It's hard trying to make a budget. A lot of the things you hear about how much to save and spend are completely arbitrary, and it leaves you clueless on where to start. Maybe you're wanting to make one before a problem arises in your finances. Or maybe your finances are off track and you're trying to right the ship. What's the best way out of this? Where are some areas where you can cut back? Today we plan to help answer those questions. Here are 10 areas of your finances where money might be hiding in plain sight. Follow these tips and hopefully you can increase your savings easier than you'd imagined!
1. Subscription Services
Don't worry, I'm not asking you to throw away your InStyle or GQ magazines. If you have magazines you enjoy, see if there is a reduced rate offered for online subscriptions as opposed to print versions. The same philosophy of 'reduce, not cancel' holds true for any subscription you pay for that might SAVE you money or provides value, such as an Angie's List or Amazon Prime. But many of us subscribe to websites, magazines, credit monitoring sites and more that automatically renew even when we no longer have an interest in the offerings. The biggest offender I see is gym memberships. While working out is great, paying an exorbitant amount to go the gym once a week is a bit of a waste. If you're not getting good use of your membership, search around and see if there are more cost-effective gyms or even free workouts available near you. Also consider investing in equipment you can use to workout at home, such as exercise apps or free weights. All of these little things can add up to big savings. Take a day this weekend and set aside time to cancel or modify these services and free up some money you didn't even realize was missing.
2. Cable/Internet Packages
My wife and I finally did it last year: we cut the cord on our cable. With the onslaught of new streaming services, Apple TVs, Amazon Fire sticks and Rokus, it no longer made sense to pay $100+ each month for channels that we either didn't watch or were available to stream for less money. Millions of Americans are coming to the same conclusion. Cable packages are terribly priced, and it's highly likely you find significant savings by reducing or eliminating your bill. We eased into the process; first, we wrote down the cable channels we actually watched each week and realized all our favorites were available on a cheaper package than we had. After that, we realized that not only were all of our sitcoms available via streaming, but even the sports we watched were shown on local channels, which are free! So, we got an Apple TV and an HD antenna and never looked back. The greatest part is we watch even less TV than before, which kind of seems like a good thing, right?
3. Coverage Limits and Deductibles
For things like car, home and renters insurance, two of the factors that influence your payments are the level to which you want your valuables covered, and the deductible you pay before insurance kicks in. Regarding the level of coverage, run a quick calculation of what you would want replaced in the event of an emergency and how much it would cost. If for example you have renters insurance that covers your valuables up to $10,000, but you only need $5,000 to replace them, you might be able to save money on your premium by reducing the coverage level. The same is true for car insurance, where you could be paying for coverage you don't need, or health insurance, where you might have a top of the line plan with low copays even though you go to the doctor once a year. For deductibles, keeping them low can help save you from yourself if you haven't been putting money aside to pay for an emergency. But if you can maintain discipline and put your 'found money' to good use, raising the deductibles on your insurances can potentially lower premiums and free up cash for your household.
4. Insurance Rates
The prices for certain coverage, like life and disablity insurance, can rise or fall based off of how healthy you are when you apply. Insurance companies use your health data to place you in a rate class, such as Standard, Standard Plus or Preferred. The healthier you are, the lower your cost of insurance. If your health has improved significantly since applying for coverage, you can go back to your insurance company and ask them for a rate reconsideration. Losing weight and keeping it off, recovering from an illness that affected you at the time of application, even stopping smoking are all reasons a company might improve your rate class. Another factor that influences insurance pricing is claims history; the less likely it is that a life insurance or disablity company will have to pay a claim, the more affordable your coverage will be. This fact is particularly important for life insurance companies, who often use mortality tables to determine how likely you are to die during a given period and set their prices accordingly. If you haven't noticed, people are living longer, which makes mortality tables more favorable to insurance companies. As a result, the cost of term life insurance has been decreasing consistently. Even if you haven't radically improved your health, if you have an old insurance policy it's worth seeing if there's a more affordable option available simply because rates have dropped since you last applied.
5. Income-Tax Withholding
We've all been there; looking forward to our tax return in the mail, thinking that the IRS is our own personal Santa Claus. The temptation is always high to blow this money on a trip or a TV, treating the check like some unexpected bonus. The problem is, the IRS ISN'T here to give you money that you haven't earned. Your tax refund is just that, a refund that is a result of paying TOO MUCH tax to the IRS. Instead of being happy, you should be upset, because you could have had that extra money in your paycheck throughout the year! When you work as a W2 employee, every once in a while your job will ask you to fill out a W4, a tax form that gives them an idea of how much to withhold from your check to pay your taxes. If you find yourself consistently getting large returns and your lifestyle hasn't changed signifcantly (getting married or divorced, a child moving out of the house, etc.), meet with a tax professional to make sure you're filling out the form correctly. IF it's appropriate to reduce your withholdings, you can create additional savings for yourself just by keeping your money now as opposed to waiting for the tax man to figure out you overpaid.
