In helping others with their finances, I find the people who are least able to afford anything routinely pay the most in unnecessary fees. When going over their finances to help them improve their financial stability, I am saddened by how much money they needlessly spend in extra fees. This is money that could have been applied to pay down debts and build up necessary savings.
Some of the voluntary fees they could reduce include:
- ATM fees – plan ahead and use your own bank network
- Late fees on bills – schedule all of your payments and use autopay
- Exceeding phone data plan because of games and music downloads – instead of changing your plan
- Check cashing services – find a cheaper way or get a free bank account
- Having credit cards that charge an annual fee – most cards do not charge a fee
- Doubling up on insurance – you may already have insurance on a rental car through your own car insurance or from the credit card that you used to pay for it, so don’t pay it again to the rental company
- Cellphone roaming charges when traveling abroad – instead use Wifi or a pre-paid SIM card
- Not tracking all of your accounts and then losing that money to the state as “abandoned property”
- Directory Assistance from phone companies – I’ve seen charges from $2.99 to $6.99 for each call
- Routinely paying for parking at a job when there are free options nearby or free/discount-validating by employer or stores
Recurring charges for services that you may not be using:
- Subscriptions – newsletters, websites, magazines, clubs, etc.
- Mortgage insurance when it is no longer needed
- Safe-deposit box for items that are inappropriate to store there
- The classic charge is an unused gym membership
- Access to apps, music, or movie catalogs, etc. that you thought were a one-time charge that are actually recurring charges for membership
- I also find people paying monthly fees for financial services that they are not using:
- Financial planners not doing anything
- Bank trust departments not doing anything
- Transaction tracking software they do not use
- Financial consolidation services they could easily do on their own
- Very expensive tax preparers completing a simple tax return
There was one acquaintance I was helping and he was paying around $50 a month in ATM fees and another $11 to have a bank account. He paid cash for most things but he’d only withdraw $20 at a time at ATMs; each time a charge of $2-$4 in fees. His banking routines costing him $61/month adds up to $730 per year. This is more money than he had ever saved in his life! Instead of volunteering to pay the ATM machine owner he could build his savings account instead. This is just 1 unnecessary fee that he was volunteering to pay; there were several that I discovered for him. When you’re not paying attention to small financial details, these tiny fees can invade, build up, and consume far too much your income. At least once a year, go through all of your statements and expenses to locate any voluntary fees that you can stop paying to others. Instead, accumulate them in your savings account.