Being a fairly thrifty guy, I try and stretch my dollars as far as they can go. When setting up our family budget, I noticed we were spending a bit too much on car insurance. Here are my top 10 tips to save money on auto insurance:
Tips To Save Money On Auto Insurance
- Shop around – My first step to save money on auto insurance was to obtain a couple of free online insurance quotes, as well as an over the phone quote from a local insurance agency. As it turned out, my existing premiums were still competitive in the market, so I needed to dig deeper.
- Multiple vehicles – Having multiple vehicles under the same insurer can save you 10% or more on auto insurance.
- Bundle other policies – Better yet, insure your home with the same company and save up to 10%.
- Increase your deductibles – Increasing your deductibles by $250-$500 can reduce your collision and comprehensive costs by 15%-30%. The trade-off is that you are required to pay more for small claims.
- Self-Insure the small risks – By increasing your deductibles you avoid unnecessary coverage, and since small claims increase your premiums anyways, filing fewer claims will reduce the chance of your premiums rising in the future Besides, if you are an above average driver, the savings in premiums should more than pay for your claims over time.
- Avoid Collision on older cars – Collision coverage protects damage to your own vehicle, but if your car is worth $2,000 or less, are you really going to salvage it after a major wreck?
- Low mileage discount – This may not apply to many people, but I live less than 10 km away from work, and since that is my major daily commute, the insurance companies offer a discount for low mileage drivers. This can also apply for your secondary vehicle that perhaps doesn’t get out on the road as often.
- Good driving record – Being accident and ticket free over the past 10 years has saved me between 5%-20% on my premiums. Savings kick-in after 3 accident and ticket free years
- Value of Car – Expensive cars cost more to repair and therefore cost more to insure. Check the insurance rates before you decide to purchase a car.
- Pre-Pay your insurance – Most insurance companies will charge you up to 3% to set-up a monthly payment plan. Avoid this by pre-paying your insurance at the start of the year.
Just by going through these steps again with the auto insurance company earlier this year, I managed to save $360 off our annual premiums. We now pay less than $1150 to insure two vehicles.
Do you have any money saving tips to save money on auto insurance?
Any inspirational book or seminar will tell you that you need to write down clear, concise and measurable goals in order to successfully plan your future. Almost any life goal has a financial aspect to it.
You could have a goal to have a million dollars in investments, but it’s more exciting to incorporate a vision of your life such as, “I need to save $50,000 to be able to quit my job and live in Belize for a year so I can write a best selling novel.”
Setting Measurable Goals
You can keep this vision in your mind so it’s less painful when you walk past the shoe sale and bring your bag lunch to work. I believe money should be a tool, not the ultimate goal.
Related: How To Set Short Term Goals
That said, my own goals are actually quite modest. For the next year I will:
- Maximize my TFSA contribution. This account is part of my long-term retirement strategy so I plan to contribute the max every year.
- Begin minor renovations on my 30+-year-old house that seriously needs some updating. This not only will increase its value, it will make it more attractive to me and hopefully make the house more saleable if / when we decide to move.
- Visit my elderly parents more often. They still live in their own home, but in another province and I want to check up on them in person every three or four months or so to see if everything is OK.
- I currently work part-time so I don’t technically get paid vacations. I do however get vacation pay on my bi-weekly paycheques. I am depositing this amount into my savings account to reduce the sting of not only paying for my holiday, but that I also have no earnings while I’m away.
- I want to take a course or two – perhaps upgrade computer skills and learn a new language for an upcoming trip to Europe (part of my medium-term goals).
These should all be achievable with a little more work and motivation and a little less procrastination to keep me on track. How do you set measurable goals for yourself?
What gets measured gets managed. It’s true in business and it is definitely true in personal finance. Every year most of us at work write down our short term goals and objectives for the year. Some people really dislike the process, but I love it. How else do you know where you stand?
The same approach can work for you at home. From simple objectives of increasing your net worth, reducing your debt, or contributing to your RRSP and TFSA, to more specific goals of changing careers, building a house, or creating & sticking to a family budget, writing down your short term goals and regularly checking in on your progress is critical to your financial success.
My Short Term Goals
I write down my short term goals at the beginning of the year. This year, I wanted to do the following:
1. Create a family budget – With my wife staying at home full time looking after our first child, we would be adjusting to single income living by March. I’ve never done a budget before, but I felt this was the right time to start tracking our spending to ensure that we could make this transition as smoothly as possible.
- Progress – I found a family budget in Excel on Google Docs that I customized for our own situation. The first tab is the overview of the entire year where I can forecast income and expenses. Then I have set up individual tabs representing the current month that I’m in. So far, so good…and here’s the link to check out the budget tool for yourself
2. Max out my TFSA contribution – At the beginning of the year I will contribute $5k to my TFSA, which is held at TD Waterhouse. I have a specific strategy for this account, which I will get into at a later post.
- Progress – Completed, I contributed $5,000 into my TFSA account in March.
3. Maximize Rewards Points – I have always been a big fan of collecting Air Miles rewards, but I wanted to find out if I was truly maximizing my dollars spent with the rewards I’ve been receiving. Turns out I wasn’t, so after careful research I chose the PC MasterCard, which offers 1000 points for every $100 spent. 20,000 points can be redeemed for $20 in free groceries.
- Progress – Completed. I use PC MasterCard to pay bills online and for day-to-day purchases, and still use my Air Miles AMEX when we go shopping at Costco.
4. Save $1,000/month – This is part of an intermediate goal of upgrading our house in the near future.
- Progress – this varies from month-to-month, but so far I’ve consistently saved at least $600/month, and hopefully by the end of the year I can get this up to $1000/month
5. Increase Net Worth by $50k – This is basically the culmination of the other 4 goals. With my TFSA contributions, pension contributions, dividends, market growth, bi-weekly mortgage payments (and super-low interest rates), and increased savings rate, this should be achievable.
- Progress – Increased net worth by $27k as of July 31st
So there you have it. Nothing too crazy, but it looks like I’m on the right track to meet or exceed all of my short term goals for the year. That probably means I set them too low 🙂