I recently attended a presentation on helping clients with personal budgeting. It contained lots of good advice until the presenter starting talking about eye-rolling ideas for saving money, such as buying large blocks of cheese to shred yourself instead of purchasing the pre-shredded variety.
When my clients ask for ideas on saving money, I try to provide ideas that will have a real financial impact, and importantly, don’t require a major change in lifestyle. Here are ten of my favorites:
1) Get a 5% cash back credit card. Good deals on credit cards are still out there, and several cards will pay you 5% cash back on purchases at supermarkets, gas stations and drug stores. Spend just $100 per week on food and gas and you’ll get an extra $250 in your pocket each year.
2) Bundle your phone, Internet and tv services. Cable and phone companies are battling for your business as they invade each others’ turf. Take advantage of these offers for your benefit! I recently went with Comcast’s $99/month offer which shaved $30 per month from my combined bills PLUS I don’t have to pay for long distance any more. As an added bonus, our Internet speed is now substantially faster too.
3) Buy jewelry insurance. If you own expensive jewelry (like an engagement ring), you probably insure it via a rider on your homeowners or renters policy. These policies usually charge tremendously high premiums for the coverage that they provide. Instead, switch your coverage to a jewelry insurer and you’ll not only save up to several hundred dollars per year, but enjoy much better coverage as well.
4) Increase your car insurance deductible. Make sure your collision and comprehensive car insurance deductibles are set at $1,000 each. Yes, you may have to pay a bit more out-of-pocket if you are ever in an accident, but it beats paying for the high cost of a low-deductible policy year-after-year.
5) Open a Flexible Savings Account. Many employers offer FSAs, which allow you to deduct money pre-tax from your paycheck for health care-related expenses. Then, you just submit receipts to your health insurance company to be reimbursed the full purchase price, tax-free. It’s a nice tax deduction that even very healthy people can enjoy, as you can use these funds for things like contact lenses and supplies, trips to the dentist and even vitamins. Hint: Planning on having a baby in 2009? Set up one of these accounts before year end for big savings!
6) Purchase commuter checks. If you take public transportation to work, this is another great little tax benefit. If your employer and community participate, you can have the cost of your monthly bus or train pass deducted from your paycheck each month, resulting in another $100 - $200 annual tax benefit to you.
7) Shop via a rewards program. Programs like MyPoints award you points redeemable for gift cards for every purchase you make. Find a program that your favorite online merchants participate in and make all of your purchases through their Web site. A few free gift cards at year-end are a nice way to treat yourself or reduce the costs of gift-giving without reducing the gifts you give.
8 ) Set up overdraft protection. Many banks now charge $35 per bounced check which can quickly add up to hundreds of dollars in fees if you happen to have a bad day calculating your balance. You can often set up free overdraft protection by linking a credit card to your checking account. Your credit card will charge you the high cash advance rate for the amount that you are overdrawn by, but you can pay it off during the grace period to avert both punitive fees and interest charges.
9) Don’t miss out on cheap gas. While gas prices are down substantially, prices may still vary widely in your neighborhood. Take note of which stations have the best prices or use a site like Gas Buddy that tracks prices at stations nationwide. Going just a few blocks out of your way to save 15 cents per gallon could put an extra $100 in your pocket next year.
10) Shop the week after Christmas. People get up before dawn on Black Friday, but huge bargains and quieter stores can always be found during the last week of December, and probably even more so this year. Take the opportunity to snap up that gift you thought you were going to receive, clothes for your kids (and yourself), and even holiday decorations for next year at a fraction of what they cost just a week or two before. It’s a great excuse to spend those holiday gift cards too.
This is a guest post by Kristin Harad, CFP ®. Kristin owns VitaVie Financial Planning, a San Francisco financial planning firm focused on new and expectant parents.