Whether you had to start working from home, saw your hours cut back or were placed on furlough due to the coronavirus quarantines, you probably have finances on your mind. Watching your savings dwindle without knowing when you’ll be back at work full time is uncomfortable.
The virus has created a lot of uncertainty in the world. Even as states begin to reopen, there’s reason to believe the economy won’t fully recover until a viable vaccine is available. Until then, taking control of your finances by trimming your living expenses is a prudent choice that can help you get by until the world starts to look normal again.
It’s wise for every family, regardless of financial standing, to save money on everyday expenses that can really add up. Not only does cutting costs create breathing room in your budget, but it also frees up money that can go toward your family’s well-being.
Child care is one of the biggest expenses that parents contend with, particularly when their children are young and need constant supervision. If your child’s day care or school is closed but you have to work, you may need to make alternative arrangements for child care. According to Marketplace, you may still have to pay your day care facility even if it’s closed, depending on where you live and the type of contract you signed.
Though it’s impossible to predict injuries and illnesses, there are tricks to save money on rising healthcare costs.
If you and your spouse both have jobs that offer health insurance for dependents, comparing insurance plans can lead to major savings. You might find, for instance, that your spouse’s employer has a more cost-effective insurance plan for families.
Furthermore, when it comes to prescriptions, buying generic whenever possible can lower your monthly expenses. For example, it costs approximately $164 for a 30-day supply of Zocor, a popular cholesterol medication, whereas simvastatin — the generic version — typically costs patients under $6 for the same amount, according to Excellus BlueCross BlueShield, a nonprofit health insurance company.
Since you’re spending more time at home, you’re probably going to spend more money on household expenses. Saving on household supplies such as toilet paper, lightbulbs and cleaning products comes down to smart shopping, but that can be a challenge when supplies are short and you’re forced to buy whatever is available.
Warehouse stores that allow you to buy in bulk can be excellent sources of savings. Some warehouse clubs, like Costco, charge a membership fee, but other options — such as Smart & Final — are open to everyone. Shopping at a dollar store and other discount stores can also yield savings.
Additionally, use store apps whenever possible, as well as cash-back sites and, of course, good old-fashioned coupon clipping.
The cost of life insurance increases as you age, so it’s best to buy as early as possible to get a good price. If you’re still shopping around, skip going through a broker — the process will cost you, and brokers can’t legally offer you any discounts. The price of Fidelity life insurance through a broker, for example, will be the same as if you go through Fidelity itself. Instead, try a site such as Policygenius, which offers a tool for comparing insurance rates.
Remember to be honest about any health issues you already have and take the medical exam — skipping the exam means you’ll pay more. And, make annual payments if possible, as this cuts down on fees. Policygenius notes that some companies offer discounts of up to 8% when you pay yearly instead of month to month.
Whether it’s a dog, cat, bird or some other creature, there are various ways to save money on pet expenses:
Prices for senior care vary dramatically based on location and the level of care needed, according to SeniorLiving.org. For instance, a private room at a nursing home costs about $6,570 a month on average, whereas companion care costs $18 an hour on average with a four-hour minimum. So, the first step to save money on senior care is to honestly evaluate yourself or your loved one. There are numerous options available, including adult day care, in-home care, assisted living and skilled nursing.
If you or your loved one are independent enough, it might be a matter of downsizing to a smaller, more manageable place where the costs aren’t as high. If the senior care needed is extensive, consider U.S. Department of Housing and Urban Development (HUD) programs that help seniors and people with disabilities find affordable housing. There are also housing programs for people of certain religions, veterans and Masons.
Medicare or Medicaid can also help mitigate the costs of senior care. Medicaid is specifically geared toward low-income seniors and covers both in-home and nursing facility services.
Warehouse Club Membership
- Average monthly spending: $4.38
If you belong to a warehouse club, it’s likely because you buy food and household goods in bulk for your family. Does your membership actually help you save money, though? The answer: It depends.
With notable exceptions in store-brand items, tires and major electronics, many warehouse club items are comparable in price to goods at other stores. However, these memberships often offer discounts on things like prescriptions, gas, event tickets and pet medications, so the true value of your membership comes down to how you use it. Comb through your purchases and compare prices across stores to see if you’re really making your money back in savings.
