You’ve cut out to-go coffees, and you shop the sales at the mall. What more can you do to improve your financial bottom line? Believe it or not, you can sock away even more than you do now, without feeling pinched. We spoke with Jorie Johnson, a certified financial planner and president of Financial Futures in Manasquan, New Jersey, and Kathy Muldoon, a certified financial planner and senior vice president of Carter Financial Management in Dallas, Texas, about ways you may not have thought of to keep more money in your pocket.
Tip #1. Use Uncle Sam as a bank. If you work, consider increasing your tax withholding—more money will be taken out of your paycheck, but you’ll get it back at tax time as a refund. “It’s a way to force yourself into saving because once you commit to having more taxes taken out of your paycheck, it takes more effort to change it. You have to go to your company’s human resources department and fill out a form,” says Johnson. Just be sure to put your refund towards savings rather blow it on a trip.
Tip #2. Check your cell phone plan(s)... "One surprising thing to me is how many couples I see where the husband is on one cell phone plan and the wife on another,” says Johnson. “They don’t think of getting the cheaper family plan because the kids are grown.” The problem: You end up overpaying. If you and your spouse have separate plans you’re probably overpaying, so ask your mobile company about switching to a family plan and adding a line, which typically costs an additional $10 or $20. For example, the cheapest individual plan with AT&T Wireless costs $39.99 a month, or $80 for two lines, whereas a family plan costs $59.99 and $9.99 to add a line, saving you $10 a month.
Tip #3. ...And your cable bill, too. Another monthly expense people seriously overpay: cable. “We typically help clients cut $25 to $50 off their cable bill,” says Johnson. How? By taking off special channels like HBO that you no longer really watch (getting the specific shows you want on pay-per-view is more economical), and by bundling services such as telephone and Internet connection with the cable bill. Another savings tactic: Switch carriers every 12 or 24 months and ask for a lower rate. Johnson estimates you can save $10 to $20 a month.
Tip #4. Buy long-term care insurance, the smart way. “Outliving our financial resources is now a very real concern for the pre-retiree, who may still be caring for and/or paying for aging parents, helping their own kids, and frequently, grandchildren as well,” says Muldoon. “Considering the role, benefits and costs of long-term care insurance is essential at this stage of life.” Where should you shop for a policy? Try your employer—companies often offer group long-term care policies at discounted rates that are cheaper than if you applied for policy on your own. Typically, you can continue the policy even if you leave your job. And if your company doesn’t offer it, your adult child may be able to buy a policy for you through his employer if it’s offered.
Tip #5. Pay your bills annually. Some companies, such as car, home or life insurers, often charge less if you pay your entire year’s bill in one go or quarterly, rather than spreading it out monthly, says Muldoon. For example, paying annually for life insurance ould save you as much as 6% on your bill. Just be aware that the insurer may require that you set up an automatic debit from your checking account in order to give you the discounted rate.
Tip #6. Try out a new lifestyle before you commit. Many of Johnson’s older clients want to make major long-awaited purchases like buying a boat or a vacation home. And she always gives them the same financial advice: Rent first. “It’s almost like dating before you get married,” she explains. “If you think you want to be a boat owner, rent first so you have some experience with how much it really costs and whether it’s really for you.” That way, you won’t have the headache of unloading a big purchase like a home, especially in this economy.
Tip #7. And of course…log on to keep in touch with your grandkids. Save on cell phone or long-distance calling costs, and actually see your grandkids as they grow up no matter how far away you live, by logging on to the free video-calling service Skype on your computer. All you need is a computer and an Internet connection. “You can even help with homework on Skype,” says Muldoon. “It’s essentially a free way to stay in touch and help out.” You’ll save money and have more quality time with your family!
How well do you get along with your grandchild and other family members? Want to know if your personalities mesh?Find out here.