It might sound like we are stating the obvious, but bear with us here. Clearly, one of the keys to managing your personal finances is to make sure that you are never paying more than you need to.
And while it is obvious, it is a truth that many people actually completely overlook when they are managing their finances. They will tweak here, and trim there, and get their financial life into some sort of order.
But so many fail to make one of the most basic changes to their financial habits that they can: simply identifying where they are paying too much for something they can get elsewhere for less. Often, it is the case that people feel that they don’t have enough time to do the research, or if we’re honest, they don’t make the effort to prioritise looking for the best deals. Others don’t know where to start, or just assume that they are probably getting the best deal. In our experience, they’re usually not.
So, here are some more of our thoughts on paying no more than you really need to.
Cutting unnecessary costs
A quick note about fees. Eliminating unnecessary fees from your financial life can make a huge amount of difference. This could be the €0.50 a day you’re paying for an overdraft facility you don’t really need, or that you could clear by simply moving some money around between your accounts. Or, it might be the late fee you’ve had to pay on a credit card bill, which could be eliminated with a simple direct debit. More prosaically, if you’re a regular traveller, it could simply be the investment you make to buy your own baggage scale to check your luggage before you fly, so that you avoid excessive baggage fees.
The world is full of unnecessary, completely avoidable fees – and the companies that make their money out of them rely on us to not make the effort to avoid them.
It always pays to shop around
The chances are that you will be paying too much currently, and thanks to the internet it has become easier than ever to compare prices on everything from flights to broadband deals.
But while many sites will take you through the whole process of looking at your current deals and comparing them to the competition, it is always worth taking careful note of what is being recommended to you. Some sites will have preferential deals with certain providers, and promote these results above the others, so just make sure you really are being shown the best deals.
Talk to someone
For us, price comparison sites are a useful tool, but they are not the whole story. While most of the regular outgoings we have in our lives – utility bills, mortgage repayments, mobile phone deals – can be compared online, it also always pays to talk to someone direct.
The real value in price comparison sites lies in the ammunition that they give you when you go into a negotiation – the hard data that you can use to say “your competitor is offering me the same service for this price – can you beat it?”.
And that kind of conversation, we’ve found, is almost always best done face-to-face or over the phone. So, gather all of the information you can on what the competition can offer, and go direct to your current provider to see if they can do better.
Threaten to walk away
It is the oldest trick in the book – but in our experience it almost always works. Whether you are doing some hard bargaining with a salesperson in a souk in Marrakesh, or speaking to someone in a call centre to discuss your current home insurance deal, it pays to make them think that they are just about to lose your business.
Of course, it is a game of bluff, and there is always the chance that they will call it, but this is usually not the case. Many companies now have a section of their customer service division dedicated to rescuing those accounts that they are just about to lose
So it is more than likely that if you tell the advisor you are talking to that you are leaving, they will rapidly escalate their efforts to keep you. In our experience, even just telling your current provider that you have been offered a better deal by their competition will prompt a rapid response from them. And if it doesn’t, then they clearly don’t deserve your business.
About the Author
Jurg Widmer Probst is a former Director and CEO of a well-known global investment firm. His goal is to educate the everyday reader about best practice in investing and personal finance.