How To Save Money on Food Expenses
Food can be expensive, especially if it’s high quality and nutritious. On top of that, you’re constantly racking up a food bill because you need to eat every day — national average spending on food alone is $7,729 a year. However, there are easy ways to save money on your monthly food-related expenses, and they all stem from becoming a savvy shopper.
- Average monthly spending: $363.58
Just as with household goods, buying in bulk is one of the simplest ways to save money on groceries. At Walmart, for example, you can purchase a dozen 15-ounce cans of Chef Boyardee Mini Ravioli for $17.76, or you can buy three of their four-packs of the exact same product — also equal to 12 cans — for just $10.44.
Additionally, it’s worth comparing stores. Though discount stores can offer great savings, there are some things you shouldn’t buy at a dollar store. For instance, you can get two dozen cans of Libby’s Whole Kernel Sweet Corn at Walmart for $14.78. Meanwhile, the same amount of the same product at Dollar Tree would cost you $18.96.
Whenever possible, try store-brand products because they’re usually cheaper. You also should combine low prices with cash-back sites, coupons and discounts from store apps for maximum savings.
How To Save Money on Housing
Housing costs are the largest monthly expense for most people. That being said, regardless of whether you rent or own, there are money-saving tips that can help cut your housing bill each month.
- Average monthly spending: $134.67
According to the Insurance Information Institute (III), you can save money on homeowners insurance — anywhere from 5% to 15% off your premium — by buying your home and auto insurance from the same company. Furthermore, finding the right company and sticking with it for the long haul can save you money. In an article reviewed by the Consumer Federation of America and the National Consumers League, among others, III wrote that you can receive 5% off your premium if you stay with certain insurers for three to five years, and 10% off if you remain with them for at least six years.
Also, taking steps to increase your home’s security or reduce its susceptibility to storm damage can lower the cost of your insurance.
- Average monthly spending: $272.08
You might think that your mortgage is a fixed payment that you’re locked into, but there are ways to save money on this hefty monthly expense. For starters, you can always re-amortize, aka recast. Re-amortization means that you pay a lump sum upfront — usually $5,000 minimum — to have your lender extend the term of your loan, thereby lowering the monthly payments. This usually comes with a service fee of around $250, according to HouseLogic. Keep in mind, of course, that a longer term means you’ll have to pay more in interest over time.
Similarly, you can refinance your mortgage to get a better rate, but this is a longer, costlier process, and you’ll need a good credit score to get better terms. Since you’re applying for a brand-new loan, you’ll likely need to pay for an appraisal, closing costs and fees all over again. Also, you’ll likely be resetting the clock — for example, if you started with a 30-year mortgage and paid it off for 10 years, that progress would be gone, and you’d be right back at 30 years again. Unless you pay off your mortgage early, you’ll spend more time forking over interest.
Finally, if you didn’t put down 20% of the purchase price on your home, you’re likely paying private mortgage insurance (PMI). Fortunately, this is something you can get rid of. Once you’ve paid down your mortgage balance to 80% — thereby owning 20% equity in your home — you can request that your lender cancel the PMI. Once you’ve paid down to 78%, your lender is legally required to cancel the PMI.
- Average monthly spending: $172.08
Property taxes are determined by your county’s assessment of your home and land, so the primary way to reduce your bill is to challenge that assessment. Start by going down to city hall and requesting your property tax card, which is a detailed description of your home and land. Note any discrepancies — such as extra bedrooms or incorrect square footage — and point them out to the assessor’s office. You can also examine the assessments of homes in your neighborhood to make sure they’re consistent. If you find that your neighbor’s property is nearly identical to yours but their home is valued at a lower price, perhaps your property was overvalued — making your taxes higher.
In any case, you can request a property tax reassessment. Walk your property with the assessor and be sure to let them see inside. If you don’t, they have to make assumptions — which might mean rounding up your home’s value.
If you end up disagreeing with the reassessment, you can challenge it by filing with the county and requesting a hearing with the State Board of Equalization. Just keep in mind that every nook and cranny of your home will be under scrutiny, meaning your plan to lower your property taxes could backfire.
- Average monthly spending: $1,455
If you’re wondering how to save money on monthly bills, rent is likely at the forefront of your mind — the average American spends $17,460 a year on rent alone. Luckily, there are a few ways to reduce your costs.
