You’re Probably Spending Too Much on These 7 Things

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Wasting a little money from time to time proves you’re only human, but that doesn’t mean you should spend with reckless abandon. Everyone should occasionally take time to comb through their budget for areas where they’re overpaying so they can hold on to more of their cash. Here are seven common categories to start trimming.

1. Housing

Housing is most people’s largest expense at every age. It can seem like there isn’t much you can do about it, but you do have choices. Homeowners who have a mortgage should keep an eye on interest rates, and consider refinancing if they drop. They could also rent out an extra room in their home to bring in extra cash.

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If you’re renting or in the market to buy a house, you should choose your next home carefully. Think about how much you can comfortably afford and how much space you actually need. It might be tempting to shell out more money for a home with all the bells and whistles, but if you’re trying to save money, it’s probably not worth it. Focus on finding a place that has the things you need at a price that’s fair.

2. Utility bills

In addition to steeper rent or mortgage payments, larger homes typically bring larger utility bills. This is especially true for older homes that may not be as well insulated or don’t have energy-efficient appliances. Conducting a home energy audit can help you see where you’re losing money and what you can do to lower your utility bills.

You can also invest in smart-home devices like a connected thermostat to reduce your home’s temperature when you’re at work and warm back up when you get home. Smart outlets can eliminate phantom electricity, which is the power used by devices when they’re plugged in but not turned on. You should also go easy on the heat in the winter and the air conditioning in the summer. In either case, setting it a few degrees short of your ideal temperature can save money.

3. Insurance

Checking insurance rates at least once per year can help you secure the best possible deal. Set aside an afternoon to get a few quotes for your home or renters, auto, and health policies to see what options are out there.

It’s best to choose a high-deductible plan if you’re trying to keep your monthly costs low. Set aside the money you’re saving in premiums to build up an emergency fund so you can cover your higher deductible when you need to use it.

4. Bank fees

Certain bank accounts charge monthly maintenance fees, and additional fees for not maintaining a certain minimum balance, overdrawing your account, making too many transfers or withdrawals per month, or stopping payments on checks, among other things. You might not even realize that you’re paying these fees because they come directly out of your bank account.

Your bank should provide a fee schedule, but if you cannot find your old paperwork, check your bank’s website or ask the bank for more information. Some fees, like fees for paper statements, are easy to get rid of. With others, you might be able to negotiate them down with your bank. If you find you’re paying too much in fees and you can’t get rid of them, switching banks is an option too.

5. Credit card fees

Some credit cards charge annual fees, but these are worth it if you believe you’ll earn more in rewards than it costs you to own the card. Do some math to figure out whether this is the case for you. If not, try to negotiate with the credit card issuer to get rid of the fee, or close that credit card and switch to a card without an annual fee.

Avoid late fees whenever possible; they could hurt your credit score. Take steps to pay down your credit card debt today, if you have any, starting with the card that has the highest interest rate. Be sure to make all your minimum payments to avoid late payments.

6. 401(k) fees

Yes, even your retirement accounts charge fees, and these also come directly out of your account, so you may not even know you’re paying them. They can eat into your profits over time, forcing you to save even more before you can retire comfortably. Some fees are administrative, like record-keeping fees, while others depend on what your money’s invested in. Expense ratios are annual fees that all mutual funds charge shareholders. They can vary considerably from one fund to the next.

Ideally, you should keep your 401(k) fees to 1% of your assets or less. Contact your plan administrator and look over the prospectus for your investments to see what you’re paying. If you think it’s too much, talk to your employer about adding more low-cost investment options, like index funds, to the plan. You could also roll your savings over into an IRA, since these are often cheaper and give you more investment options. But this might not make sense if you’re getting a 401(k) match that covers what you’re paying in 401(k) fees.

7. Medication

Staying healthy or actively improving your health might free you from spending money on medications, but if this is not possible for you, there are still ways to keep your costs low. Make sure you have health insurance so you don’t have to pay for your prescription costs completely out of pocket. You can also find online coupons, which can bring down your costs significantly.

Go with generic medications whenever possible. They provide the same benefits as the name-brand drugs at a fraction of the cost. Some online sites enable you to comparison shop to see which pharmacies in your area offer the lowest rates on a certain medication.

We’d all like to hold on to a little more of our money, so try some of the above tips and see what kind of a difference they can make.

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