How Much Can You Save?
Nancy Olson’s husband doesn’t think that cutting back on small things will really save any money. Well, Nancy, m’love, he’s wrong. He just doesn’t want to tighten his belt. Wuss!
There are dozens of things you can do to save money. I have a section on my website called 99 Ways to Save and you can:
a) check there for ideas on how to save… I’ll build it up over time
b) send me your money saving ideas and I’ll put them there and tell everyone just how smart you are
c) include links to good sites and if I like ‘em, I’ll link to them from this section.
Most people spend without even thinking about it. When I suggest you can find the money you need to save (or pay down your debt) it isn’t a matter of cutting back to the point where you’re having no fun at all. But wouldn’t it be interesting to see just where the money goes when you’re really paying attention?
Cut out just $5 a day and you’ll have an extra $1,800 a year for investing or paying down debt. Wow!
Make yourself up a tracking sheet to see just where your money is going. Put the days of the week across the top and some typical categories down the left-hand side. Include stuff like coffee, snacks, lunch, cigs, gas, magazines/newspapers - everything you spend money on in a day. Leave lots of blanks on the left because you’ll be amazed at what you’ll add when you see all the places where you’re spending money.
As you go through your week, write down what you’re spending. Add it up, so there should be a column on the far right for Total Spent for the week for each category you’ve included on your worksheet.
Are you surprised at what you’re spending? I’ll bet you a teabag you are. And I’ll bet you another that you can trim $5 a day out of your spending, no problem.
Do you know that in drugstores and convenience stores, all the stuff around the cash register is called “the kill zone.” That’s the stuff they know you’ll buy on impulse. And since there’s a whole breed of consumer who doesn’t even consider change to be money, they’re counting on you dropping coins here and there on stuff you don’t really need.
So is nickel and dime-ing it really worth it? Yup. If you save $5 a day 20 days a month and put the money in your retirement plan earning just 7%, in 20 years you will have $55,000. Double your savings and you’d have over $100,000.
Of course, you actually have to SAVE the money. That means taking it out of cash flow and putting it somewhere to work for you.
If you save 50¢ using a coupon and then you turn around and spend it somewhere else, you actually haven’t saved a thing. To SAVE you have to take the money out of your wallet and put it somewhere you can’t spend it. Then you have to put that money to work.
So, are you willing to take up the challenge and see how much you can save, Nancy?
How about the rest of ya?
February 19th, 2008 at 11:47 am
After attending Gail’s seminar in Nanaimo and hearing her statement that 10 - 30% can be ‘found’ in your budget that can be used toward paying debt, saving, whatever, I took the challenge thinking that I had a tight budget and was estatic to have found Gail’s truth. I have not done without ’stuff’ and have actually found I am grocery shopping better quality which in turn cuts down the volume of food and also variable expenses like gas for vehicles and buying in the kill zone as described in this article. Give it a try and be amazed at how simple this exercise is!
February 19th, 2008 at 12:27 pm
I can attest to this fact as well. Last month I was in serious jeopardy of going on strike. While negotiations were going on I made a vow not to spend a penny. I didn’t go without, I still had my morning coffee I just brought it from home, same with lunch. Funny thing was I got to pay day with my spending money still intact. I really think it is a mindset and if you can get around feeling like you are being deprived if you don’t buy the $2.00 cup of coffee then you have mastered it! I am now ahead of the game because we have an agreement!
Great post Gail!
February 19th, 2008 at 4:21 pm
Simply put all your change in a bowl at the end of the day and you’d be amazed how quickly it adds up. I know of a woman who used to pay her entire car insurance with this money. I have often used it as my “fun” money and haven’t even noticed that it hasn’t been spent in the first place. I am currently putting all of the change I roll onto my VISA - it works out to an extra $100 or so a month!