Moving to an area with a lower cost of living can help you save on rent. However, if that isn’t feasible, try looking for a smaller space or splitting the cost with a roommate. You can also try negotiating a number of things with your landlord. If you’re willing to agree to an extended lease — which saves your landlord the hassle of looking for new tenants — put that offer on the table in exchange for lower rent. If you don’t need the parking spot that comes with your apartment, offer to give it up for a lower rent, too. Your landlord can likely sell the space to a tenant with two cars.
- Average monthly spending: $15.58
Though renters insurance is fairly affordable, there are ways to lower that cost even more. First, bundle and save. Just as with homeowners insurance, if you get multiple policies through the same company, you’re likely to receive a discount. Second, you can slash your rates by reducing your risk. This could mean moving to a safer area or a newer building with better safety and security features. Taking steps such as installing fire extinguishers and smoke detectors, even in older properties, can also help you reap savings, according to State Farm. Just ask your insurance agent for any safety discounts they might offer.
How To Save Money on Transportation
You may not be driving as much as you used to before the quarantine, but transportation could still be eating up a significant portion of your budget depending on the type and number of vehicles you own. Figuring out how to save money on expenses like gas and auto loans is crucial if you want to free up funds.
Auto Loan Payments
- Average monthly spending: $523
If you’re looking to lower your auto loan payments, the bulk of the work happens before you even buy a vehicle. You’ll want to pay as big of a down payment as possible, find a vehicle that suits your needs at the lowest possible price, try a loan with a longer term and consider leasing instead of buying.
However, if you already have a loan and are looking to save on payments, you can try refinancing. Some banks, like Capital One, will let customers check their refinancing options without a hard credit check, so there’s no real downside.
- Average monthly spending: $80.58
When it comes to cutting auto insurance costs, there are a number of options:
- Try to maintain a clean driving record. Customers with fewer accidents cost less for companies to insure, and they’ll pass a portion of those savings on to you.
- Build a good credit score. Your insurance policy is partially based on your score in most cases.
- Ask for discounts. Cheaper rates exist for veterans, people who put very little mileage on their cars, good students, those willing to take a defensive driving course and more.
- Raise your deductible. Note: You should do this only if you can afford to pay the deductible in the event of an accident.
- Bundle and save. As with other forms of insurance, a company is usually willing to offer a reduced price if you have more than one policy with them.
- Don’t be afraid to switch. You should routinely shop around for the best rates and change insurers if you find a better deal elsewhere.
- Average monthly spending: $79.50
One of the easiest ways to save on maintenance costs is to avoid going to the dealership, which is often more expensive and seek out a reputable local mechanic instead. You can also do several routine tasks yourself, such as tire rotations, air filter replacements, windshield wiper replacements and oil changes.
On that note, don’t change your oil more than you have to. If your car has an indicator, it will light up when the oil needs to be changed. Engineers are responsible for this feature, so trust the indicator light over the little reminder sticker that the auto service company (aka the one that wants your business) slapped on your windshield.
- Average monthly spending: $164
Gas prices are nothing to joke about — the average American spends nearly $2,000 a year on fuel. If you live in a major city, traffic congestion is taking a huge toll on your gas tank and your wallet. That said, you can save on gas in several different ways. Start by selecting a car that uses regular fuel and has a good fuel economy.
If you already own a car, treat it with care to reduce your spending on gas. According to Oak Ridge National Laboratory, aggressive driving — such as repeated braking and bursts of speed — can cost you up to $1 per gallon. Furthermore, carrying extra weight, overusing the air conditioner, idling and using the wrong type of oil can all hurt your car’s fuel efficiency.
Try to be cognizant of the gas prices in your area whenever possible. Apps like GasBuddy can help you find local gas stations with the best prices.
- Average monthly spending: $59.33
Though public transportation tends to be a more cost-effective option compared to owning a car, those bus rides still add up over time. Try looking for discounts; they usually exist for students, seniors and veterans. You can also use discounted or free forms of transportation. “In Baltimore, the Charm City Circulator runs throughout the downtown area and is completely free,” said blogger Kara Stevens of the Frugal Feminista. “D.C. has a circulator that costs $1 per ride. Check out what may be available in your area.”
