By Essie Bester
You already know that it’s smart to put away money for the future regularly. You also know that it is not wise to buy unnecessary things that will land you in debt. But what about all those hidden expenses that are costing you your hard-earned money?
For more money in your bank account, pay more attention to the following:
Savings accounts ─ apart from better interest rates, the fees on savings accounts are usually also low. However, you pay per transaction, which means that in the end you pay more if you do a lot of transactions. Be careful of transactions that cover only the first two ATM transactions, after which you pay much more per transaction. Rather choose a debit-card account that you can use to pay at shops.
Cheque accounts are better choices if you want more comprehensive options that, for instance, include internet banking services and a loyalty programme.
Keep the following hints in mind:
Rather use your bank’s ATM to draw money or do other transaction because it is cheaper.
Try to use digital channels for transactions as it is cheaper than doing your bank business at a branch of the bank.
Choose a bank that offers unlimited free card transactions and find out about options with lower bank charges.
Avoid fines by always leaving enough money in your bank for purchases and deductions.
Ask your bank to send your bank statements by email rather than posting them, which is more expensive.
Take good care of your bank cards. You pay extra to have them replaced.
Check your bank statements regularly and keep record of your monthly transactions so that you can learn to budget better.
Financial experts encourage people to pay off credit card debt even if you have to use your savings. Having debts at a high interest rate while you are saving at a low interest rate simply does not make sense.
- Tax deductions and unclaimed credits
Tax payers who qualify for tax credits sometimes do not claim this benefit on their tax returns. In addition they make all sorts of mistakes on their tax forms, including picking the wrong submission status. Online tax programs can help you to identify deductions and credits that you qualify for. However, if you have a complicated tax situation ─ such as when you have started your own business ─ rather pay an expert to help you increase your savings on income tax.
Experts warn that extended guarantees, which are nowadays offered on almost all purchases (from TV sets to household appliances and vehicles) are often not worth the price you pay for them. You may think that you are being financially responsible by buying a guarantee, but the reality is that extended guarantees are mostly agreements that are not in your favour. In general they contain fine print that usually excludes the most probable problems. Sometimes they also duplicate the guarantees that manufacturers provide free of charge in any case. Rather start a savings account that can cover repair or replacement costs if some of your possessions break.
South Africans love to plunge themselves into debt in order to buy a new, more expensive car. This, however, is one of the worst investments you can make. A car loan takes on average 60 months to pay off, while your shiny new transport looses about 11% of its value the moment you drive away from the dealer. For most of us this ought to be sufficient reason not to buy a brand new vehicle.
Rather buy a reliable used car on the shortest loan term that you can afford so that you can pay off your loan much quicker. Drive your car for as long as possible while you save the money that you would have spent on car instalments. Ideally you should be able to pay cash for your next car and continue to save for vehicles. Therefore, try to avoid car loans and buy reliable used cars that you can drive for a long time. Also try to save the extra cash that you would have spent on new vehicles during the course of your career.
Most drivers don’t hesitate to admit that they regularly drive too fast. This will cost you, however ─ and not only if you get a ticket that comes with fines and higher car insurance premiums. Your fuel saving will drop by as much as 30% on freeways and 40% in stop-go traffic if you drive too fast. In addition it increases the risk of collisions ─ and accidents are expensive, especially if you are found guilty and your insurance has to pay the other driver’s damage. Rather keep to the speed limit. That will ensure that you still reach your destination while you are safer and spend less money.
- Make sure of the octane number of the fuel your car really needs
High octane is considerably more expensive and may be unnecessary. Therefore you should consider using 93 octane instead of 95 octane petrol. Today’s car engines are designed to protect themselves. Most cars don’t need the high octane, although the manual may say it is “recommended”. Consult online sources if you are unsure about this step.
- Your rental car insurance
Rental car insurance may cost you a lot. And while this might be unnecessary in most cases because your own car insurance should provide adequate cover, the clerk at the rental car counter will probably try to sell you a comprehensive policy. It would therefore be wise first to consult your insurer and credit card to find out what cover you have before you rent a car. Even a credit card, which is something most people probably use to pay for a rental vehicle, could possibly offer insurance for rental cars.