Managing money as a member of the middle class can be challenging. It might feel like society caters to the upper class, so it’s an ongoing balancing act of cutting some items from the budget, while still allowing for little luxuries from time to time.
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It’s tricky to know what to spend money on and what to skip, however financial experts caution that there’s some methods of saving money that just aren’t worth it. Read more to find out what not to do.
Just Cutting, No Analyzing
When a middle-class household is looking to cut expenses, they might not be seeing the full picture of their finances. Instead, they might just wonder “What can I cut?” rather than “How can I adjust my spending in a comprehensive way that meets my needs?”
Jennifer Beeston, mortgage lender, financial educator and author of “Brainhacked,” suggested using a budget app to get a complete financial breakdown, then truly analyze expenses.
“Categorize them by CANCEL (something you do not need and you know is wasteful), NEED (something you have to have such as food and shelter) and JOY (money you spend that makes you happy),” she explained. “Expect to spend a few hours doing this. Really take the time and think about your purchasing history.”
Beeston added that an app can also alert you of bank fees, double charges and multiple subscriptions to one service. These can all cut down expenses without having to purely “give up” something.
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Thinking Bills Can’t Be Negotiated
Beeston pointed out that many bills can be lowered simply by giving the service provider a call. If you don’t try, you’ll never know.
“Call your internet provider and let them know you are going to switch to their competitor. Watch your bill get reduced,” she noted. “If you own a car, shop for less expensive car insurance, same with homeowners and renters insurance. Own a house, check in with a lender to see if there are lower rates available. Call you credit card companies and ask for a lower interest rate.
“Make it a game and see how many bills you can get down. The worst thing these companies can say is no.”
Skimping on Home Repairs
Melanie Musson is a finance expert with InsuranceProviders.com and said some middle-class families might opt to do home repairs themselves to avoid paying a hefty fee to a professional.
She cautioned that this might end up costing more in the long run.
“If you try to cut costs and complete a DIY home repair, you could end up with a bigger problem than you started with, especially if you don’t know what you’re doing,” Musson explained.
When paying for a professional, Musson advised picking someone with a strong reputation who delivers quality work-not just the person charging the least.
“You could even hire someone and end up with a bigger problem if you opt for the cheapest option without getting referrals and checking backgrounds,” she added.
Investing Blindly
Investing might seem like something that’s not accessible to the middle class, but it can be. It just takes the right advice to make strong investment decisions, rather than trying to figure it out by yourself.
“It’s often worth hiring someone to handle investments because they can help you earn more money than you could on your own,” Musson suggested. “Their services are easily paid for from your improved earnings.”
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Sources
- Brainhacked, “HOME.”
- YouTube, “Jennifer Beeston.”
- InsuranceProviders.com, “Compare Insurance Provider Quotes.”
This article originally appeared on GOBankingRates.com: 4 Mistakes the Middle Class Makes When They Try To Cut Their Expenses
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