Most of the initial stages on the road to wealth involve making sure that you’re moving forward, not slipping backward.
Unfortunately, many of us are too consumed by day-to-day life to focus on the countless instances of small-scale back-sliding: completely unnecessary waste, extra money we could have if we just reached for it, fees we could avoid if we just made a little effort. The stupid easy stuff, in other words.
What follows is a list of 10 common financial leaks — by no means an exhaustive list, but a good starting point — and strategies for plugging them.
1. Your savings barely earns interest. The average money market fund pays next to nothing — 0.12% as of March 2013 — yet savers still leave loads of money in them. With a little shopping around, you’ll see that many institutions pay close to 1%, which can earn $100 a year on every $10,000 in savings. Search for the best rates here.
2. You don’t admit your money mistakes. This one has broad application, but let’s focus on a really common one: You haven’t been to the gym in months, but you don’t cancel your membership because doing so would mean acknowledging that you made a mistake — and that you won’t get back the money you already wasted. Continuing that unused membership can cost $500 to $1,000 a year.
3. You waste your flexible spending dollars. A third of FSA account holders let their hard-earned dollars go unspent each year — at a cost of $120 a year on average. To use up funds by the Dec. 31 or March 15 deadline (check with your firm), buy a spare pair of glasses or stock up on staples like bandages. You’ll need a prescription to get reimbursed for most OTC meds, which your doctor can fax to the pharmacy.
4. You leave your heat and AC running for no reason. Using a programmable thermostat to adjust your home’s temperature — it can lower the heat at night and when you’re at work, for example — could shave 5% to 15% off your heating and cooling bills. What’s more, about half of households with a programmable thermostat fail to use that feature.
5. You pay your bank to hold your money. Americans spend $7 billion on bank fees each year. But many banks will waive their monthly checking account fee if you set up direct deposit from your employer.
Source: CNN Money | Amanda Gengler