Interestingly, the research says that low income individuals are hyper aware of where every penny they have goes. When they leave the grocery store, they know exactly how much they spent on a gallon of milk, a lb of meat, etc. As we move out of the penny pinching stage of life, though, it’s easier to lose track of every detail. However, paying attention to our expenses is a critical component of being a successful money manager.
Sometimes the answer is less about increasing your income and more about being assertive in managing what you have. I’ll give you two examples from this week.
Vehicle Insurance
When we traded in our old car for a newer one this week, I wasn’t surprised when our vehicle insurance went up. I was surprised that it was going up from $500 every six months to $825. That’s a 60% increase. While frowning at the itemized invoice, I realized an occupational discount was no longer listed.
A 15-minute call and a polite inquiry about the missing discount was all it took to reduce the from $825 to $650 every six months. That short phone call will save me $350 in the next year alone. That’s better than earning $350 in 15 minutes because there is no income tax involved. That’s the good news.
The bad news is the occupational discount had been missing for the past two years. Had I been paying attention as a money manager sooner; I could have saved hundreds of dollars. Of course, they were unwilling to retroactively re-apply the discount.
This is just one example of why it pays to look at every invoice, credit card statements, bank statements, and loan payment documents closely.
Seeing The Difference as a Money Manager
Lea Satterfield, MPower Co’s CEO, offers another example of paying attention to expenses this week. After her annual eye exam, she started to purchase a year’s supply of contact lenses at the optical office. Her cost is usually about $600 for a one-year supply of contacts, however her out of pocket costs this week were going to be nearly $1,000.
She paused, and asked for a written contact prescription instead of placing an order, because she realized the increases in cost stood out to her. In only ten minutes on the Internet, she purchased a one-year supply of contacts for less than $600. Saving about $400 with a ten-minute information search is great use of time.
Monitor Your Credit Card Statements
Another statement to monitor closely is your credit card statement. It is amazing how quickly the charges add up, right?
I am just starting to travel again. If the coming year is like usual, I will find duplicate charges from hotels to the tune of several hundred dollars. It generally happens when I have a hotel reservation. On arrival, the desk clerk can’t easily find my reservation and makes a new booking. My account ends up being charged for a “no show” plus the room booked at my arrival.
The Bottom Line for Being an Effective Money Manager
You’ve heard the saying “A penny saved is a penny earned.” Actually, that is incorrect. A penny saved is better than a penny earned because there are no income taxes to pay. Skillfully making your money go further can be even better than earning more money.
If you are ready to get assertive about paying attention to your finances and tackling unnecessary expenses, MPower Co can help!
Meet Dr. Thia, MPower Co’s Director of Education
This article was authored by Dr. Cynthia “Thia” Crawford, MPower Co’s Director of Education. She has over 40 years of experience in adult education and is a specialist in both personal finance and positive psychology. She is a true pioneer when it comes to combining these fields. She is the author and coach of the online financial course Richer Retirement and the online well-being course Happiness Habitudes.
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