This article is part of our
series, in which The Motley Fool goes back to basics to help
you improve your returns and be more successful with your
In investing, picking the right stocks, funds, and other
investments can mean the difference between
ending up rich
and wishing you'd had better luck. But as Ben Franklin said, a
penny saved is a penny earned, and often, what you do about the
of your bank accounts every month proves at least as important as
how you invest what's left over.
The other side of the coin
So far in this monthlong series of articles, we've focused largely
on what to do with the
money you've already pegged to invest
. With the right combination of strategies that use the full range
of available investments, you can do your utmost to maximize your
returns and build your nest egg faster.
But before you can invest, you have to find ways to save money,
and in a tough economy, that's harder than ever. Fortunately, there
are some easy ways to cut back on unnecessary costs and leave
yourself more money to buy stocks and other investments.
1. Don't let the banks take your money.
Banks have gotten hit hard twice in the past several years. The
run-up to the financial crisis obviously hurt the banks so hard
that many of them, including
Bank of America
) , and
) , had to take bailout money from the government. But following
the crisis, banks again faced the specter of increased regulation
that limited their traditional ways of earning profits.
banks are hiking fees
. A recent Bankrate survey found that monthly fees on non-interest
accounts rose more than 75%, while ATM fees rose to more than $3.80
for out-of-network transactions. Overdraft your account and you'll
cost yourself almost $31 on average.
As a result, it's more important than ever to avoid those
charges. Although that's harder than it used to be, checking out
local credit unions and smaller banks can show you ways to save
while still getting the services you need. In addition, online
banks often not only save you on fees but actually pay better
interest as well. If you're constantly getting dinged by bank fees,
it's worth looking into ways to save.
2. Pay less for big-ticket travel.
Overworked Americans often see their vacations as their chance to
cut loose -- and sometimes blow out their budgets as a result. With
airfares on the rise, it can be hard to economize and still get to
where you're going.
The key, though, is to take full advantage of travel websites
(Nasdaq: PCLN) and
(Nasdaq: EXPE) . These websites make it simple to assemble packages
that include air, hotel, and ground transportation at your chosen
destination. And while the "name your own price" aspect of
Priceline may seem intimidating at first, it can add to your
3. Ditch the (bad) debt.
Contrary to popular opinion, not
debt is bad. Mortgage rates are lower than ever, making it easy for
anyone who has the means to take advantage of bargains in the
But credit card companies are facing many of the same challenges
as the rest of the financial industry.
) could see their businesses take a big hit as a result of
regulation on debit-card fees and credit card reform. Issuing banks
have added annual fees to some of their credit cards on top of the
high interest rates they charge. And don't expect any leeway on
things like over-limit and late-payment fees.
The ideal situation for credit card holders is not to carry a
balance on your cards. In fact, most people shouldn't invest at all
until they have their cards paid off, as it's nearly impossible to
earn more from your investments than you pay on credit card debt.
Getting high-interest debt paid off can save you thousands in
interest charges even on relatively modest amounts.
Choosing winning investments may sound a lot more fun than dealing
with budgets and cutting unnecessary costs. But with money as tight
as it is right now, pinching your pennies can produce huge rewards
down the road. By focusing on your biggest expenditures and looking
for ways to cut them down to size, you'll go a long way toward
getting yourself in position to be a better investor.
Stay tuned throughout our Better Investor series and get the
advice you need to succeed with your investments.
Click back to the series intro
for links to the entire series.
Fool contributor Dan Caplinger remembers the pain of going
through the grunt work and getting his finances in shape. You can
follow him on Twitter here. He doesn't own shares of the
companies mentioned in this article. The Motley Fool owns shares
of Bank of America, Citigroup, Mastercard, and Wells Fargo. The
Motley Fool has also created a ratio put spread position on Wells
Fargo. Motley Fool newsletter services have recommended buying
shares of Visa and priceline.com. Try any of our Foolish
newsletter services free for 30 days. We Fools may not all hold
the same opinions, but we all believe that considering a diverse
range of insights makes us better investors. The Fool's
disclosure policy wants you to save.
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