6. Bank Account Fees
One thing that we're not lacking as consumers is high-quality options. If you're paying too much for something, it's probably avaiable for less SOMEWHERE. Not getting good service? It's highly likely there's an alternative solution out there for you. We just don't have to settle anymore as consumers. Nowhere is this more true than with banks. Long-gone are the days when you've no other choice but to be nickel-and-dimed by your bank for account maintenance fees, ATM charges, or even excessive overdraft fees. There are now banks that refund all ATM fees, offer free certified checks and billpaying services, and even link your accounts so that a purchase can be covered if one account is overdrawn. If you're not sure what you're paying, review statements or call the bank and ask what fees are associated with your account. After you have this information, do your research to see if there's a way to reduce the fees with your current bank, or whether it's worth the money to switch to a different institution.
7. Credit Card and Student Loans
Credit cards are bad debt, there's no way around it. They carry high interest rates, and because all many companies ask for is that you pay the interest each month, you could owe on a card for the rest of your life. For people stuck in credit card debt, it's worth seeing if there is a card offering a lower interest rate or even no interest for a period of time you can use to pay off what you owe. Consumers who have a good income and strong credit might even consider transferring debt to a personal loan, which can offer lower rates than some credit cards and a definitive end date to your payments. A student loan can be. If you're making a good income that you wouldn't have made without your degree, there's no use crying over spilled milk; those loans helped get you where you are today. But there's no reason to pay more interest on those loans than you have to. If you watched our video a while back on private student loans, you'll recall there is no need to have loyalty to a lender when it comes to private student loans. Just because one company offered you the loan doesn't mean you have to stay with them to pay it off. Other lenders might offer a lower interest rate or more favorable terms, which could lower your payment or expedite the repayment period. These options are all worth considering, and taking charge of your loan repayment could free up significant resources in your budget.
8. Your Closet
Don't hurt me, it's just a suggestion! Look, I like clothes just as much as the next person. But as trends evolve, I find there are some clothes in my closet that might not get as much use as they did five years ago. There are also some items from my high school and college days that I might tell myself I'll be able to fit again one day, but it's unlikely I ever reach the weight I was at 19. Do you find yourself in this position? Do a purge of your closet and find that pile of clothes you longer plan to wear. Head to your local consignement shop or used clothing store to turn them into cash. You might also be the type of person that hates wearing the same thing twice but doesn't make enough scratch to buy new clothes every month. Consider clothing subscription services like Trunk Club that send you new clothes each month, or utilize sites like Rent the Runway before a big event so you can stay fashionable and keep within a realistic budget.
9. Your Restaurant Bill
Restaurants are a budget-killer, especially when alcohol is involved. While those 2 for 1 drink nights seem like a good deal, it's not a better deal than skipping one a time or two. Do you go for the networking or to get a break from the office? You won't die if you order a Sprite one time out of three, I promise you. Appetizers, desserts, frequent trips to expensive restaurants: all things that can be reduced without having to eat at home every night. Start paying attention to not just how frequently you eat out, but what you're ordering when you do. It may not be a matter of staying in and eating a peanut butter and jelly sandwich each night; it may just be a matter of getting water instead of a house soda. Or not getting the ice cream and brownie dessert for $10 when it's avaiable for $5 at the grocery store down the street. Pay more attention to your dining habits and I'll guarantee you'll see room for improvement that will still allow you to enjoy life.
10. Your Grocery Bill
Speaking of groceries, maybe I'm the only one who DOESN'T save money by grocery shopping instead of going out. I leave the grocery store with a bill much higher than just getting a to-go meal, and it's usually because I pick up the priciest items I won't even eat before they expire. When I'm intentional, I stick to a few rules that help me out. First, I go heavy on lower-priced vegetables and fruits (stay away from those honeycrisp apples, they'll bankrupt you!). I also buy items in bulk that will last a long time, such as beans, rice, oats, etc. Processed foods and snacks also run up my bill, so I try to stay away from the Oreos and stick to things that are good for me. I check the per unit price to make sure I'm getting the best bang for my buck. And finally, I make my grocery list BEFORE I leave the house and I don't go to the store when I'm hungry. It seems like a lot of rules, but it keeps me from getting stuck in aisle 5 trying to decide between Lucky Charms and Apple Jacks!