Being smart with your finances often involves getting creative with how you can make the most of your financial accounts and grow your savings. We’re often told to “budget better”, put savings into a high-interest savings account and simply avoid taking out too much debt, which are all very obvious tips. But what are some more unique ways you can improve your financial position?
Whether it’s negotiating for a better interest rate, making extra repayments on your loans, minimizing your household energy usage or giving up smoking, there are many unconventional tactics you can use to improve your financial health
Negotiating for a better price on your financial accounts is a smart way to save some cash and ensure you’re getting the best value for money. Whether it’s your home loan, credit card, Internet bill or mobile phone plan, do some casual research online to see what other providers are charging and find out if you can score a better deal, then ask your current provider.
For instance, if you’re constantly using more than your monthly allowance on your mobile phone plan and having to pay extra, compare different products from other providers and see if your existing provider can match (or beat) a competitor’s price. If they’re not willing to budge or offer you a more competitive price, then it may be time to switch to a new provider. A saving of even $150-$200 per month can add up quickly over time.
When you sign up for a financial product such as a loan, the bank will create a repayment plan for you and specify what your minimum repayment each month is. Many people fall into the trap of only making the minimum repayment, even if they have the capacity to pay more than this amount. This is something that you should avoid doing.
Instead, get into a routine of paying more than the minimum amount of your outstanding debts. For example, if your monthly mortgage repayment is $1,502, round this up to $1,510 or even $1,520. Alternatively, if you have some surplus cash or income, such as a bonus you’ve received from work, you should throw this towards your loans right away. Doing this will help you reduce the interest you pay on your loan and it will minimize the loan term.
Being conscious of your energy consumption is another tactical way that you can save money. Whether it’s choosing energy-efficient appliances such as a television or dishwasher, using the “eco” setting on your washing machine or using a ceiling fan instead of an air conditioner, there are plenty of ways you can cut your energy bill (while also minimizing your carbon footprint).
With the Easter school holidays coming up, it’s important to be aware of the “holiday tax”. Whether it’s inflated prices for airfares and accommodation or public holiday surcharges at restaurants, it’s important to avoid paying extra.
To avoid inflated prices, consider traveling during an alternate time of year and rethink your need to dine out on a public holiday.
Saying goodbye to unhealthy (and costly) habits such as gambling, smoking or drinking can help you save.
For instance, if you’re spending $100 on alcoholic beverages each month and you decided to give up this habit, you’d have $100 extra that can go towards paying your bills or repaying your loans. On a $500,000 mortgage at 5.0% interest, if you made extra monthly repayments of $100 (starting 5 years in), you’d pocket over $27,000 in saved interest. To top it off, you’d also reduce your loan term by 1 year and 9 months.
Many insurance providers and banks also offer discounts or rebates for healthy habits, such as if you walk a certain number of steps per day or quit smoking.
There are many fees that you shouldn’t be paying on your financial accounts and one of these is ATM withdrawal fees (when you withdraw from another bank’s machine). Typically, ATM withdrawal fees range from $2.00-$3.50 per transaction, which may not seem like a lot, but if you’re doing this on a regular basis, it can quickly add up.
If you’re traveling abroad, you should also be cautious about racking up ATM fees. Rather, see if your bank is part of the Global ATM Network Alliance. Otherwise, consider using a debit card to avoid global transaction fees.
As a retiree, you may find yourself facing an extremely tight budget, especially if you have unexpected medical costs or home repairs to contend with. Taking out a reverse mortgage on your home can help you to deal with those financial problems by providing you with extra cash each month for a set period of time. Your lender will discuss reverse mortgage pros and cons with you, including the positive fact that you will not be required to pay the money back right away, giving you financial freedom during your retirement. You will also be made aware of the negative side of such reverse loans, including the fact that your loan balance will be due if you ever leave the home, which means that your heirs may not inherit the property from you.
When it comes to managing your personal finances, think of more unconventional ways that you can reduce your debt and increase your savings. Get yourself into good money habits early on and you’ll be on your way to achieving your financial goals, whatever they may be, in no time.
Bessie Hassan is a Money Expert at finder.com.au. She is a respected media commentator who regularly appears on radio, TV, and throughout digital publications sharing her best money-tips.