Also, consider buying a reloadable fare card, such as Boston’s CharlieCard or San Francisco’s Clipper card, which can help you avoid surcharges on rides. Buying passes in bulk at a discounted rate is also an option in some areas.
How To Save Money on Utilities
Utilities aren’t over-the-top luxuries that you can necessarily cut. However, it’s possible to significantly reduce the size of each utility bill by taking certain steps. From bundling services to putting your bills on autopay, you can potentially shave hundreds off your annual utility costs.
- Average monthly spending: $93.17
Cellphone bills can get expensive, especially if you have a large family of active phone users, but you can reduce your phone bill dramatically with these money-saving tips:
- Only purchase a phone you can truly afford, and stick with your phone as long as possible. Don’t be swayed by the newest gadgets.
- Compare deals from different carriers. Shopping around helps you find the best plan for the best price.
- Only pay for what you need. If you don’t require something like voicemail that reads your messages aloud, don’t pay for that service.
- Try to find a plan with freebies — like a complimentary Hulu subscription, for example.
- Don’t pay for phone insurance. Instead, save money in an emergency fund that can be put toward other unexpected expenses if you don’t end up using it for your phone.
- Avoid costly data overages by using WiFi whenever possible and ensuring apps aren’t running in the background.
- Put your bills on autopay and go paperless if possible — many companies offer a small discount for this.
- Check to see if your employer offers a discount through a particular carrier.
- Average monthly spending: $118.33
The more time you spend at home, the more electricity you will likely consume. If you own your home, try following certain energy-saving tips and tricks that can have a significant effect on your electric bill. Installing a ceiling fan, adding solar panels, fixing any leaks and replacing your air filters are all great ways to lower your bill.
If you rent, you’re more limited in your choices, but it’s still possible to bring your costs down. Buy energy-efficient appliances, only run air conditioning and items that require power when necessary, turn off the lights whenever you leave a room, and use a slow cooker, toaster oven or other small devices instead of the oven whenever possible, as they consume less energy.
- Average monthly spending: $100-$200
The easiest way to save on gardening costs is to do the work yourself — and that might not be a bad idea if it gives you something to do. If you’re paying someone to come once a month to trim the hedges, try buying a pair of hedge clippers and going the DIY route. Better yet, put your teenager to work if you have one.
You can also cut costs by being strategic about what and where you plant, as well as the amount of water you use. Map out your garden before planting, understanding where sunlight naturally falls and the location of your water source. Choose only native plants that don’t need an excessive amount of water.
Group plants together so you aren’t dragging the hose around, wasting water from spot to spot. Also, plant sparingly — the more plants you have, the more water you’ll need to keep them alive. Mulch can help keep weeds, which soak up precious water, at bay. If you want to make your own, try composting to save money.
HouseLogic calls green lawns “a suburban ideal” that takes over 20,000 gallons of water to maintain every year. So, swap out your green lawn in favor of buffalo grass or another variety that requires less water.
- Average monthly spending: $31.75
When it comes to reducing your gas bill, the goal should be to trap warmth inside your home so that you don’t have to resort to running the heater — which will cost you. There are several ways to do this:
- Check your home for air leaks. You can light a candle and hold it up to your windows and doors to see if the flame flickers. If it does, you might need to add some caulking or insulation in your home.
- Consider installing a programmable thermostat. Though it can cost upward of $100, you’re likely to make your money back within the year. Programmable thermostats can help your heating, ventilation and air-conditioning (HVAC) system run more efficiently without sacrificing comfort, according to Thermostat Center.
- Ensure that your water heater is working properly and not expending extra energy.
- Keep your doors closed and ventilation fans off if they aren’t being used.
- When all else fails, bundle up. Before turning on the heat, consider putting on some nice wool socks and a sweatshirt first.
- Average monthly spending: $39.99
If your area has multiple internet providers, you can use this as leverage to negotiate your bill. Switching to another provider might yield a new customer discount, too. However, you’ll have to get a little more creative to save if you’re one of the 129 million Americans limited to one provider, according to the Institute for Local Self-Reliance.
First, buy your own modem and router. If you own this equipment, you won’t have to lease them from the cable company. That said, make sure your modem and router are compatible with your provider.
Second, examine your internet habits so you know which download speed you should be paying for. Hulu recommends 3 Mbps for streaming, whereas Netflix recommends 5 Mbps for watching high-definition movies, for instance. If you’re mostly using the internet to watch movies, do you really need to pay for the 100 Mbps that some cable companies offer?
