5 Ways to Save Money on Your Household Expenses

5 Ways to SaveIf you’ve been trying to budget, you may have had the experience of looking around your house to see where you can cut costs. It can seem like quite an unpleasant task, one that requires eliminating lattes or making a number of other sacrifices.

But saving money doesn’t always have to be difficult — or even require any changes to your coffee habit. Here are a few ideas to get you started.

1. Look into refinancing

If you have a mortgage, it might be a good time to consider refinancing. According to Freddie Mac, rates on 30-year fixed mortgages are at near historic lows (going back to 1972)1. Depending on your loan characteristics and financial plan, the implication is that now could be a good time to lock in a lower interest rate on your mortgage.

Even though it might not always feel like it in the moment, paying a lower interest rate can save you a huge amount of money over the long run. For example, if you are making monthly payments on a 30-year fixed home mortgage of $250,000 with a 4.5% interest rate, your total interest cost over the life of the loan will be about $206,000, not including any other fees or taxes. With a 3.5% interest rate, that cost drops to $155,000, all else equal.

Refinancing a home will likely trigger upfront closing costs and fees, and the interest rates available to you may vary depending on your mortgage, credit history, and home value. Refinancing isn’t right for everyone, and it’s always possible that rates could go down further.

However, if it’s in keeping with your financial goals and you can access a good deal, it can be worth looking into refinancing as a way to save on the long-term cost of home ownership.

2. Make your home more efficient

Are you tired of opening your utility bills in the depths of winter or height of summer — or really, at any time of year?

Maybe you could benefit from energy efficient home improvements. Solar panels, for example, are becoming increasingly popular among homeowners. New residential solar power generation reached a high in 2015 as people invested more and more in the technology.2 The expansion of tax incentives for solar might be part of it; they’ve helped to reduce the cost of solar panel installation by 73% since 2006.3

But home upgrades don’t have to be quite that dramatic. You could simply replace your thermostat with a programmable one, upgrade your windows for better insulation, or choose new energy-efficient appliances when replacing your old ones.

Small changes can add up. According to the US Department of Energy, most energy in homes is wasted “through leaky windows or ducts, old appliances, or inefficient heating and cooling systems.” The Department estimates that the typical family could save up to 25% on utility bills simply by making intelligent upgrades and adjusting energy usage behaviors.4

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3. Explore your insurance options

Do you have life insurance? Car insurance? How about a homeowner’s policy?

Whether you have one insurance provider or many, it can be worth your time to research lower-cost alternatives. Sometimes just shopping around can help you find a better price on the insurance coverage you need. Other times, you’ll find that insurance companies will try to get your business by offering package or family deals.

Research your options online or ask your broker for better rates based on the types of policies and coverage amounts you need. With some comparable prices in hand, you can call up your existing providers to see if they’ll match their competitors. If not, it might be time to take your business elsewhere.

When shopping around, keep in mind that insurance policies are only as good as the company issuing them, so research your insurer’s creditworthiness and customer service history. You don’t want to save money now only to find out that you’re unlikely to receive benefits later!

It’s also tempting to try to save money on insurance by raising your deductibles or reducing benefits. This isn’t always bad in and of itself, but make sure that your coverage is in line with your financial needs and goals, and that you’ll be able to manage any potential costs.

4. Take advantage of deals on technology

If you’ve ever been blown away by low introductory rates for cable TV or internet compared to what you’re paying, then you’ve experienced the power of “stickiness.” Companies offer these kinds of deals to get you in the door with the expectation that you won’t make the effort to shop around later.

In other words, you’ll “stick.”

Similar to insurance, taking the time to look for better rates could save you a lot of money each month — and it might not even be as much of a hassle as you’d expect. Companies like to keep the customers they have, so you may be able to call your existing provider and get another introductory deal that keeps you on the books. Bundling services where feasible could also generate savings. For example, you might want to consider a family plan for your cell phone or data.

Of course, the amount you save will be dependent on what’s available in your area, the products and services you use, and the deals being offered at a given time. Your mileage could vary — but it could also be significant.

5. Re-examine your banking situation

Finally, take a look at your banking costs.

Two banks right next door to each other could offer largely similar products and services, but at profoundly different prices. If you’re paying high fees for your bank accounts, it could be time to see what else is out there.

While you’re at it, consider expanding your search beyond traditional banks. Credit unions, for example, operate similarly to banks in terms of the services they offer, but you might find a credit union that offers more competitive prices. These savings are driven by the member-owned, not-for-profit structure of credit unions (which some customers find attractive in and of itself).5

With all of these tactics, the savings you accrue on a monthly basis might not seem like a lot at first. But put them together and you may find that you’re making a lot more headway on your budget than you expected.

That’s how it is with saving: a lot of times, small changes added together can be more incredible than you could imagine. Use those kinds of small budgeting victories to transform your budget, and your finances, for the better — without foregoing the coffee.

Act Today!

We can discuss this topic and more in person at a complimentary appointment. As a bay area retirement specialist we can give you a review and make suggestions based on your retirement objectives.

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