That title might be a little misleading. I’m not telling you to go out and shop for new clothes or a new car and other things. I am telling you to go shop for new insurance coverage, review your investments and your banking needs. The reason for this is because many of us “set it and forget it”. While this is good in some areas in life, being lazy like this with your money actually costs you more money in the long run.
Most of us find an insurance provider for our cars and house and stay with them. I did this for the first 13 years I was driving. I simply went to the same people my parents used their whole lives. A few years ago, I became tired of seeing my rates increase every year when I was never in an accident, never received a ticket and wasn’t driving a fancy new sports car. I decided to shop around and was I ever surprised.
I researched two insurance companies and both quotes came in lower than my current provider. Of course, just because they offered the lowest price didn’t necessarily mean they were better. I was looking into how responsive they were in paying claims, how easy they were to work with, etc. All of this can be found online. After doing my research, I settled on the one firm and was saving myself $250 per year. All for around an hour’s worth of work. The great thing about doing this is that it costs you nothing. Insurance companies will happily provide a free quote.
When it comes to investing, many of us are paying high fees with our mutual funds. It doesn’t have to be this way. There are many mutual funds and exchange traded funds (ETFs) that have very low expense ratios. Most of us don’t realize how much we are paying in fees since we never get billed for them. We do get charged; it’s just that they are hidden in the fund’s returns. For example, you might think you did great this year earning an 8% return. But, before the fees were deducted from that return, you earned 9.1%. You paid an entire 1% in fees. I know, 1% seems small. But if you are investing $100,000, that’s $1,000 per year you are paying in fees. Over the 35 years of investing for retirement, that is over $35,000 you paid in fees!
In reality, you are paying more than that in fees since your balance will be increasing each year and if you had kept that money, you would have been able to reinvest it and let it compound into an even greater amount. The point is: be aware of the fees!
It is a hassle to switch banks. I know banks say direct deposit is for saving the environment – less paper equals fewer trees – but I really think it’s done to keep you as a customer. It’s just one more thing you have to change if you want to switch banks. As much as of a pain it can be, it is important to see if you are paying fees you otherwise don’t have to.
Look into your average balance and how many times you use your debit card. Many times you can get free checking simply by keeping a certain amount in the account and setting up direct deposit. With so many banking choices today, there really is no need to be paying a fee for simply having a checking account.
These are three areas you need to shop around for new services. Make it a point that every new year, you review your investments, compare insurance quotes and be certain that you are using the right bank account for your needs. The worst thing you can do is lose money simply because you are lazy. You work hard for your money. Make sure you put in the effort to keep it. The tips above won’t cost you much time but could easily save you thousands of dollars.
Hi, my name is Jon and I run Penny Thots. I blog about many personal finance topics, but my specialties lie in investing, paying off debt, and achieving your financial goals. You can learn more about me on the Author Page.