Lastly, take advantage of any new discounts or promotions that your provider is offering. Just don’t get roped into tacking on unnecessary services in the process, as that defeats the point of saving money.
- Average monthly spending: $19.83
If you’re trying to figure out how to save money on bills, here’s a tip: Ditch the landline. In this day and age, there’s really no need for a landline phone unless you own a business. In the latter half of 2017, approximately 54% of households were wireless only, according to the National Center for Health Statistics. It’s time to join the majority of Americans and cut the cord.
However, if you’re insistent upon keeping your landline, you can lower your phone costs by negotiating when possible, taking advantage of promotions and switching companies if it makes sense.
Water and Sewage
- Average monthly spending: $48.58
Saving money on your water and sewage bill primarily comes down to water conservation. The average American uses a staggering 25,300 gallons each year, according to Boston University, which translates to nearly 70 gallons of water a day. Fortunately, there are plenty of ways to cut back on your water usage and save money in the process:
- Only run the dishwasher when it’s full — the same goes for your washer and laundry basket.
- Turn the faucet off while you brush your teeth.
- Use a broom to clean the driveway instead of the hose whenever possible.
- Take shorter showers and switch to a low-flow showerhead.
- Collect rainwater in barrels to water plants.
How To Save Money on Dining Out
Restaurants may have closed their dining rooms during quarantine, but many of them are still open for delivery and take-out business. Plus, some of them are reopening now with social distancing guidelines in place. Ordering from your favorite restaurants is one way to help them and support their staffs — if you have room in your budget.
- Average monthly spending: $59.83
If you want to cut your coffee bill but aren’t ready to give up your caffeine completely, try reducing the number of times you hit the coffee shop each week. You can treat yourself on certain days of the week, like Monday and Friday — that way you start and finish your workweek in a cheery mood.
There are also specific ways to cut costs at Starbucks, such as getting a French press for your table to share and cashing in on that free coffee refill. Better yet, you can buy Starbucks beans from the store and brew your coffee at home, which can provide major savings. A 12-ounce bag of coffee beans yields 62 cups of coffee that are 9 ounces each, according to Blue Moose Coffee. A 12-ounce bag of Starbucks coffee costs about $8, so based on that price and the 62 cups of coffee that such a bag would produce, you’re getting 558 ounces of coffee — which comes out to about a penny per ounce. A 16-ounce “grande” cup of coffee brewed at home would cost about 16 cents, whereas the same cup of coffee prepared at Starbucks will set you back about $2.45, depending on your location.
In short, it’s more than 15 times as expensive to get your coffee at Starbucks instead of preparing the same brew at home.
Restaurants (Delivery and Takeout)
- Average monthly spending: $280.42
If you’re wondering how to save money on restaurants, the answer is easy: Cut it out as much as possible. If you can’t eliminate restaurant spending, try these money-saving tips to help reduce the impact on your wallet:
- Limit eating out to special occasions like your birthday or anniversary.
- If you’re in charge of picking the location, scout ahead. Both Yelp and Google use dollar signs to denote how expensive a restaurant is — the more dollar signs, the higher your bill will be. You can also choose restaurants with free appetizers and “kids eat free” days.
- Eat a couple of sides or an appetizer as your meal.
- Follow the restaurants you frequent on social media to take advantage of deals. For example, some restaurants offer deals for “checking in” on Yelp.
- Ask for restaurant gift cards for Christmas and birthdays.
How To Save Money on Entertainment
A 2018 survey conducted by OnePoll, on behalf of CooperVision, found that Americans spend almost half of their waking hours staring at a screen — and that was before the coronavirus pandemic pushed the world into remote work and schooling. All that screen time includes television, gaming and more, which might be hurting your budget. Learning smart ways to handle the costs of subscriptions and other entertainment purchases could allow you to enjoy your free time while putting cash back into your wallet.
- Average monthly spending: $35.80
There’s an increasingly strong case for cutting the cord completely. Streaming services like Netflix and Hulu offer more film and television options than you could ever hope to see in your lifetime, and at a fraction of the cost. However, if you’re not ready to part ways with your cable box, there are a few things you can do to lower the monthly cost.