February 19th, 2008 at 7:36 pm
I read a lot of personal finance/frugality blogs and one of the best lists about saving money I’ve ever come across is “The frugality cheat sheet: 147 tiny tips to live healthier, happier, greener and better” found at http://frugalist.instantcreditcard.com/2007/the-frugality-cheat-sheet-147-tiny-tips-to-live-healthier-happier-greener-and-better/
My personal favourite money saving secret is to use your local public library. Libraries are simply amazing places (magic even) chalked full of great books, magazines, CDs and yes DVDs. I get a new release DVD or award winning film set aside each week for me at my library (I search for new titles and put them on reserve on-line - easy peasy!). If I’m interested in a book my library doesn’t carry, I’m almost always able to get it simply and quickly through inter-library loan. Amazing!
February 19th, 2008 at 8:44 pm
I downloaded my entire 2007 financial statements, banking and visa, into quicken and spent a couple of hours categorizing. I know, to the penny, how much I spent at Starbucks last year for lunches and lattes. It was almost $800… egads! One of my new year’s resolutions was to only allow myself $20 a month (refillable card) at Starbucks. Imagine my surprise when I had money left over at the end of January on the card. I am very proud!
February 19th, 2008 at 11:43 pm
Jean L - a couple of years ago a man who owned a branch of a major coffee house told me that this chain of coffee houses made alot of money from young women, aged 25-30, starting to move up in the workforce. That customer spent $5 to 7 per day on beverages, snacks and lunch-type food. Assuming 20 business days per month, that is $5 x 20 days x 12 months = $1200 per year. At $7, that’s $1680 per year.
February 20th, 2008 at 11:10 am
How to save more at the end of the year?
If you earn more than the maximum for EI and CPP, you can put that money towards your RRSP and Christmas gifts (so you can pay cash and kill the January ‘oops!’.).
My yearly budget is somewhat based on Gail’s pessimistic budget philosophy, so my January paycheck dictates the base budget. Any possible pay increase is used for debt reduction and RRSP contribution. It is a ’smoother’ way to rebalance the budget towards a more balanced one.
One statement I read once: live on what you made 5 years ago!
Now I just need to reduce the number of unexpected expensive events
February 20th, 2008 at 12:48 pm
Here’s some food for thought…my fiancee and I have been saving our change for the past month. We toss into a clear jar all of our change and if we have an extra fiver, it goes in too. From mid-Jan to last weekend we managed to save $212 which paid for our groceries for the month (including meat purchased in bulk), our toiletries, pet food and litter, and our treat…3 rented movies at Blockbuster. We’ve emptied the jar and starting again this week and we’re already up to $8! My old high school Entrepreneurship class teacher said this: take care of the change and the bills will take care of themselves…..that’s definitely some food for thought!
February 20th, 2008 at 3:05 pm
I have been tracking every penny of my variable expenses since Jan 1/08.
I am now a believer Gail ! So is nickel and dime-ing it really worth it ?
You betcha!
For example I am carrying my coffee in a thermos now. Tim Hortons coffee is now an occasional treat rather than a 2-4x/ work day thoughtless purchase. I now savour and enjoy every sip when I do buy a cup of coffee out. I have saved a fair bit of cash on this change in routine alone.
Gail I am so happy you write this blog. It supports the developing of my new found financial muscle. I love your down to earth no nonsense advice.
I am also a huge fan of your wonderful show.
February 24th, 2008 at 6:19 pm
Here’s a list of ideas that came in today from someone who doesn’t want anyone to know how smart she is…
Here is my contribution towards:
32- You don’t have to go inside a shopping mall to go for a walk.
99 ways to save money, a beginning:
1- Some supermarket offer an extra 10% on Tuesdays/Wednesdays.
2- I love Moneysense.ca. I read the articles online instead of purchasing the magazine. They are available later, but they are free.
3- Move from a bank with a minimum requirement to one with none and move that minimum to a higher yield savings account.
4- You want something you don’t need and know you should not buy? Put it on your Christmas/birthday wish list.
5- Brown bag your lunch.
