Most of the time, we concentrate on finding additional ways to make revenue, so much so we neglect big financial holes via which we lose money.
Identifying and plugging income leaks is as much a revenue building activity as selling products or services. Unfortunately, a lot of us are too engrossed in the demands of our business routine to focus on the numerous instances of wastage or overspending. Think about the extra money we could save if we were more observant about our activities. Remember that, if you are a higher income earner, a pound saved is actually £1.40 earned, as you don’t have to pay tax on money you save.
The following are common ways our business loses money without us realising it.
You place money in savings that hardly earn interest
The standard money market fund pays almost nothing for savings. In fact, following the impending inflation at the dawn of Article 50, the Bank of England has decided to peg interest rates at a record low of 0.25%. Yet millions of savers still keep money in these banks.
If you make an effort to look around, you could find favourable interest rates that pay as much as >1% for your savings. Think how far it can go (at least £100 annually for every £10,000) when you save some of your revenue in these accounts.
You allow your heating and AC to run unnecessarily
It is very easy to lose money through heating/cooling appliances because we forget to switch them off when we are done. Did you know the weather may not be too hot to tolerate? So, switching on that AC may not be necessary after all. You can cut off up to 15% of your energy bills by going smart.
Installing a programmable thermostat that automatically adjusts its settings to the temperature of your home or office can do wonders for your cash flow. Buy appliances that increase cooling in the day and reduce them at night so you can plug needless income leaks.
Are you paying your fund manager too much?
Making financial investments are a good way to boost income, but at what cost? Mutual funds that trade their assets most frequently, have a 25% chance of success in the market. Most times, you are better off sitting it out.
The broker and other expenses that fund managers rack up by dealing in and out of stocks regularly, don’t appear in the expense ratio. It is advisable to confirm the turnover rate at Morningstar.co.uk or the company brochure. If the whole fund turns over 150% (1 ½ times) or more annually, it is too much. Watch what you pay on trying to grow your money.
You could be spending too much on your car
Cars generally become too expensive to maintain after some time. If your vehicle is more than 10 years old, the cost of fixing it after an accident is likely to cost more than the original amount. You could be doing your cash flow a disservice by holding on to it.
Dennis Miller of equities.com believes you should start looking to trade in your car as it approaches its 10th year. Of course, if you can afford to, you can sell it off earlier. Your insurance premium will be too much for any car older than ten years.