Negotiating with your provider is key, whether you’re a new or existing customer. If your contract is up and your price is set to increase, call your provider and tell them you’re ready to get rid of cable completely because the price is too high. You might be surprised at how quickly they’re willing to drop your price. Just remember to be courteous when you call if you want this kind of outcome.
Take advantage of any available promotions and discounts, which include bundling your internet, landline and cable. Also, be sure to evaluate your cable usage honestly by asking yourself if you really need 200 channels. You likely stick to the same handful regularly, so why pay for the others?
- Average monthly spending: $3.89 for subscription services
Whether you buy games piecemeal or use a subscription service, gaming can get costly. A new title for a game console usually costs $60, according to Forbes. Similarly, a PlayStation Plus yearlong membership costs $59.99. If you want to keep playing for years on end, you’ll have to get strategic to cut costs:
- Wait for games to decrease in value before purchasing, or hold off for sales.
- Try playing indie games, which tend to be cheaper — and no less fun — than big-name games like Call of Duty.
- Ask for games for birthdays and Christmas, or gift cards to places like Steam, Best Buy, Target and GameStop, where you can take your pick.
- Avoid getting sucked into pay-to-play models and buying downloadable content that you don’t need.
- Choose open-world games such as The Elder Scrolls V: Skyrim and Horizon Zero Dawn, as they offer more possibilities. If the game has only one outcome, you’ll be less motivated to play again once you beat it.
- Buy used games or borrow from friends whenever possible.
- Be honest about what kind of gamer you are to determine if a subscription model or buying piecemeal makes more sense.
Magazine and Newspaper Subscriptions
- Average monthly spending: $18.25
If you’re paying for multiple magazine and newspaper subscriptions, it’s time to examine your reading habits and try scaling back to just one or two. You might find that you tend to go weeks without flipping through certain magazines because you’re so busy with work or school. But if you still can’t imagine life without your Esquire, Vogue, Vanity Fair and Rolling Stone, consider apps like Texture or Readly, which give you access to popular magazines for just $9.99 a month.
- Average monthly spending: $8.33
If you’re paying for a music subscription service such as Spotify Premium or Pandora Premium, consider downgrading to a free account to cut costs. These basic accounts don’t come with as many bells and whistles — and you’ll have to listen to ads — but in the end, you still get access to music. You can also listen to the radio for free and switch channels when ads interrupt your listening.
Additionally, remain on the hunt for discounts and sign-up offers. For instance, if you’re a student, you can get Spotify Premium for $4.99, and Spotify will even throw in complimentary subscriptions to Hulu and Showtime.
Video Streaming Services
- Average monthly spending: $10.19
If you’re subscribed to multiple streaming services, the first thing you can do is choose just one. Amazon Prime Video, Hulu and Netflix don’t cost too much on their own, but when you add them together, you’re paying quite a bit annually — plus, there are overlaps in content. Monitor your viewing habits to see if you tend to gravitate toward one streaming platform.
You can also try wrangling a discount from your favorite company. For example, Aaron of review website Three Thrifty Guys saved $4 by simply asking Netflix for a loyalty discount for being a longtime customer.
How To Save Money on Beauty, Fitness and Health
Taking care of your body and seeking to look presentable are always good ideas — in fact, some jobs require you to do this. But it’s easy to go overboard, especially if you’ve turned to online shopping while you’re at home. If you’re looking for ways to save, separate your wants and needs.
- Average monthly spending: $58
Exercise is important for both your physical and mental health, but that doesn’t mean you need a pricey gym membership to do it. Working out at home has never been easier with free fitness apps, YouTube tutorials or cost-effective fitness games for your video game console. You can also turn the outdoors into your personal gym by running around your neighborhood or heading to the local park for some free yoga.
- Average monthly spending: $27.67
The best way to save money on cigarettes is to quit smoking, plain and simple. Sure, you could try to scale back, but even one cigarette a day hurts you. According to a study on cigarette consumption published in The BMJ, men who smoke just one cigarette a day have a 48% higher risk of heart disease and a 25% higher risk of stroke. For women, those numbers are worse at 57% and 31%, respectively. Furthermore, if a pack of cigarettes costs $15 and you have 20 cigarettes in a pack, smoking just one cigarette a day will cost you $274 a year, according to Smokefree. Chances are, if you’re a smoker, you’re smoking far more than one a day anyway. Use gum, patches, hypnosis or whatever else within reason that will help you ditch one of the worst vices for your health and wallet.
