Common Sense Money Advice That’s Not So Common

Every day, consumers ignore common tips that could keep them from wasting money.

Common Sense Money Advice

Money doesn’t grow on trees, and, unfortunately, most people don’t have money to burn.

Too many Americans live paycheck to paycheck. A recent Credit Donkey survey revealed that 26% of Americans don’t have any money stashed away that can be used in an emergency. And yet, some people act as though they have an unlimited supply of money to spend frivolously. Some money advice might be debatable, and other tips might be applicable in only some situations, but not others.

However, following common sense instructions can have a huge impact.

These tips have stood the test of time, with outcomes that have been proven over and over again. And, yet, common-sense money advice is not heeded by far too many consumers, some of whom are struggling to make ends meets, and can ill afford to blow through their income. Keep reading to discover 15 tips that too many people fail to heed.

Just Say 'NO' to the Lottery

According to the North American Association of State and Provincial Lotteries, last year, Americans spent $74 billion on lottery tickets.

In a three-year period, the NASPL reports that there were 82 winning Powerball or Mega Millions jackpot winning tickets, and more than 1,300 winning tickets worth at least $1 million. However, there are 565 million people in North America – 321 million just in the U.S. Do the math, people. Your chances of (insert just about any word here) are greater than the probability that you’ll win the lottery. The only people hitting the jackpot are the individuals raking in the $74 billion each year.

Avoid Unnecessary Bank Fees

There’s room for improvement when shopping for banking services.

For instance, a MoneyRates.com survey found that maintenance fees on checking accounts are roughly $159 a year. Typically, consumers need to have a balance of at least $11,000 to get those fees waived. Consumers also pay overdraft fees and ATM fees. Some banks also charge consumers to transfer funds, and also those who choose to go to a teller instead of an ATM. Consider banking with a credit union, since these organizations are less likely to have as many fees as a bank.

Buy the 'Cheap' Gas

You want to treat your car right so it will last a long time. But, if you also want your money to last a long time, stop reaching for the premium gas pump.

According to AAA, last year, Americans spent a combined $2 billion on premium gas, even though their cars didn’t require it. Tests by AAA show that premium gas is more expensive, but not a better quality. Some vehicles may need premium gas, but your car’s manufacturer and your owner’s manual should list this information. By the way, only 16% of vehicles require premium gas, 70% require regular gas, and 10% require mid-grade gasoline. (4% use an alternative fuel source.)

Don't Splurge on a Lavish Wedding

While your wedding day should be memorable, you don’t want to remember it for being an albatross around your neck.

According to CostofWedding.com, the average wedding costs $26,720 – and this doesn’t include the cost of the honeymoon. The bulk of the money is spent on the venue, catering, and rentals. That’s a lot of money for one day. To put it in perspective: you can buy a new car for the price of an event that lasts for a few hours. This is not to say that everyone should just go to the courthouse. But, at least consider scaling back the wedding so you and your spouse will have more money for your new life together.

Prioritize Home Renovations with Resale Value

Not understanding factors affecting resale value

Obviously, you want your home to reflect your style. However, when making major renovations, it’s important to consider resale value - unless you never, ever plan to move.

Any extreme personal flair that you add should be something that is easy to remove: for example, you can paint over that purple wall. However, the Remodeling Cost vs. Value Report reveals that you won’t break even on some renovation projects. For example, you might decide to spend $43,000 on a bathroom addition, but, according to the report, this project would only increase your resale value by $23,000. Adding a backyard patio for $51,000 will only increase your resale value by $28,000. In other words, major, costly projects can be risky, and might not do anything to increase your home’s worth.

Be Careful with Credit Cards

If you don’t have adequate savings, you might need to use your credit card in the event of an emergency. However, credit cards can be a money trap if not used judiciously. For example, let’s say you have a $5,000 balance and an 18% interest rate. If you pay $200 a month – and don’t continue to make additional charges - it will take 133 months, which is 11 years to pay off your card. And, you will have paid $7,873. Late payments add late fees, and can increase your interest rates. And, cash advances are among the worst ways to misuse a credit card. According to CrediCards.com, typical interest rates for cash advances are almost 24% - and card companies usually also charge a fee for advances.

Always Read the Fine Print

Making a purchase or entering into a contract without reading the fine print is like getting married without paying attention to the wedding vows. And often, “till death do we part” is the only way you’re going to get out of your contractual obligations.

