Even those with strong money management skills sometimes waste money or pay more for things than they should. Not all wasted money is in the form of eating in restaurants every night or getting a coffee on the way to work, although those are generally the easiest money leaks to recognize and fix. There are other situations where money may be wasted that aren’t quite so obvious. Here are five ways you may be wasting money and how you can reduce the waste:
1. Insurance Deductibles
An insurance deductible is the amount of money you have to pay before your insurance coverage starts covering the claim. Many people carry lower deductibles on their insurance policies so they can pay less if they need to put in a claim. A better strategy may be to increase your insurance deductibles and keep enough money to pay the higher deductible in an accessible account in case you need to put in a claim. The higher your insurance deductible, the lower your insurance premium, and since you only pay the deductible when you actually make a claim– it often makes more sense to have a higher deductible and lower premium. For car insurance premiums, people can save anywhere from 10% to 40% on premiums just by increasing the deductible from $250 to either $500 or $1,000.
Homeowners insurance works the same way: the higher your deductible, the lower your premium. Raise your homeowner’s insurance deductible from $250 to $1,000 and save about 24% annually; raise it to $2,500 and save about 30% annually.
This may not be a good money saving strategy for someone with little money in savings, or someone who puts in claims and pays their deductible often.
2. Snow Removal Tools
If you live in an area that experience three months with possible snow storms per year, do you really need to invest $1,200 on a top-of-the-line snow blower? It will sit in your garage or shed the rest of the year. These machines have engines and need to be maintained over time, too. A better idea may be to split the cost of a snow blower with a couple of your neighbors, and allow everyone to use it to clear their driveways and sidewalks, or to simply pay someone for snow removal if it’s needed infrequently.
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