How To Save Money on Banking Expenses
Figuring out how to save money on monthly expenses should always start with eliminating costs that are completely unnecessary. Though banking fees might seem small in the grand scheme of things, they do add up over time. The average person pays $84 a year in banking fees, according to January 2019 GOBankingRates data. Luckily, these fees are completely avoidable.
Account Maintenance Fees
- Average monthly spending: $6.03
To avoid account maintenance fees, sometimes called service fees or minimum balance fees, start by choosing a bank that offers checking accounts without these fees. Ally Bank, Discover Bank and Capital One offer online checking accounts with no monthly service fees. If you already have a checking account, remember what the minimum account balance is and maintain that at all times. If your bills are on autopay, be sure to keep in mind when each bill will be deducted from your account so that you don’t accidentally go too low. And, of course, watch your spending.
- Average monthly spending: $2.63
ATM fees are charged when you use an out-of-network ATM, so the best way to avoid them is to stick with your own bank or credit union’s ATMs. If you find that you’re consistently having to visit ATMs that are out of your network, consider switching to an institution that will reimburse ATM fees in real time, such as Fidelity. Or, you can open an account with a bank that has plenty of ATMs located near where you live, work or go to school.
- Average monthly spending: $30.92-$32.70
Overdraft fees occur when you spend more money than you have in your account and the bank covers the cost. They do this when you’ve signed up for overdraft protection. If you don’t have overdraft protection, the purchase might not go through, and regardless, you’ll be hit with a different kind of fee: nonsufficient funds.
To avoid this mess altogether, make sure you can track where every penny is coming and going. This sounds tedious, but it pays off big time to know when bills will be automatically debited from your account or when your spouse is planning to buy that brand-new TV.
How To Save Money on Credit Cards
Though credit cards are inarguably useful, they’re also a pain point for many American households. In a November 2018 GOBankingRates survey, nearly 33% of respondents said they wanted to get rid of credit card debt the most compared to other forms of debt. And this is understandable — credit cards typically come attached with high interest rates, and the average balance per credit card user was $5,543 in the second quarter of 2018.
Luckily, there are a number of ways to ensure your credit cards aren’t carrying a balance, such as eliminating those annoying little fees that add up over time.
Balance Transfer Fees
- Average monthly spending: Varies
If you’re trying to pay down debt, the idea of opening a balance transfer credit card can be enticing. However, when you factor in the transfer fee — which is typically $5 or 3% of the amount transferred — you might find yourself rethinking that strategy. To determine if paying a balance transfer fee is worth it, look at the amount of time that the 0% APR is offered. For example, if the introductory period is 16 months, divide your debt by 16 to see what your monthly payment would need to be in order to have the balance paid off in time. And, don’t forget to factor in the cost of the fee itself.
There are also a few options for credit cards that don’t charge balance transfer fees at all, such as the DCU Visa Platinum Rewards card.
Cash Advance Fees
- Average monthly spending: Varies
A cash advance fee is charged when you take out cash against the line of credit on your credit card. You should only do this in an emergency, as you’ll pay not only the cash advance fee — usually $10 or 3% of the cash borrowed — but also interest on the amount that you took out. Withdraw from your checking account to avoid these fees, and be sure to build up an emergency fund for situations where you need cash fast and your checking account doesn’t have enough.
Credit Card Annual Fees
- Average monthly spending: $6.47
Annual fees on credit cards can get pricey and aren’t worth the cost in some cases. For instance, the Citi/AAdvantage Executive World Elite Mastercard charges a $450 annual fee. If you don’t take advantage of your credit card perks and can’t spend $40,000 within a year to earn 10,000 miles, you won’t get your full money’s worth. Ultimately, you have to weigh the benefits of the credit cards that you’re considering before determining if the annual fee makes sense.
The best way to avoid the cost completely, however, is to find a credit card with no annual fee, such as the Chase Freedom or Capital One VentureOne.
Late Payment Fees
- Average monthly spending: $38 per payment
Late payment fees are one of the main reasons that you should put credit card bills on autopay. If you were to make a late payment every month, you’d spend $456 a year, on average — not to mention ruin your credit score and risk getting your card canceled.
