money wasters switzerland
Everyday Money

11 Easy Ways to Lose a Lot of Money

August 16, 2024 - Daniel Dreier

Ever wondered where all your money goes every month? Sure, a lot of it probably goes towards legitimate expenses, but chances are that at least some of it is being poured into one of the black holes listed here.

Switzerland is an expensive place to make financial mistakes. Still the relatively high incomes, and high levels of disposable income in particular, lead to many residents having a somewhat careless attitude towards money. Over the long term, the cost of poorly-informed financial decisions can cost tens of thousands of francs. Here, moneyland.ch lists 11 easy ways to waste a lot of money in Switzerland.

1. Choosing the wrong health insurance

In Switzerland, health insurance is one of those costs you simply cannot get around. However, you can end up paying much higher premiums than necessary by choosing the wrong policy, insurance model and deductible.

Getting compulsory health insurance from an expensive insurance provider and settling for a standard insurance policy when a low-cost family doctor, telmed or HMO model would work just fine for you is equivalent to flushing money (more than 2000 francs per year) down the toilet. An obligatory health insurance premium comparison can help you avoid this waste. Likewise, getting supplementary insurance which does not cover your actual healthcare needs is another easy way to waste money.

2. Leasing instead of buying

Leasing everything from vehicles to furniture to televisions is a popular practice in Switzerland. However, leasing rarely makes financial sense, especially where getting a car is concerned. Aside from the high cost of lease payments, drivers of leased cars have to fulfil expensive lease obligations (like regular services at expensive garages) and are usually required to take out expensive fully-comprehensive car insurance. You do not benefit from income tax deductions (as you do when you get an auto loan) and in the end, you do not even own the leased car. Get more tips on auto leasing here.

Using personal loans also does not make financial sense. If you have no other choice but to get a loan, you should make sure to compare the costs, as each lender has its own interest rates. Also be aware that the longer the loan term is, the higher the total cost of the loan will be.

3. Plugging in to actively managed funds

At some point in life, many people feel the need to invest part of their savings, and in many cases their bank will point them towards actively managed funds. Unfortunately, actively-managed funds are expensive because you are paying a professional asset manager to manage your portfolio. On average, costs are equal to 0.7 percent of invested assets, but actively managed funds rarely manage to outperform general market rates.

This means the returns on the money you pour into these funds may be slim or non-existent. In the worst case, you could end up spending more on fees than you actually earn off your investment. Passive funds (like ETFs based on stock indexes) have much lower average costs of around 0.2 percent, for example, and generally perform just as well. Choosing the wrong investment vehicle is an easy way to lose a lot of money fast. You can read more in the guide to investing in ETFs.

4. Getting the wrong mobile phone service

Smartphones seem to have become a permanent extension of most people’s bodies, but some people pay a lot more for the prosthesis than others. Phone contracts and prepaid services are becoming cheaper and offering more service for your money all the time, so avoid tying yourself into a long-term contract (more than 12 months) because a better deal is likely to come along long before your contract expires.

While many telco service providers offer free or cheap deals on expensive phones when you get a long-term contract, paying for a phone up front in cash rather than installments is almost always a cheaper option. If you rarely use your phone, getting a prepaid option will normally work out cheaper than tying yourself into a contract. Paying for an expensive contract which provides services you do not actually use is another good way to waste a lot of money. Take a moment to compare mobile plans to find out whether you still have the best deal for your needs.

5. Dabbling in the stock market

The stock market is not a good place for dabblers. The basic rule of trading is “do it right or don’t do it at all”. Take time to study the costs, risks and inner workings of stock trading thoroughly before you invest real money. Compare the costs of different brokers (using the moneyland.ch broker comparison tool, for example). If you do not feel confident in your knowledge of trading, consider investing through passively managed funds like ETFs instead.

6. Buying a home when you aren’t financially prepared

Taking out a mortgage and buying a home when you do not have the financial means to cover the often-high costs that come with being a homeowner is one of the surest ways to lose money fast. The rent or buy calculator from moneyland.ch can help you determine whether buying a home is a good financial move for you. Additionally, buying the wrong house can very quickly turn your pockets bare. Never rush into buying a home and do your due diligence. Check out this list of things to look out for when buying a home in Switzerland to help you avoid buying into an expensive bargain.

7. Picking the wrong car insurance

Not having the right car insurance coverage can cost you dearly if you have an accident. If you have invested a lot in a vehicle, getting collision insurance or semi comprehensive insurance coverage could help you avoid spending a lot on car repairs or losing your investment if your car is written off. Likewise, getting comprehensive or even collision car insurance for a car that isn’t worth much is usually a bad financial move, and compulsory liability car insurance is probably all you need. Taking time to compare car insurance offers can also save you up to hundreds of francs per year.

