How to Save $3,000 This Year

Learn how to cut your banking costs to put the average tax refund in your pocket.

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As you wrap up preparing your taxes this year, I hope you're one of the many people set to receive a healthy tax refund. Last year, the average tax refund was over three thousand dollars! Three thousand can make a huge dent in some debt or fund a pretty nice vacation.

[In Pictures: 10 Smart Ways to Improve Your Budget.]

What if I told you that you could find that kind of money just by spending a few minutes of research? If you think that sounds like a get-rich scheme, wait until I explain it. Right this minute you might be overpaying for services you simply have price shopped in a while. When was the last time you look at the fees your bank is charging you? Or how much you're sending to the auto insurance company each month? That's right—the key to saving thousands of dollars each year is in shopping around for these products.

Banking Services

With the advent of banking reform, a lot of banks are scrambling to replace the billions in dollars of fee income they've come to rely on to juice up their profits. A lot of free checking options are going away, replaced by account maintenance fees or higher minimum account balances.

According to Bankrate's 2010 Checking Study, only 65 percent of non-interest checking accounts were free, down from 76 percent in 2009. If this has happened to you, or you're simply unhappy with your bank, there are many more fish in the sea and it benefits you to see if you could do better elsewhere. One stop on your search has to be a local credit union or an online bank. Credit unions work for the depositors and they typically have better rates than commercial banks. Online banks have much lower overhead costs and pass a portion of those savings along to their customers. In both cases, they will have low minimum account balances and won't inundate you with fees.

[See What to Do With Your Old 401(k)]

Retirement Accounts

Did you change jobs recently? Have you reviewed your assets to do some rebalancing or otherwise adjust them to meet your changing needs? One of the easiest ways for you to save a lot of money is selecting the right assets in your retirement account. Number one on that list should be reducing expenses.

When I left my last job, I opted to rollover my 401(k) into a Rollover IRA at Vanguard in order to simplify my finances and reduce my expenses. My fund options at my former employer's 401(k) were good but the expenses were a little on the high side. By moving my assets over to a single account, it was easier for me to manage and saved me some money. It won't look like much but half a percent can become very large over forty years. It's also important to review which assets you have in which account. A Roth IRA isn't subject to income taxes if you make qualified withdrawals, so it's best to do most of your active trading within that fund.

A regular IRA or 401(k) isn't subject to income taxes until you start making withdrawals either so you don't benefit from long term capital gains tax treatment. If you plan on building a dividend portfolio or holding onto stocks for at least a year, a taxable brokerage account is optimal because you benefit from lower capital gains rates.

All Insurance Policies

Insurance is such a tricky expense because the only time we think about it is after something bad happens! In reality, it's an expense we are paying each and every day, even if it's only collected once every six months or invisibly deducted out of your paycheck. Almost all of us have auto insurance (if you drive), homeowner's or renter's insurance, and health insurance (hopefully!).

A few of us have life insurance, business insurance, and perhaps a blanket umbrella insurance. Regardless of what you may have, it pays to shop around at least once a year to see if you could be paying less. The easiest way is to look at online insurance quotes, since you can do it in the comfort of your own home. Be sure to consider all the discounts available to you when you do get individual quotes. Sometimes bundling, having multiple policies at one insurer, can net you big savings.

While you're at it, make sure you have all the discounts you're entitled to at your current insurer. Shopping around once a year should cost you nothing except your time, so take advantage of it!

Jim Wang writes about personal finance at When he's not tackling money issues, he's usually looking forward to his next vacation and writing about it at Wanderlust Journey.