6- Teach your kids to prepare their own lunch.
7- Potluck dinners with friends instead of restaurants.
8- Read about your employment’s benefits package carefully.
9- Part-time students often have access to a gym.
10- Use unexpected income to boost your RRSP contribution or pay down debt.
11- Use the public library (books, DVDs, magazines, …).
12- Clean laundry in cold water.
13- Use 10% less soap when cleaning.
14- Dilute juice 10% (but not too much).
15- Keep your car longer.
16- Keep your computer longer.
17- If you have time to shop as entertainment or morale booster, you have time to plan your budget!
18- How many TV channels do you really watch?
19- If you can’t afford the rent, move to a cheaper place BEFORE you get kicked out. Another city may have to be considered.
20- Reuse your grocery bags.
21- It’s not prettier and it doesn’t fit better because it’s on sale.
22- Before you buy: are you going to get around to using that thing?
23- Does your pension plan allow you to contribute beyond the base amount?
24- If you intend to buy a house, plan you budget as if you were already living there and put the difference aside for your down payment. Don’t forget the taxes!
25- Which phone options do you need?
26- Do you need BOTH a landline and a cell phone?
27- How is your cell phone plan anyway?
28- Don’t keep up with the Jones’s debt load!
29- If you talk about your money saving ideas with a friend, they may wish to brag about their ideas too!
30- Do not lend more than you can afford to loose.
31- If you lend money, ask how THEY plan to be able to pay you back!
33- Find a very good friend to make it through your debt repayment plan (going through it together might help).
34- Read the newspaper on-line.
35- Holidays with campground hospitality.
36- Single car household /no car household
37- Choose your car according to your budget instead of fitting your car inside your budget. (Don’t even try the extras that you can’t afford!)
38- Before buying car, find out the insurance cost for that model.
37- Rent a smaller place in order to save for your down on a house.
38- Find the summer jobs that will let you use your student loans as an emergency fund.
39- Tired of cooking? Get the other members of the household to pitch in before you order out!
40- Save up monthly to pay your car insurance in one installment so you can save on fees (administrative and/or interest).
41- Use holidays from first job to get a temporary second job or work odd jobs.
42- Check your credit record for accuracy a few months before major purchases requiring credit rating.
43- Air dry your hair, especially in the summer.
45- Use automatic withdrawals for your RRSP and savings.
46- Rent a car once a month instead of buying and use public transport otherwise.
47- Share a taxi ride.
48- Be open to your kids about your budget.
49- If it’s not broke, why are you buying a new one?
50- If it’s broke, can you fix instead of buying a new one?
…
97- Celebrate the increase in your net worth! You paid down your debt, give yourself credit. Find the inexpensive way to remind yourself that you did great! Charts work for me.
98- Laugh once daily!
And this one is for you Gail:
99- Find a good financial advisor!
No need to credit me for the website, but I keep the right to use it elsewhere! These ideas are not all my own.
February 28th, 2008 at 12:50 pm
Elvin has a great thing going there with the coin jar idea. My boyfriend does the same thing as his spending is primarily in cash. He avoids spending coin unnecessarily and every day it goes in the jar. This is also a great strategy if you are supplementing your income with a job that pays in cash (such as serving tables or pouring drinks). At the end of every week, empty your tips into the jar, leaving yourself a consistent budget for the next week’s spending money. Periodically tally up the jar and make deposits into a high interest savings account (even better if it is your RRSP or the new tax free account available next year). You will never miss the change and rolling coin is a great cure for insomnia when your financials stresses start keeping you up at night!
February 28th, 2008 at 1:28 pm
Thanks for the kudos K! 50% of my fiancee’s tips are going in the jar now. It’s gonna help pay for our modest wedding. One thing to avoid….Coinstar! They take 9 cents on every dollar you bring to their machine…..take the extra time and roll the change for yourself…the dollar store has tons of them for cheap…..it drives banks crazy..but at least you can make banks work for their multi millon dollar profits each year by paying their wicket attendants.
