Plug These 10 Most Common Financial Leaks

There's no reason to let your money go down the drain.
There’s no reason to let your money go down the drain.

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.

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Source: CNN Money | Amanda Gengler

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