Bank of America is one of America’s oldest and most highly respected banking institutions. It prides itself as a fountain of financial advice about how you can best secure your future financially. However, it now seems to be offering some of the most irrelevant and hoariest clichés in personal finances about how to best build your financial future.
Tips that will save you $4400 a year
The bank’s consumer website, “Managing your money” provides financial advice that theoretically can save you as much as $4400 a year through tiny economies and will help you “take a big step toward achieving your financial goals”. It includes the advice that if you trim some small daily expenses you will be able to make big contributions to your savings account. For example, the website urges you to give up your daily newspaper at $1.50 a day and get your news instead online for free. It also suggests you give up those drive-through lattes at $2.50 or $3 each.
Live like a monk
Bank of America’s advice is actually both misleading and slipshod. Its whole package includes the long-discredited concept put forth by personal finance experts that the little luxuries like our morning jolt of Java or an evening drink after work represents squandered money. What this actually amounts to is cheap moralizing. The idea here is that we could all be millionaires if we just lived like monks. In fact, Helaine Olen, who writes for Slate on personal finance penned a book in 2012 titled “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry,” in which she calls the latte factor the “favorite myth” of the personal finance industry.
What’s even more suspect
The small-luxury list quoted by Bank of America’s financial advice is even more suspect than the latte factor. It suggests that you take advantage of such economies as carpooling or public transportation instead of driving to work even though in many parts of the US public transit can be time-consuming, inconvenient and actually more expensive than driving.
Bank of America also suggests that you give up your gym membership at $1.83 a day and run on park trails for free. The bank says that this should save you $448.35 a year. Part of the reason it urges this is because 66% of people who belong to a gym never go there to work out. But this raises the question as to how many of those people would maintain an arduous outside jogging routine instead.
The issues these lists never address
The problem with Bank of America’s list of money-saving tips and others like it is that it never tackles what keeps most American families from building a nest egg – the big things such as education, childcare, healthcare and education. According to Olen these are the things that are demolishing many family’s finances and not mythical newspaper subscriptions. Take healthcare for example. Its out-of-pocket cost for a household has increased by more than 50% since 2010.
Another category of spending not addressed by Bank of America’s financial advice is its cost or the cost of retail banking. That’s unfortunate because much of a family’s money can go down the drain in banking fees. While it’s not easy to find Bank of America’s rate and fee schedules on its website a little digging reveals that the bank charges $300 a year just for an interest-bearing combined checking/savings account – assuming you don’t keep $10,000 on deposit. That translates into about a 3% annual drain. However, if you do keep $10,000 on deposit the bank will pay you interest in the majestic sum of one dollar a year.
It doesn’t always deal honestly
To make matters even worse Bank of America doesn’t always deal honestly. It paid $410 million in 2011 in settlement of a class-action lawsuit that alleged it had manipulated debit-card transactions to maximize what it could charge its customers in overdraft fees. At around the same time the bank was going to charge people that have its debit cards a $5 monthly fee for their accounts. However, it backed off this idea after a huge public outcry
It should offer serious financial advice
Most people don’t pay any attention to financial advice from a company such as Bank of America that they give up on those little luxuries that are part of the daily life in order to achieve financial independence. They understand that these little luxuries are what sometimes makes life worth living and that what really matters are to be paid equitably for their work and to find ways to insure themselves against huge expenses such as hospitalization. Of course, Bank of America’s financial management advice doesn’t cover this. In fact, those tips are really almost entertainment. But a bank is not here to entertain us. If BofA wants its customers to take its financial advice seriously it should offer just that – serious financial advice such as …
How to combat the high cost of healthcare
One of the biggest expenses for most U.S. families is the cost of healthcare. This has become a contentious issue since the advent of Obamacare or the Affordable Care Act. However, there are ways to fight this cost and the first is to pick the right policy. Make no mistake about the fact that this will take time and effort. Here’s one example of this. People in Fort Lauderdale, Florida have a choice of 94 plans through the Affordable Care Act. You will need to find a policy that includes your medications, your doctors and that provides help with any chronic conditions you might have.
Second, be sure to know what your health care insurance covers. The time to carefully review your policy is before you need it. You need to know about emergency room visits, co-pays and coinsurance for procedures. And be sure to check bills and insurance company statements for errors. Even if you have one of the best health insurance policies you could end up getting bills for procedures that should have been totally covered. One little mistake in a medical coding could be the difference between a mammogram where there was no copay and one where you’re billed $600.
Finally, don’t be afraid to negotiate big bills. If you have a complicated procedure
get an itemized bill before leaving the hospital. Assuming there are no errors you should ask the hospital’s billing department about a possible discount for paying cash, financial aid or a payment plan. If you have a large number of big bills you might consider hiring someone to negotiate for you.
Here’s a short video that explains more about negotiating medical bills and how an advocate could help.