Instead of focusing a lot of effort on making many changes to your spending habits, these six areas of your financial life can yield big savings and earnings with just a few small tweaks.
Many insurance carriers offer a bundling discount if you purchase multiple insurance plans through them. If you have two cars, insure both with the same firm, and consider using that firm for your rental or home owners insurance too. Ask your broker for other discounts you might be eligible for. Another great way to save on auto insurance is to increase your deductible to lower your monthly premiums.
- Your home
If you’re currently looking for a new home, try to purchase one that costs less than what you think you can afford, and don’t forget to factor in association fees, taxes, homeowners insurance and other costs that come with owning a home. If you already own a home, consider refinancing to potentially save hundreds each month. Finally, making your home safer (by installing a smoke detector, for example) can decrease your home owners insurance premiums.
- Debt payment
If you can, pay off your credit card bills in full each month so you won’t ever have to pay interest. To prevent having to put large amounts of money on a credit card with a high interest rate, save up an emergency fund for unexpected expenses. If you’ve already charged a sizable debt, develop a debt repayment plan and work it into your budget so you can pay off your cards as soon as possible and pay less interest in the long run. If you’re in good standing, it’s worth it to contact your credit card company to request a lower interest rate.
- Spending plan
Think of your budget as a way to organize your spending, not necessarily limit it. You can automate your finances to make sure your savings and investing goals are always met and your bills are always paid on time. This will save you money by avoiding late fees and penalties. By having a budget, you’re less likely to waste money on purchases you’ll later regret.
Make sure you’re taking advantage of applicable deductions and credits. To lower your taxable income, contribute money to a 401(k), IRA or 529 plan. To minimize your capital gains tax, consider selling some of your investments at a loss—but make sure you’re not using taxes as your main motivation for selling. Another easy way to get a tax deduction is to make a charitable contribution. Finally, a Health Savings Account is a tax-free way to save money for health expenses. The money goes into the account tax-free and is exempt from taxes upon distribution.
The best way to get a return on your investment is to start early. Open a retirement plan and begin contributing as soon as possible so your money can experience the “magic of compounding” that only happens over time. Keep in mind that frequent trading and investing small amounts over time may cost more in commission and fees. Research the fees associated with your investments to make more strategic decisions or consider switching to a lower cost plan.
Sometimes the smartest financial moves (such as investing or buying insurance) can quickly eat away at your budget. By making small changes in these six areas, you can save significant amounts of money without significant effort.
Investment and insurance products are: not Alpine Bank products; not FDIC insured; not guaranteed; and, may be subject to investment risk, including possible loss of principal.