6 invisible ways you're losing money and how to stop
It's hard to keep track of everywhere your money is going — but it pays to try
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You know your mortgage payments, how much your utilities are and which gas station has the lowest prices. That means your budget is working, right?
In reality, do you know everywhere your money’s going? It is hard to make sure you have every dollar accounted for. Each account, service and product you use has its own fees and rates, and companies are putting out new offers all the time.
Every few months, it pays to dig into your automatic payments and see whether you’re losing more than you should. There could be hundreds or even thousands available to pay off debt faster, top up that emergency fund or even speed up retirement.
Not sure where to start looking? Here are six invisible ways you could be wasting money and how to fix them.
1. Extra investing fees
Investing is essential to building wealth. Even if the markets have been up and down recently, the old adage is true — time in the market beats timing the market.
Once you have a solid emergency fund established, you shouldn’t let your extra cash stagnate in your chequing account, where you’ll earn little interest. But depending on your broker or investing platform of choice, a range of forgettable fees could be ripping into your profits.
Even discount brokerage firms will charge anywhere from $5 to $30 in commission when you buy or sell, and at full-service firms that number can easily hit $100. That’s in addition to any management fees you need to pay just to maintain your account with them.
Think about how much value you are getting for the fees you are paying. If you aren’t seeing it, consider going with a less expensive option.
Wealthsimple’s robo advisor service, Wealthsimple Invest, comes with a mere 0.5 per cent management fee, and its discount brokerage service, Wealthsimple Trade, charges zero commission.
2. Inflated insurance rates
It’s easy to set and forget all of your insurance policies, but you should never forget how much money is leaving your bank account every month.
But inflation might be coming for your insurance payments.
The Financial Services Regulatory Authority of Ontario recently approved increases for 31 private insurance companies, which means your premium is about to go up. The costs of both new and used cars have gone up, along with the parts needed to repair them, adding to insurance costs overall.
Luckily, those in British Columbia aren’t expecting an increase on basic insurance rates this year.
If you have private insurance, it might be time to see if you are being offered the best coverage for the best price. Rates change fast, and any loyalty discounts you might be getting by sticking around could pale in comparison to the savings you find elsewhere.
Some experts suggest seeking out better rates every six months. That includes car insurance, home insurance and life insurance premiums. If you haven’t already invested in life insurance, remember that term policies — which only last as long as you need them — make protecting your family much more affordable.
3. Low-interest bank accounts
Saving accounts at big banks usually pay little interest, while digital banks, which don’t have the overhead of physical locations and the staff that comes with it, can offer more.
EQ Bank is currently offering 2.5 per cent to all of its customers — 250 times as much as some competitors — and you won’t pay any monthly fees, either. This is a great place to stash your emergency fund, vacation savings or even a house down payment. That way it will safely grow your savings, till you are ready to use them.
4. Unconscious overspending
You probably put a lot of thought and time into a big purchase like a new couch, a play structure for the kids or replacing your aging car. But chances are you don’t keep track of every coffee, chocolate bar or bottle of washer fluid you buy.
Every tap of your credit card or subscription that auto-renews goes uncounted. To make sure these small expenses don’t add up, you may want to consider an automatic budget tracker.
In addition to keeping an eye on your purchases, it is always a good idea to watch your credit score too. You can do this easily by signing up for a free credit-monitoring service. It takes just three minutes to see where you stand. If your score is lower than you’d like, you’ll also get personalized tips and tools to help you bump it up.
5. High mortgage interest
No one actually likes their mortgage, so don’t act like you’re attached to it. If you can switch to a better loan, do it.
Mortgage rates have been creeping up this year, and if you have a variable rate mortgage, you’ve definitely noticed. If you are thinking about locking down your mortgage or are renewing soon, you’ll need to do your research to find a deal.
A great place to start is with a free online comparison service, where you can compare the best offers from dozens of lenders at once.
If your credit score is solid, and you don’t have too much debt, you should qualify for the lowest rates available. Not sure where your credit score stands? It takes free credit-monitoring service to check it, so you can breathe easy, or make plans to improve it.
6. Shopping without getting rewarded
The cost of everything nowadays is up, whether you are buying tires or lettuce. If you aren’t getting rewarded for everyday purchases you are leaving money on the table.
One obvious way to wrack up that cash back is by buying everything on a rewards credit card. But you can earn extra cash back automatically by connecting your debit or credit card to RBC’s Ampli app. Purchases at places like Petro-Canada, Lowes and Doordash all count towards cash back.
Likewise, you can earn free gift cards when you shop online through a service called Swagbucks. Plus, you can earn even more by answering surveys or watching videos, if you have the time.
This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