8. Paying unnecessary taxes

While making sure you pay the taxes you owe is a legal requirement, many people spend more money on taxes than they need to because they don’t understand what expenses they can deduct from their taxable income. If you are not deducting income earned from stock dividend distributions, money you deposit into 3a retirement accounts, money you spend on health insurance premiums, money you donate to registered non-profit organizations and money spent on interest charges (for loans and mortgages) from your taxable income, then you are paying too much. Paying more taxes than you are legally required to is equivalent to donating money to your municipality, canton and the federal government.

9. Not paying your bills on time

Merchants and service providers are legally allowed to charge 5 percent interest on bills which are not paid by the due date. If you pay your bills late, the cumulative penalty interest charges can add up to a lot of money. In the case of credit cards, the annual interest rate of up to 14 percent will apply if you do not make your credit card payment on time. If paying late is a bad habit of yours, setting up direct debits for recurring payments instead of getting billed is an easy way to avoid blowing money on penalty charges.

10. Keeping unused subscriptions

Gym memberships, internet subscriptions, auto club memberships, phone contracts, paid credit cards, car-sharing service subscriptions, club memberships – the list goes on and on. Most Swiss residents hold several subscriptions and many of these subscriptions go unused for long periods of time. Go over every single subscription that has any kind of recurring cost attached to it and ask yourself whether or not you still use that subscription. Recurring expenses for services you do not regularly use – even when individual charges are insignificant – can add up to huge amounts of wasted money over the years.

11. Expensive rental housing

Housing is a necessary part of life. But you can easily waste thousands or even tens of thousands of francs each year by choosing your housing carelessly. Take time to consider how much space you really need, and to seek out the cheapest possible offers. You can find useful tips in the guide to saving on housing in Switzerland.

More on this topic:
Compare car insurance offers now
Compare health insurance offers now
How to avoid double insurance
How to get cheaper rental housing in Switzerland

Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.
SWISS CAR INSURANCE COMPARISON

Find the cheapest car insurance now

Compare now
Request now for free

Leading credit cards

Free credit card

Swisscard Cashback Cards Amex

  • No annual fees

  • Two cards Amex & Visa/Mastercard

  • With cash back

Free credit card

Migros Cumulus Visa

  • No annual fees

  • With Cumulus points

  • Without foreign currency fees

Deal of the Day
×
Free credit card

Swisscard Cashback Cards Amex

No annual fees

Trading platforms

Brokers with low fees

Swiss Trading Platform

Swissquote

  • Leading Swiss online bank with FINMA license

  • Free multicurrency account & low commissions

  • Access to more than 3 million products (shares, ETFs, crypto and more)

Swiss Trading Platform

Cornèrtrader Special Offer

  • Special offer: particularly favorable conditions for Moneyland users

  • No custody account fees for shares

  • Swiss online bank with FINMA license

Swiss Broker

Saxo Bank Special Offer

  • Special offer: Reimbursement of brokerage fees up to CHF 200 for 90 days

  • Licensed Swiss bank (FINMA)

  • Free expert research and trading signals

Request now for free

Cheap bank accounts with card

Swiss Bank

Bank WIR Bankpaket Top

  • Free account & card

  • No exchange fees for foreign payments (interbank exchange rates)

  • 24 ATM withdrawals worldwide per year free of charge

Swiss digital bank

Radicant

  • 1% interest on your everyday account

  • Best exchange rates

  • 1% of card spending as saveback in the investment portfolio

Free bank account

Yuh

  • No account fees

  • Banking partner: Swissquote & Postfinance

  • CHF 20 trading credit with code «YUHMONEYLAND»

Swiss digital bank

Alpian

  • CHF 100 welcome bonus

  • Favorable foreign exchange rates

  • Multi-currency account with Visa card (CHF, EUR, USD, GBP) 

Online private account

UBS key4

  • 50 KeyClub points as a welcome gift

  • Online private account with debit card

Request now for free

Cheap bank accounts with card

Swiss Bank

Bank WIR Bankpaket Top

  • Free account & card

  • No exchange fees for foreign payments (interbank exchange rates)

  • 24 ATM withdrawals worldwide per year free of charge

Swiss digital bank

Radicant

  • 1% interest on your everyday account

  • Best exchange rates

  • 1% of card spending as saveback in the investment portfolio

Free bank account

Yuh

  • No account fees

  • Banking partner: Swissquote & Postfinance

  • CHF 20 trading credit with code «YUHMONEYLAND»

Swiss digital bank

Alpian

  • CHF 100 welcome bonus

  • Favorable foreign exchange rates

  • Multi-currency account with Visa card (CHF, EUR, USD, GBP) 

Online private account

UBS key4

  • 50 KeyClub points as a welcome gift

  • Online private account with debit card

Free subscription

Sign up for the free newsletter

Subscribe now
more than 3 million pieces of data

Find all comparisons here

Go to comparisons