I think we gonna invite Gail…seeing as she’s the one that opened our eyes to what we truly value…each other…not keeping up with Joneses!
February 29th, 2008 at 9:53 pm
Here are 40 more ideas that my hubby and I have done within the past year that have allowed us to save TONS more money more than we were before - in fact, by saving effectively and following a budget, we were able to put away $28K into our RRSPs this year by diligently saving!! Last year, we put zero, zip, zilch…WOO HOO!!! Talk about a MEGA improvement! Hope these ideas help.
1. I just paid for my entire grocery bill ($135) with reward certificates from Air Miles (we have a no fee plan and pay off our balance monthly); you can cash-in your points for groceries, gas, gift cards, etc…and you can transfer a lot of points from one program to another (ex. Esso -> HSBC)
23. wash your dishes by hand (especially the big ones that take up too much space in the DW) and only run your dishwasher when it is full
35. Set gift limits at holiday times and pick names for stockings and/or gifts - for example, for a family, each person picks the name of the person for whom they’ll fill a stocking for $15 max and gifts per person are not to exceed $100. You’d be surprised how much more you get out of the holidays when you get away from the material focus and back to the real meaning of the holidays!!
Jenn
2. Repair stuff when it breaks, don’t buy new (sew holes, glue things, etc.)
3. Buy baby/kids clothing at garage sales/second hand stores (you’d be AMAZED how much this can save!!!)
4. KEEP YOUR RECEIPTS!! We were tossing them and tossing money out the window as a result. Sometimes you will buy something and take it home and you find that you don’t really need it or you made an impulse purchase that you shouldn’t have made; most stores have liberal policies IF you have a receipt, then you have that money back to spend wisely
5. Buy clothing basics (they can be worn longer) and dress them up with up-to-date accessories that are far less expensive than a whole new outfit
6. Buy cards at the dollar store!!! Birthday and other cards are like $5 a pop these days in some cases - Dollarama has nice cards for 99cents!
7. Speaking of the Dollar Store, go in there for something and then leave, don’t browse and come home with a bag of crap!!
8. Invest the money that you spend on lottery tickets and you WILL WIN!!
9. Make sure you save the RRSP % at work to ensure you get the full amount of your employer match program
10. If you get prescriptions monthly, make sure to shop around for a pharmacy with a lower dispensing fee - fees range from $2.99 to $10.99 that I have seen…whether you have a plan or not, if your plan covers 80%, you’ll save some change by paying based on the $2.99 fee…
11. Fill-up your car with 1/2 tank instead, you’ll be tugging-along a lighter car/truck and get better mileage as a result
12. If you have a baby, use reusable (washable) stuff including diapers, washcloths, nursing pads, etc. It is unbelievable how much $ is spent on disposable stuff
13. Buy food that is not prepackaged - prepare it yourself, in advance if you have to; just because someone has cut and washed the veggies for you can add A LOT to the price of the SAME food
14. CREATE A WEEKLY MEAL PLAN (this has saved us HUNDREDS of dollars annually b/c we are less apt to eat out) - every Sunday night we decide what we’re going to eat for the week each day, then we make the grocery list based on the ingredients needed for all of those days and shop based on the list. Leftovers are for lunch or get frozen for future meals.
15. Buy meat in bulk and freeze it (you can save a lot of $ doing this!)
16. Buy generic brands - contract manufacturers make the name brand AND the generic brand on the same production line. For over-the-counter medications, check out the ingredients list - they are the same in most cases. Ex. 325 mg Life Brand Acetaminophen = Regular Strength Tylenol but it is a few bucks cheaper! Ask the pharmacist and they’ll tell you - it’s the SAME THING.
17. Eat breakfast at home - even a bagel and coffee at Tim’s every morning adds-up…
18. save.ca is a great place to get coupons…make sure you only get coupons for stuff you would buy anyway
19. turn down your furnace by a degree or two; you won’t notice the difference but you will when you get your bill!!
