Five personal finance tips better than skipping your daily latteJay Handy, CEO of Walnut Capital Management and SignalPoint Asset Management
by Jay Handy, CEO of Walnut Capital Management and SignalPoint Asset Management
You’ve probably read the plethora of financial advice columns telling you that if you would just skip your Starbucks latte every morning, you’ll be rich before you’re 45.
But ask yourself this: Are you prepared to never venture into a coffee shop again?*
Most likely, you’ll buy another latte. “Just this once,” you’ll tell yourself. And you’ll tell yourself this over and over again until you’re buying lattes every day and feeling defeated. At the end of the day, if you enjoy a latte in the morning, skipping it isn’t going to be realistic way to fund your retirement plan.
But is it possible to make the equivalent savings over the long term some other way? Yes! And it doesn’t require daily willpower.
- Negotiate your bills
People are accustomed to just accepting the price shown on their phone and utility bills, presuming the price they see is the price they must pay. But we shouldn’t assume that our bills are set in stone.
Bills are ongoing expenses so negotiating with the company can save you a significant amount of money in the long term. Some bills are more flexible than others, and I recommend trying your cell phone bill first.
To do so, check which plan you are on and see if the company can offer you on which is more appropriate to your usage. Don’t pay for something you don’t use!
If you have been a customer for a long time, use this history as leverage. Tell the phone representative (nicely) that you want to cancel your contract and they’ll pass you through to someone who will offer you all kinds of discounts to stop you from canceling. If you manage to cut just $10 off your phone bill every month, you’ll have made $120 a year all from one phone call.
(See more tips on negotiating a phone bill here.)
- Ask for a pay raise
The most straightforward way to accumulate more money is to make more money, so try asking for a pay raise. Many people shy away from asking for more money, but you shouldn’t.
You’ve surely had days at work when you think to yourself “I don’t get paid enough for this.” Well, you’re probably right and your boss probably knows you’re right. Appraisals and progress meetings are the best opportunity to bring up a pay raise.
- Buy in bulk
Buying in bulk doesn’t necessarily mean buying food in enormous quantities at Costco. Think about other recurring expenses, including travel. If you use public transport to commute to work, check to see if there is a monthly, seasonal or annual travel pass. You’ll be making savings every time you travel without having to conjure up any willpower whatsoever.
Similarly, if you like to get massages or other salon services, you can usually buy a package of 4 or 10. While the bulk price tag might look hefty, you’ll save money in the long run if you’re a regular customer.
- Move to a new neighborhood
If you live in a metropolitan area, the difference in rent by neighborhood can be astonishing. A property just a mile away might be hundreds of dollars per month cheaper for comparable floor space. Over the course of a year, you could invest thousands of dollars that would have otherwise gone to your landlord.
If you rent it’s likely that you are used to moving anyway, so consider what is actually important to you in a property. Is it square footage? A home office? A backyard? A dishwasher and gas stove? Compare the different areas with your criteria in hand and consider a cheaper property that meets your needs. If you cut your rent bill, you’ll save money every day just by living there.
- Review all of your financial products
Oddly, the public perception of and insurance companies is that they are not a company selling products. And yet, they offer different rates and incentives for things like credit cards and mortgages.
If you’re not using all the bells and whistles of a service, such as the rebate options on a Visa credit card, you might be paying more for something you don’t need.
Review your credit cards: Look at the interest rate you currently get and see if you can get a better deal by switching to a new card at a lower rate or an initial 0% interest rate. If you call your credit card company and tell them about your intent to switch to a new card (and mean it), they may offer you a better rate.
Look at your life insurance coverage and consider whether you really need to be insured for as much as you are. It’s very comforting to think that you have a policy worth millions but does your family really need it? It’s financially responsible to protect your family against the worst, but be careful not to overprotect them with an expensive policy that drains you of your resources when you’re alive.
Saving doesn’t have to be a daily sacrifice. By taking action just once you could be making big savings in the long term — and you don’t necessarily have to cut back or change your lifestyle to do so.
*If you’re not a coffee drink, substitute your own personal indulgence here.