My Top Two Money Saving Tips
By Steve Gillman
The usual tips for spending less are all about price shopping.
That's a great start, because if you can get the same thing for
less, you are that much further ahead. So we should learn how
to find the deals, and maybe it even makes sense to use coupons
(although the time investment is often too much to compensate
for the savings). But there are more powerful ways to save money
on the things you buy. Here two of them.
Find True Alternatives
As mentioned, it is common to look for a better price for
something. But there are often alternatives that have nothing
to do with paying less for the same thing somewhere else. To
find them, you have to think in terms of the underlying goals
of a purchase.
For example, going out to eat isn't just about food. It is
about getting out of the house and letting someone else do the
cooking. What are some alternatives that accomplish both of these
goals? You might buy prepared food at a delicatessen and go on
a picnic. This could mean a savings of $15 for two people.
This assumes that you enjoy picnicking, of course. The idea
here is to meet the underlying needs or desires in a less expensive
way. It isn't about giving up what you enjoy.
Here's a three step money saving technique:
1. Find the true cost of what you are considering.
2. Identify the deeper needs or desires it is meant to satisfy.
3. Think creatively and start looking for alternatives that
meet the need at a lower cost.
Let's look at an example of putting this technique into action.
Suppose you're going to buy a boat. Step one: do an honest tally
of all expenses. The boat will cost $12,000 and be worth $4,000
in eight years or so, so there is $1,000 per year. Interest on
the loan, insurance, gasoline, maintenance, a trailer, gas for
your vehicle to haul the boat around, life jackets - you add
up everything and find that the cost will be about $2,400 per
year over the course of the expected eight years before you replace
the boat. You realize that you honestly might only average using
it ten times per year, so the cost is about $240 per use.
Second step: List the deeper goals, which in this case might
be fun, entertainment, something to do with the family, the prestige
of boat ownership.
Step three: Find ways to accomplish all or some of these goals
at a lower cost. Maybe you can rent a boat three times a year
at $200 each time, rent two snowmobiles for $200 per day three
times and spend a weekend fishing with the family at a nice resort
for $600, for a total of $1,900. If that sounds like more fun,
you just found a great way to save $600 per year. That's a money
to add to your retirement fund, save for a big vacation or for
the kids college fund, or for anything else you value.
It is easy to imagine that we need something, but we often
see only the imagined benefits without looking at the whole picture.
Choosing not to buy something does not always mean a sacrifice.
Often, we are happier without the things we thought we needed.
Many things we buy actually cause more stress because they add
ongoing expenses and responsibility to our lives. Look closely
at everything you consider spending money on, and ask if it truly
adds something of value to your life. If not, save the money
for something that does.
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