Articles one and two of the continuing “Financial Planning 101” series explained how to define and organize your goals. The third step in building a successful financial plan is examining the areas in which you already are spending. By minimizing those costs, you could save big—and use those savings to accomplish your financial goals.

Insurance costs. Increasing your auto or homeowner’s deductible from the standard $250 to $500 can reduce your premiums by up to 30 percent, according to Insure.com. Also, consider dropping collision coverage from a car valued at less than $1,500. And don’t be afraid to ask your agent for a better rate. If you tell the agent you’re looking elsewhere for coverage and have been a good customer, he or she might offer you a 10 percent to 15 percent additional reduction in premiums to keep your business.

Withholdings. Most Americans are thrilled when they get a big refund at tax time, but all they’ve done is give the government an interest-free loan. With the recent reduction in tax rates, it definitely is time to revisit your W-4 federal withholding. Assuming your tax situation hasn’t changed, for every $850 in federal refunds you received in 2003, increase your W-4 withholding allowance by one. So if you received a $2,000 federal tax refund in 2003, you should increase your W-4 withholding by two.

Banking charges. The average fee on an interest-bearing checking account is $10.86 a month, according to Bankrate.com. That same average fee for a regular checking account is only $3.72—a difference of $86 a year. At the fall 2003 average yield of 0.27 percent, you would have to keep nearly $32,000 in the interest-bearing account to recover that $86!

Visiting ATMs also can be damaging to your wealth. If you use another bank’s ATM, you’ll pay an average service charge of $2.69 for each withdrawal. Making two withdrawals a week would cost you $280 a year. Here’s more food for thought: If you make a $20 ATM withdrawal and pay a service charge of $2.69, you have lost 13.5 percent of the amount you have just withdrawn.

Credit cards. The average American owes nearly $9,000 in credit card debt. At an average APR of 16.44 percent, that’s $1,470 a year in interest alone. If you are carrying large credit card balances on high-interest cards, ask your cardholder to lower the interest rate. You will save about $90 a year for every 1 percent the APR is lowered, so a 3 percent APR reduction will net you $270 a year.

Telephone bills. Examine your monthly usage patterns for both mobile and landline phones. Perhaps your cell phone plan gives you 1,000 minutes for $80 a month, but you use only 300 of those minutes. Switching to a 400-minute plan for $40 a month will save you $480 a year, provided you don’t exceed your allotted minutes.

Some telephone companies now offer bundled local and long-distance plans that cost about $50 a month for each line. If you’re a heavy long-distance user, you easily can save $30 to $80 a month by signing up for a bundled service. That’s an average savings of $600 annually. Or, ask yourself this: Do you need both a cell phone and a landline? Some people are abandoning landlines altogether and going mobile.

It all adds up. Making these changes could save the average consumer about $1,800 a year, or $150 monthly. Investing that savings of $150 a month in a mutual fund that earned 10 percent a year for 20 years would yield $113,000. Remember, small changes make a big difference.

Next month’s column, the fourth article in this series, will tackle retirement planning.