- Americans could easily pay over $10,000 in banking fees over the course of a lifetime, according to a recent GOBankingRates survey.
- Avoiding these fees could clearly make a major difference, especially if you were to invest that money each month instead and let compound interest work its magic.
- Budgeting expert Amy Blacklock shares how she and her husband keep these fees from hurting their bottom line.
There’s no doubt finding ways to reduce what you spend on the major expenses in your life — e.g., housing, transportation and education — can save you substantial amounts of money over time. Paying $100 less each month in rent or for a car payment, for instance, saves you $1,200 per year. Over five years, you’re talking savings of $6,000. So, it makes sense to look for ways to save on large expenses to keep more money in your pocket.
But what about smaller expenses? Is it worth the time and effort to review your monthly spending and pay attention to the little things? Quite often, the answer is a resounding yes.
My husband and I made some significant changes in our lives to save money, but we watch all the little things too. Now we are on the verge of early retirement, when not so long ago we weren’t sure when, or if, retiring would be possible.
It might take some time and effort to track your spending and review small expenditures initially, but once done, it’s easy to make simple changes and experience ongoing savings. Things like canceling a subscription for services you don’t use, buying store brands instead of big national brands, and making snacks and drinks at home take little time but together can greatly help reduce your expenses.
Do You Know? 15 Hidden Fees to Watch Out for in Retirement
Doing the Math
To illustrate, let’s take a look at a great example of what many consider a ‘little thing’ or small expense: banking fees.
The GOBankingRates survey on Americans’ banking habits revealed respondents are paying an average of $7 per month in banking fees. Though an expense of fewer than 25 cents a day might not seem remarkable, over a decade, this little fee adds up to a whopping $840.
I can think of many things I’d rather spend $840 on than bank fees. I bet you can too. So, don’t be like the 88 percent of bank survey respondents who don’t plan on switching banks this year — likely because they haven’t taken the time to run the numbers and realize the magnitude of banking fees over the years. Instead, consider switching to a local credit union or using an online bank with no, or at least fewer, account charges, to pocket those bank fees. Those same credit unions and online banks are also more likely to pay you a higher interest rate on money you park there — win-win.
Note, though you shouldn’t discount the little things, you also shouldn’t negate your efforts to save money on things like bank fees by increasing your fuel expenses to drive to a credit union located farther away than your current bank.
Start by tracking your spending for one to three months; longer is better for a more accurate picture. Then, review all your expenses, big and small, and identify those you can cut without costing you more in the long run. Chances are, you’ll find a recurring charge you forgot about or realized isn’t worth the cost.
Being apathetic about the small things might be costing you more than you realize. A small effort today to cut your monthly expenses could result in significant savings over the years. I urge you to start saving now on the big and little things, so you too can achieve financial independence.
Click through to read more about how little Americans have saved.
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