Most people (whether they admit it or not) spend money on
needless things It’s just become habit
to buy the things you are used to buying, whether it’s food, beverages, or
household items that you don’t realize there are other less expensive options
for. I had a habit for many years of
stopping at a local fast food restaurant for a bagel and cream cheese every
morning on my way to work. When I first
started this habit, it only cost $1.25 a day.
At the time of this writing, that same bagel and cream cheese costs
$2.79. This may not seem like much, but
back in the day that $1.25 bagel cost me about $25/month. At the current price, it would cost me
$55.80/month. If I buy my own bagels and
cream cheese from the store and make my own, it would cost me roughly $26/month. That is more than half the cost of what I
would be spending at the drive thru.
And that is just one example. Just changing this one habit alone would save
me $29.80/month. Some of you might be
thinking “that’s only $30. What’s the
big deal?” Well first of all, that is
just one item. We have saved a lot more
by making other changes. We have dropped
our cable altogether and use Hulu and Netflix instead. We don’t even miss our cable. We have cut out nearly all eating out and
enjoy more time together at home being creative in the kitchen and saving money
while we are at it. We don’t buy many
disposable items and instead use reusable replacements, such as cloth napkins
or washcloths instead of napkins, rags instead of paper towels, real plates and
silverware instead of paper and plastic.
We do still purchase toilet paper.
We draw the line at that one, but I won’t say I haven’t thought about it. All of these changes add up to a lot of money
Now let’s take this a step further and add up all of the
savings we have made and see how much we could make in interest by investing
this money we have saved. Let’s use the
$29.80/month I am saving by not buying that bagel and cream cheese every
morning. If I invest that into my 401k
averaging a modest 6% interest rate, we would invest $16,272 in 20 years and
earn $15,452.47 in interest for a total savings of $31,724.47. That’s pretty incredible if you ask me! I certainly don’t want to lose out on almost
$32,000 just for a bagel. If we manage
to cut out $100/month in spending and invest that into a 401k averaging the
same modest 6% interest rate, we would have invested $33,120 in 20 years and
would have racked up $31,451.94 in interest for a total of $64,571.94.
Here is a table of more examples:
20 Years @ 6% Interest
25 Years @ 6% Interest
30 Years @ 6% Interest
The more and longer you can save, the more you can invest
into your future. Ask yourself these
questions every time you are about to spend any money:
1. Is this a necessary purchase or do I have alternative options?
2. Is this a purchase that can wait?
3. Can I find a better price (either through another
retailer, coupons, thrift shop, garage sale, or Craigslist)?
Most of the time, I don’t make it past that first question. The
grocery store is no exception. There are too many overpriced premade or individually packaged foods sold
at grocery stores that you can easily spend a fortune on. I am not a creative person at all and I have
surprised myself how many times I have gotten creative and found other uses for
things I already have to avoid buying something else. My husband recently forgot to buy tartar
sauce for the fish he made for dinner one night. Instead of going back out to get some, he
made his own using mayonnaise and horse radish.
This saved us the cost of the tartar sauce and the gas used to get to
the store. Plus it was quicker to make it than to go back to the store
anyway. I have also been known to make
my own laundry detergent, glass cleaner, and dish detergent. Sometimes making your own cleaners does cost
more up front, but saves you money in the long run. Sometimes the cheaper option isn't always the
best option either. For instance, I will
buy Dawn dish detergent before buying the cheaper stuff because I can use much
less of it to get the job done so it lasts longer.
Being creative and weighing all of your options is key to
making the best financial decisions.
Remember too that everyone’s priorities are different. Keep what is most important to you in mind
when making decisions regarding your time and money. Saving money doesn't have to make you
miserable. If you cut out spending in
areas that truly aren't that important to you, this leaves you more money to
spend on the things that are important to you.
I love to travel so I would be willing to live a very simplistic
lifestyle at home to have the money to travel and see the world. Not everyone has the time to apply all money
saving tactics out there either. I know
the power of couponing, but to save the most can be a full time job. I did have fun during my couponing phase and
learned a lot from it, but I choose now not to spend that much time on couponing
because that was pretty much all I did outside of work and I didn't have time
to enjoy with my family and relax.
photo credit: shopping via photopin (license)