There’s a reason companies use fine print, and typically, it’s to conceal information that might cause you to back out of the deal. For example, those “free” trial memberships? Somewhere, in small letters, it explains that your debit/credit card will be charged within 30 days unless you contact the company to opt out. Zero percent interest on your new credit card? The fine print explains that this is just an introductory offer, and within 6 months, your rate will balloon to 17.9%. In addition, not understanding the stipulations, restrictions, and exceptions on your home, auto, or health insurance policy could lead to your claim being rejected.

Avoid Payday Loans

When people need cash and they need it quickly, a Payday loan might seem like a blessing. But, according to the Consumer Financial Protection Bureau, the annual interest rate on a loan could be more than 300 percent. According to the CFPB, a typical two-week loan, which is usually a $15 fee for every $100 borrowed, is actually closer to a 400 percent interest rate. The Bureau also reveals other troubling details. For example, 70 percent of borrowers end up taking out a 2nd loan within a month, and 20 percent have taken out up to 10 consecutive loans. Also, 20% of short-term borrowers lose their cars because they can’t pay back their loans.

Save for a Rainy Day

One reason Payday loans are so popular is that Americans are not saving money. It’s not a matter of if, it’s a matter of when you will have an emergency. If you don’t think you have enough money to divert funds to savings, consider rearranging your priorities. Most people are spending money on some habit or guilty pleasure – it may be those daily $3 lattés. However, you can brew coffee at home for a fraction of the cost.

Turn the Air Conditioner Off When You’re Away

Letting the air conditioner run when you’re gone

Whether it’s summer or winter, everyone likes to come home to a comfortable home.

However, leaving your air conditioner or heater running while you’re gone is costing unnecessary money and heating or cooling an empty house. If you have a thermostat, increase it a few degrees during the summer when you’re gone. In the winter, lower it a few degrees when you’re not there. Also, remembering the drape rules can also regulate the home’s temperature. In the winter, open the drapes during the day to let the heat in. In the summer, close the drapes during the day to keep the heat out.

Negotiate Your Cable/Internet Fee After the Promotional Period Ends

Failing to negotiate cable and internet service after promotional period

Most companies offer lucrative packages to new customers, but when the introductory period is up, the price usually goes up as well. Instead of complaining about your new rates, do something about it.

Competition is stiff – that’s why you received such a low rate in the first place – and you should use this to your advantage. Call the company to find out what other types of offers they have that can lower your bill. If they’re uncooperative, threatening to leave will usually produce the desired result. However, if you have a contract, be sure that you’re not violating the terms by leaving.

Borrow Only as Much Student Loan Money as you Need

Borrowing more student loan money than you need

As a young college student applying for a student loan, it can be tempting to increase the amount of money that you borrow.

You might be thinking of all the other things you could do with more money, and a Student Loan Hero survey reveals that 41% of students are using their loans to pay cell phone bills and other monthly bills, 18% are making car payments and paying car insurance, and 14% are buying clothing and accessories. A small percentage are taking vacations, and even buying alcohol and drugs with loan money. However, all of this money must be paid back – with interest. The more money you borrow, the more you will have to paid back.

Never Pay Extra Just for a Paper Copy of Your Bill

Some utilities companies, insurance companies, and other organizations charge consumers a monthly fee to receive a paper copy of their bill in the mail.

Fees vary by company, but could be as high as $4 a month. Depending on how many companies a consumer receives a monthly paper bill from, this could add up to more than $200 a year – just in fees for physical copies of a bill. Instead, just go online to view and pay the bill. Most companies will allow you to view at least a year’s worth of statements/bills. If you really need a physical copy, it’s cheaper to just print it out. Also, if you don’t have internet access, many companies will waive the fee.

Save on Gym Memberships (Especially If You Don't Use Them)

Most people only go to the gym on a routine basis at the beginning of the year when they’re excited about their New Year’s resolution to get fit. Otherwise, it’s rare that members spend enough time in a gym to justify how much they’re paying on a monthly basis.

If your gym membership helps you with much-needed social motivation to stay fit and healthy, so be it (and good on you). But if not, working out at home is less expensive and provides more flexibility. For example, you can only go to the gym during their hours of operation. However, you can exercise at home at any time. You can purchase dumb bells, an exercise bike, or even a jump rope, and work out at home at a fraction of the cost. And there’s an extra savings bonus from working out at home: you won’t have to purchase “nice” gym clothes since you don’t need to look presentable at home.

Make Realistic Assumptions About Your Retirement

Making assumptions about your retirement

Many people put off planning for their retirement, but preparing for this stage of life is one of the most important decision you can make.

You need to know how much money you’ll need to live comfortably in retirement, and you need a financial plan for reaching that goal. Many retirees discover, too late, that Social Security will not pay nearly enough money for them to live on. And sadly, they end up searching for jobs that can supplement their income when they should be enjoying their golden years.