By: Hirsch Serman, MBA, CPA
Have you ever wondered if you are throwing money out unnecessarily? Are you wasting money on everyday expenses without even realizing it? Have you ever reviewed your spending habits? Too often we leave our finances on auto-pilot. As easy as it is to keep going the way you always have, it can be costly. Here are some common and easy ways to save some significant money.
- Wake up and smell the Coffee!
Literally wake up and smell the coffee – make it at home! This ends up being an enormous cost without even realizing it. I recently spoke with someone who wished she could take her kids on vacation. I told her to buy a Keurig or Nespresso (if you not a coffee snob then buy a traditional coffee machine or, even better, instant coffee). She can save about $4 or more per cup of coffee. Now $4 may not sound like much, however, it adds up to approximately $2,000 of your income a year. For those that have more than one cup a day, this can be significantly more. That’s a few days of vacation in a cup!
- Cable/Direct TV
This is one I have suggested to many people. I see people paying for anywhere from $250 to $400 a month on cable or Direct TV. My suggestion is to get Netflix, Hulu, and Amazon Prime. Throw in a Fire Stick or Roku (you can purchase for as low as $29.99) for some extra channels. This will give you a multitude of viewing options for your pleasure and on the low end can save you as much as $4,000 of your earned income.
- Credit Cards
A large part of my practice is focused on people struggling with high balances, and even higher interest rates. This is an area of concern for many and unfortunately something many people do not know how to get under control. At the time I wrote this, I am seeing some credit cards with interest rates as high as 34.49% and an average rate over 20%. Some of the biggest culprits for rising balances include the ease of using and losing track of your spend amount, unpaid balances, and possibly the biggest is poor spending habits. The only way to save money on this is to systematically reduce your balance – to zero. This takes a game plan and discipline. This is one area that you may need professional help if you cannot do it alone.
- Late fees and overdraft protection
These fees are among the most unnecessary fees I see. Creating a system to pay your bills on time and how to monitor your account balances to avoid overdrafts is essential. If you are not sure where to start on this, I highly recommend working with a professional for a couple hours. It will streamline managing your household finances, save you time, and save you money. You will save significantly more in fees than your outlay.
- Home Warranty
Generally, the older your appliances the larger the potential savings. Policies cost approximately $600 a year and cover the major appliances of your home. According to First American, one of the largest home warranty companies, below is a sampling range of expenses for repairs that would be covered by a home warranty policy.
| A/C | Plumbing | Heating | Electrical | Oven/Range | Water |
| $706 to $2,989 | $460 to $1,500 | $684 to $2,753 | $400 to $1,655 | $851 to $2,935 | $860 to $1,600 |
- Life Insurance (and any coverage you have not checked in a while)
If you are like most people, you have bought life insurance for the long term protection. Whether you bought whole life or term, you may be paying too much. In general, the younger you purchase life insurance, the lower the premium, unless you bought it more than 10 years ago. In 2009 the life insurance companies changed the mortality tables used to set premiums (people are living longer) and this brought down the rates. The point here is that it is important to periodically review the coverages you have. Have your needs for that coverage gone up or down due to a change in circumstances? Is your rate the most competitive out there? Can you bundle items and save? Financial products are constantly being introduced into the market and it makes sense to review what you have, how much you need, and whether there is a better alternative.
Changing a habit can be tough. It may help to work with someone for a short time to objectively review your spending with you. Once you start, it often becomes the motivation to look for more ways to create financial wellness.
Hirsch Serman, MBA, CPA is the founder of Lifecycle Financial, a company that helps those going through Divorce and other life cycle changes to navigate the financial pitfalls of a new life dynamic. The company was founded through personal experiences in divorce and watching the changes in an aging parent. He has worked in finance for over 20 years (including financial planning and tax) and has taught on the university level as well as conducted seminars for high school youth on personal finances. Hirsch is a member of the American Association of Daily Money Managers (AADMM).
INC., The Memphis Business Journal, The New Southern, and Funding Sage media outlets have all covered his work in Divorce and Hirsch was selected to be a New Orleans Entrepreneur Week Fellow. Hirsch has a passion to serve others and has worked with numerous non-profit boards including the United Way and is a trustee of Texas College. Please reach out with any comments to [email protected].