCA Board of Trustees