These hidden household costs could be draining thousands from your bank account every year
2020-10-20 minute read
Do you ever feel like no matter how much you streamline your budget, cut back on discretionary spending, and avoid impulse purchases — you just can’t seem to get ahead? The issue may not be your budget. Rather, a few sneaky inefficiencies around the house could be robbing you of anywhere from $1,000 to $10,000 every year.
It’s time to break out your financial magnifying glass and see if any of these are artificially driving up your cost of living.
Utilities
You should be budgeting about five percent of your monthly income for utilities like gas, water, and electrical, assuming these aren’t covered in a rent or condo agreement. If you’re paying more than that, these common issues may be to blame.
Drafty doors, walls, and windows (Potential savings $100 - $700 per year)
Check for gaps around your doors, window frames, light switches, and baseboards and feel for cold spots. Caulk, insulate or install weather stripping anywhere warm (or cold if you have air conditioning) air may be escaping.
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Hold an incense stick near any doors, windows, outlets, or baseboards you worry warm air may be escaping — you’ll know there’s a leak if the smoke drifts toward the opening. |
Incandescent and halogen light bulbs (Potential savings $100 - $250 per year)
LED bulbs are significantly cheaper to operate and last far longer than their incandescent, halogen, and compact fluorescent counterparts. And their cost has dropped considerably in recent years, so you’ll see the payback sooner than you think.
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Check your regional city or provincial government for any green energy rebate programs, as you may qualify for money back on your LED purchases. |
Water leaks (Potential savings $100 - $250 per year)
Most cities charge for water service and drainage, so any leaks double the hit to your bank account. Even a faucet leaking one drip per second or the trickle from a chain getting stuck under a toiler flapper can mean big costs over time.
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Put some food colouring in your toilet tank. You’ll know there’s a leak if you notice water in the bowl changes colour between flushes. |
Hand washing dishes (Potential savings $90 per year)
Think you’re saving water by avoiding the dishwasher? Hand washing dishes every day consumes up to of 80 liters of water per day. Compare that to just four liters per day if you did one full load in the dishwasher every week — or two liters per day with a high-efficiency dishwasher.
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No need to pre-rinse your dishes before putting them in the dishwasher, just scrape any leftover food scraps into the compost bin. |
Using hot water to wash your clothes (Potential savings $70 per year)
Ninety percent of a washing machine’s energy consumption comes from your hot water tank, so switching to cold water can really cut back on your energy bill. The good news is experts say it’s just as effective at getting your clothes clean — and can preserve the longevity of your favourite outfits.
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Most experts say you only need to wash your blue jeans every five to 10 wears. Otherwise you’re just wasting water and soap and prematurely aging the fabric. |
Phantom loads (standby power) (Potential savings 100 - $200 / year)
Few devices truly turn off anymore; most simply go into standby mode. PVRs and digital cable boxes are among the worst offenders, using up to 70 percent of full operating power even when off — but other culprits include desktop computers and monitors, stereo systems, video game consoles, and anything with an a/c adapter.
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Invest in high quality power strips with on / off switches and surge protectors. These will allow you to power off your devices without unplugging them and can prevent damage in the event of a power outage. |
Dirty furnace filters (Potential savings $200 – 300 /year)
A chronically clogged air filter doesn’t just make it harder to breathe, it can hit your wallet from two directions: (1) Drawing extra power to circulate air throughout your home, and (2) prematurely aging your furnace.
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Change your filter every two to three months to keep your air clean, your bills low, and potentially avoid an early $4,000 - $5,000 replacement cost. |
Communications and Entertainment
Landline telephone (Potential savings $180 – $240 / year)
Most mobile plans include unlimited text, calling, and long distance and many smartphones allow for voice and video calls over wi-fi. If you’re still paying for a landline, it may be time to ask what you could use that extra $15 - $20 per month for.
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Review your household’s current mobile costs and investigate whether you could also save money with a family sharing plan. |
Cable subscription (Potential savings $300 - $750 / year)
Even if you’re not ready to cut the cord, you may find significant savings by getting rid of channels you don’t use. A recent court decision ruled cable companies must provide a la carte options, so you only pay for the networks you want.
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Track your household cable use for one month, including how often everyone uses cable vs. subscriptions and what channels you all watch to decide whether you’d benefit from reducing your package or cutting the cord completely. |
Subscriptions (Potential savings $100 - $700 / year)
Streaming services can save you big money, but you need to make sure you’re getting your money’s worth. Audit your subscriptions to make sure: (1) You haven’t been automatically enrolled in a service following a free trial, (2) you’re not paying for something you’re not currently using, and (3) you’re not paying for two or more subscriptions that essentially provide the same product (e.g. Spotify and Apple Music).
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Consider family plans if you have multiple people in the same household. These often allow for multiple user profiles at a fraction of the cost of multiple subscriptions to the same or a similar service. |
Groceries
Name brand groceries (potential savings $200 - $250 per person, per year)
Store brands often cost pennies on the dollar and offer a comparable product to the name-brand option. In fact, name brand companies produce and package many generic products — the only difference is the label.
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Do a blind taste test to see whether the difference between generic and name brands is worth the extra cost. The outcome may surprise you. |
Buying everything from the supermarket (Potential savings $125 - $250 per person, per year)
Grocery stores and farmers markets are great for high quality meat and produce. But they tend to be costlier for non-perishable and pre-packaged foods which you can also find online and at discount retailers.
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Comparison shop for commonly purchased items at discount retailers. And, investigate the products available at warehouse clubs — the potential savings often more than offset the price of a membership. |
Shopping without a grocery list or plan (Potential savings $300 - $450 per person, per year)
A grocery list and meal plan helps curb your spending by: (1) Reducing the amount of time you spend aimlessly browsing the aisles, (2) limiting the number of impulse items you throw in your cart, (3) helping you stretch your groceries throughout the week, and (4) reducing how often you dine out.
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Prepare a week’s worth of meals in one large batch. What this saves on your waistline, it puts directly in your bank account in the form of not eating lunches out. |
Not stocking up on sale items (Potential savings $200 - $500 per person, per year)
You don’t have to be an extreme couponer to reap significant discounts. Simply pay attention to when frequently used items go on sale and stock up while the prices are low.
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Subscribe to grocery store email lists for weekly sale flyers and coupons and schedule your grocery trips accordingly. |
Mortgage
Paying monthly rather than taking advantage of accelerated payment options (Potential savings $400 - $1,500 / year over a 25-year mortgage)
Accelerated payment options put more money toward the principal value of your mortgage, which significantly reduces the amount of interest you pay over its lifetime. You’ll pay more up front, but it’s a great investment in your future.
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Use a mortgage payment simulator (preferably from your own mortgage provider) to see if you can afford accelerated payments with your current budget |
Mortgage balance protection insurance (Potential savings $150 - $350 per year)
Employer-provided or third-party life insurance policies already cover most contingencies in this optional offering from your mortgage provider. Third-party products also typically provide better coverage and better rates.
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Work with an insurance broker before purchasing any type of home, auto, or life insurance. These professionals will find you the best rate and cost you nothing, as they earn their commission from the insurance provider you eventually choose. |
The bottom line
Why dig through couch cushions when you could rescue $500 or $9,500 throughout the year. Now you can put that money towards your debt, holiday shopping, or a long-awaited purchase. Or you could invest in your future by putting it into your emergency fund or towards your retirement.
Eric Findlay
Senior Vice President
CPA, CIRP, LIT