By ensuring you are set to automatically make the minimum payment each month — and that you have money in your checking account to cover the cost — you’ll avoid late payment fees altogether. If you do incur one by accident, try calling your credit card company, explaining the situation and asking if they can reverse the fee. Whether they say yes or no will depend on who you talk to and how kindly you do it, so don’t think that you can call once a week to get a fee reversed.
How To Save Money on Investing Expenses
Investing is a great way to grow your net worth and feel confident about your retirement nest egg and future finances. That said, investing can also be a minefield of jargon, mixed messages, risks and, unfortunately, fees. It might take some time to learn the lingo, but fees are something you can tackle right now to save money on investing.
Annual Account Fee/Custodian Fee
- Average monthly spending: $2.08
The average annual brokerage fee is $25 a year, but these fees can certainly be higher than that. Fortunately, it’s possible to find ways to lower your annual fees or eliminate them completely. There are discount brokers out there, as well as brokers who simply don’t charge annual fees, such as Fidelity. Ultimately, you’ll need to do your research, weighing the pros and cons of each brokerage — including whether or not the fee is worth it — and choose the brokerage that makes the most sense for your financial needs.
Investment Management/Advisory Fees
- Average monthly spending: Varies
Hiring someone to manage your money can help in avoiding a lot of pitfalls, but it comes at a cost. Fees for financial advisors vary widely, with some places charging as high as 2.5%, according to Cardiff Park Advisors, and others coming at a comparatively low cost. Fidelity, for instance, charges as low as 0.35% for its digital advisor option.
One simple way to save money on fees is to ditch your investment advisor. Someone with a large, complex portfolio containing a variety of assets and tax implications will likely find their advisor invaluable. However, an individual investor who is relying on a couple of retirement accounts might find that a simple mix of exchange-traded funds (ETFs) and index funds could generate the same returns as an expensive advisor — without the advisory fees.
It’s also important to find an advisor who not only meets your needs but also offers a fee structure that fits your investing style. An advisor who takes a straight percentage of your portfolio as a commission might make sense if you’re more hands off with your money and want someone who will take a big-picture approach in managing your investments. But if you’re an active investor with a clear sense of where you want to invest, you might be better served by an advisor with an a la carte approach who will accept a flat fee or hourly rate for specific advice or services.
- Average monthly spending: Varies
If you’re investing in a mutual fund, you’ll need to pay the professionals who are putting all of their know-how into managing your investments. You’ll pay in one of three ways: the expense ratio, a load or a combination of the two. Fortunately, there are some very easy ways to decrease the amount of your money going toward fees.
Pay close attention to the expense ratios and shop around for ones that charge the least. The differences are small — usually a fraction of a percent — but they can have a huge impact over time. In particular, look at passive ETFs and index funds. These vehicles are just trying to match market returns, and they charge much lower expense ratios than traditional mutual funds and don’t require as much management as a result. Also, think carefully before investing in a load fund about whether or not the additional expense is justified. Those funds can certainly make their additional fees worthwhile over time, but there are no guarantees.
If you’re not having someone actively manage your account, you’re likely going to be charged fees by the brokerage firm for your transactions. Research from GOBankingRates found that the average fee for stocks and options trades was $6.41 across nine big-name brokerages, including Charles Schwab, TD Ameritrade and Vanguard. For futures contracts, the transaction cost was $1.69 on average, and it was 74 cents for options contracts.
These fees are largely unavoidable unless you find a commission-free trade option such as Robinhood, cash in a temporary promo deal from a brokerage firm or get a deal for being a high-volume trader. E-Trade, Firstrade and some other brokerage firms offer commission-free ETFs, too, but at certain brokerages, this applies only to their own ETFs — they’ll charge you otherwise. So, this option might not make sense for you if you’re not planning to stay within the same brokerage firm for all of your investments.
Given the vast array of options out there, it’s safe to say that you should weigh your choices carefully and choose the one that meets your personal investment objectives. It might mean paying fees, but there are certainly ways to reduce or eliminate those fees if you do your research.
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This article has been updated with additional reporting since its original publication.
This article originally appeared on GOBankingRates.com: 44 Ways To Trim Your Living Expenses During the Coronavirus Quarantine