Ever buy something for 70 percent, and say to yourself, “Think of the money I’ve saved!” Later, did you realize that buying something you didn’t need – regardless of price – didn’t actually generate a savings?

Americans can be pretty bad at financial math, and often make mistakes when trying to be smart about their money. When offered a choice of getting a regular cup of coffee at a 33 percent discount, or getting 33 percent more coffee for the price of a regular cup, most consumers think the two offers are equivalent.(The discount is the better deal!) Apparently, the idea of something being “free” – in this case the extra coffee – completely scrambles our mental arithmetic.

Similarly, we also prefer package deals, paid for upfront, to paying a la carte, even when we don’t get full value for the package. Think about gym memberships. Wouldn’t paying each time we used the facilities be a better option for most of us, particularly when the rose color fades from our New Year’s glasses and we stop going to the gym often enough to make the cost of the membership worth it?

As a professional financial advisor, it’s my job to help clients get the most bang for their bucks every single day. Here are my top financial “deals” for consumers, with no fuzzy math involved whatsoever.

  1. Index Funds 

    An index fund offers diversified investments at a discount. The expense ratios for index funds are much lower than for actively managed funds, and there is no evidence that active management consistently or predictably outperforms indexes. What you save in expenses really does go to increasing your wealth, since more of the purchase price to buy the fund goes into investments and not to pay manager fees.

  2. 401(k) Match 

    This should be a no-brainer, since whatever your employer contributes to your 401(k) to match your contribution is like finding free money.  You wouldn’t step over a pile of cash on the sidewalk, would you?  But there are people who effectively do just that when they do not contribute up to the match, thinking there are better uses for the money.  Generally speaking, there are not.

  3. Cafeteria Plans

    In this case, the savings come from avoiding taxes on any money set aside for certain qualified expenses (e.g., non-covered medical costs).  As long as you are going to use your money for these special expenses, you can realize real, net-worth augmenting savings. (But don’t go spend those savings at the mall!)

  4. Withhold the Right Amount from Your Paycheck

Taxpayers often try to do themselves a favor by over-withholding, which can create a sizeable tax refund.  But when that refund comes, too often it is seen as a windfall to splurge on a big TV or an unplanned vacation. Or worse still, it’s needed to pay off credit card balances that were run up because there wasn’t enough in the checking account to pay the credit cards in full each month. Simple fix: Get your withholding right, take more home, and use that extra to avoid credit card interest or put it in the bank.

5. Open and Read your Bills:  

As a kid, did you ever search the sofa or armchairs for loose change that had fallen into the cracks? There is also loose change to be found in the corners of your credit card and utility bills. Check these bills carefully! Likely you will find an errant charge or two, such as premium cable channels, or call forwarding services you never elected. A call to the bill issuer will generally result in a credit to your account and/or the avoidance of any additional charges in the future.  Here’s a case where you can get paid just for reading carefully!

6. Make Lists and Follow Them:

Never leave home without a list! If you see something you want to buy that isn’t on the list, don’t buy it. If it is still burning a hole in your pocket and on your mind a day or a week later, then you can put it on the list and sally forth to the mall. Nine times out of 10, however, you will have forgotten about it.

Remember: Just because you see signs everywhere that announce “Everything Must Go!” this doesn’t mean your financial common sense should go out the door as well.