20. turn off the lights when you leave the room
21. buy water bottles by the case; for example, this week at No Frills you can get 12 for $1.00 or you can go to the convenience store and get 1 bottle for $1.29…
22. when you eat out with a friend, split a sub instead of getting 2 (yes, they’ll put different stuff on each side
24. close the door to rooms that you don’t use in your home and close the furnace vent; the room will still get some heat but not a lot to drain the heat unnecessarily - you’ll save $
25. take out only the amount of cash you will need for the pay period to avoid ATM fees (and stick to that as your amount of spending cash for the time period)
26. increase your deductible on your insurance policies (auto, home) and you will save on your monthly costs
27. take a long term approach to investing; don’t buy and sell, buy and sell because those fees add up!!
28. only invest the money you save in things you understand so if/when you lose any money, you understand why and can learn from it
29. use the light wash cycle on your washing machines (dishes, clothes), you’re stuff will still be clean but you’ll use less water and electricity
30. colour your hair yourself and don’t pay salon prices for hair cuts
31. want a great massage? go to a college - $15 for 1/2 hour and it is great!!!
32. watch when you fly, off season can make a huge difference (for an example, just look at any travel site at the difference between travelling during the last week of March versus the first week of April…)
33. Use a product exclusively? Call the customer service number on those products and tell them how much you love their product and ask them to send you some coupons - they’ll send ‘em!
34. Have a baby? Baby using formula? Make smaller bottles and feed on demand as opposed to making a large bottle and having to dispose of larger amounts of unused formula (which is freaking expensive) - better yet, breastfeed!! It’s free
36. Wait. Order stuff online? Wait an extra day or two for that package and you’ll save a few bucks on shipping costs! After a few orders, that can really add-up!
37. “Make your own” lunchmeat - for example, roast a chicken that costs $10 and package the meat in the frig properly for use over the next couple of days you’ll get the equivalent amount of meat as about $15-20 in processed lunch meat and it’s way better for you too…Be careful to keep the meat fresh/freeze it - processed stuff has preservatives so it “keeps” longer (ew…!)
38. Wash your car at home (or pay $10+ at the car wash…) Cha-ching…!
39. Don’t get hosed at the car repair shop - take someone with you who understands what they are talking about if you are unsure; ask to see the old parts that they are replacing with new stuff; get a quote in writing for major work…
40. Spend a night at home playing a board game like Cranium or Scene It with friends as opposed to going out to a movie - you’ll save a ton of cash and can have as much popcorn as you like at home and will actually get to talk to your pals and get caught up
I hope those help…
March 1st, 2008 at 9:16 am
I love your ideas. What a smart family you are. And your rewards are twofold: first, there’s all that money you’ve been able to save; second you’re doing things so consciously now, living in the moment. You spend time meal planning with your buddy; you cook together; you play games with friends. Congrats on having a great life!
March 1st, 2008 at 9:47 am
Thanks
That’s a nice email to start my Saturday!! I hope some of the others who read your blog can use some of the ideas too. There were 2 a-ha moments that made us go uber-saver last year ->
1. we saw how much interest we would be paying on our mortgage over the life of the mortgage (barf!!!) using an online amortization schedule (http://www.ingdirect.ca/prepaycalc/en/prepayment1.jsp)
and
2. we used 2 future value calculators to see how compounded interest on the amount we saved and then invested would make us over time. These are the ones we use:=d:
Future value of present amount calculator:
http://www.timevalue.com/Tools.aspx?CALCULATORID=IC05&TEMPLATE_ID=www.timevalue.com_2
Future value of annuity:
http://www.investopedia.com/calculator/AnnuityFV.aspx
Kinda neat to see how BIG those numbers can get with compounding over time - even a small amount today becomes a BIG number in a number of years. Seeing those numbers on paper were our wake-up call
Thanks again, Gail and type to you soon,
Jenn & the fam