The idea of these money saving tips is to reduce your spending without reducing the quality of your lifestyle. While they are useful, the most useful tip of all is to make sure when you spend money you are doing so consciously. Try to remember that you work exceptionally hard for your money and the more you spend the longer you have to work to maintain your current lifestyle.
”I have learned to seek my happiness by limiting my desires, rather than in attempting to satisfy them.” - John Stuart Mill
1. Live close to work
This is without doubt one of the best ways to save money because it increases the time available in your day to cook your own food, repair broken possessions, and engage in non-work activities. It cuts down on fuel consumption, car insurance, and allows your to ride a bicycle to do 90% of your commuting.
2. Ride a bicycle whenever possible
The benefits of riding a bicycle are never ending. It gets you fit, and can almost eliminate your need to spend money on petrol if you live close to work. Bicycles are efficient and require very little maintenance all of which can easily be done by yourself with a few minutes of research. It also lets you get the wind in your face and is incredibly fun.
3. Cook your own food
Cooking for yourself is enjoyable, allows you to control exactly what you put into your body and saves you a boatload of money. The food you prepare is normally higher quality and there are a multitude of recipes which require very little preparation, last for months in the freezer! Buy quality kitchen equipment and it will last a lifetime. Stay tuned for a regular feature I’m planning which will show you how to cook five delicious meals for $5! You can cook for an hour on Sunday and have all your work lunches done for $5.
4. Buy second-hand unless it’s impossible
The voracious appetite of your typical consumer is famous. Exploit this by purchasing perfectly good items from them for fraction of their retail price after they are finished with them, wanting the Next Best Thing. This money saving tip is best practised at Craigslist in the US, Gumtree in Australia and Kijiji in Canada, on eBay or on Freecycle. Old fashioned garage sales and friends can also be the source of bargains.
Fear not, this is very simple to achieve provided you are happy with a short haircut. A good quality pair of clippers cost approximately $50, and should last more than ten years. I have assumed that you will need to purchase a new set of clippers every five years, in order to be conservative in my calculations.
- $50 start up cost with $10 set aside each year for new clippers will cost just $246.19 over ten years.
- Meanwhile, in consumer-land: $30 x 6 hair cuts a year = $180 per year, which over ten years will cost you $2,720.06
This assumes that the various costs are compounded annually at 7%. This assumes a fairly cheap haircut every two months. It is obviously a more dramatic saving if your clippers last as long as they should, or if you normally get an expensive haircut. Over a typical adult life this tip alone can save upwards of $60,000!
6. Use the library
You don’t become smarter because you own books. You don’t become more cultured for possessing books. You become both of these things when you read books. You can do it for free at the library. Use it!
7. Cancel your cable
Paying for television is like paying for cigarettes. It is bad for you, and has almost no positive benefits. Television is a powerful platform for advertisers to push messages at you begging you to consumer more goods you don’t need! A complete waste of time for the most part, particularly if you choose to pay for the privilege! The advertising industry is a multi-billion dollar industry and is highly effective. Watching less TV makes you want to consume less.
8. Cancel your gym membership
Instead purchase weights and quality runners. If you can’t run ride a bike, if you can’t ride a bike, swim in the ocean, if you can’t swim in the ocean, push your wheel-chair as fast as you can. If you can’t do any of these things, furiously do whatever it is you can do and exhaust yourself for free! It’s not hard when you put your mind to it. There are masses of websites dedicated to body weight exercises and free outdoor activities you can do like hiking, walking, dancing and extreme ironing.
9. Shop for the best insurance
Shop for the best everything. Shop for the best phone deal, internet plan, and insurance. Investigate whether you really need insurance for your jewellery, or better yet sell it if it has no family importance! Refuse to take the first price offered to you, and don’t be loyal to your insurer or bank because you’ve always gone there. They won’t have any loyalty to you when you can’t pay your bills.
10. Turn off the lights
Turn off anything in the house that isn’t in use. Turn off the TV at the power-point when it’s not in use. This is a simple and obvious money saving tip, but it’s well worth doing. If you leave your lights on when you leave the house you should feel an urgent, stabbing pain in the chest! You should feel like you have committed a serious and stupid error. Thanks for wasting our planet’s precious resources and your own money, you dolt!
11. Buy quality tools
A $10 hammer bought 20 times over your life time is more expensive than an $80 hammer bought once. Be careful to research what is actually a quality item instead of simply an overpriced and dressed up $10 hammer. Almost without exception, ‘high-end fashion’ labels are just $10 hammers pretending to be $80 hammers.
12. Eliminate your debt
This should be fairly obvious, but paying down debt has a number of positive benefits. Firstly, it increases your ability to save and invest money. Secondly, it teaches you to spend within your means. Thirdly, it is more certain than typical investing. Take the following example:
Consider John who has $10,000 in credit card debt at 18% interest per year (yuck!), it will cost him exactly $1,800 per year in interest.
- If he came across $10,000 and could choose between investing it in shares (assume an average 7% annual return), or paying off his credit card, which should he do?
The answer is quite simple. Let’s assume that he has an emergency fund in cash and that isn’t a consideration for him. If he paid off the credit card, he would save $1,800 per year. If he invested the money, he would gain $700.
But what about compounding interest you shriek!? Well, if you left the investment alone for 10 years, and didn’t sell any shares, you’d have a handy $20,096.61. If you left the debt by itself, and the bank was crazy enough to allow it to spiral out of control, you’d be left with a whopping -$59,693.23!
Put simply: Put your money were the interest rate is highest, regardless of whether it’s debt or an investment. There are a number of exceptions to this rule, and having an emergency fund is one of them so you don’t have to go into debt if you lose your job, but it’s a good general guideline.
Try this washing liquid recipe:
1 soap bar 1 cup of washing soda 1/2 cup of borax
Grate the soap into a pan and cover with hot water and stir it over a medium heat until it's all melted, stirring it occasionally
Pour the soapy water into a 18 liter/5 gallon bucket
Add the washing soda and borax
Fill the bucket with hot water and stir
Voila. Make sure you keep it out of reach of children and animals – preferably re-use your old washing liquid containers. Use a cup for each load and save a fortune!
14. Shop online
This money saving tip should be pretty obvious in 2012, but if you’re not at least searching online first, you’re setting fire to money. If you like setting fire to money because you hate freedom and love working for The Man, that’s cool. If you don’t, please try eBay, Craigslist, Gumtree (Australia), and just plain old Google before you walk into a bricks-and-mortar shop. Go to Amazon if you want to buy a book, don’t drive into town to pay 50% more!
15. Install solar panels
Some states, including most in Australia, provide great incentives to install solar panels. If you own your own roof and have $5,000 lying around it’s something to look into. Don’t expect it to pay off quickly, but is something to consider if your local incentives are good enough.
16. Don’t use your clothes dryer
Buy a clothes hanger and put the clothes there. It takes 5 minutes longer, and saves a bucket-load in electricity costs. It’s also better for your clothes making them last longer.
17. Keep warm with more clothes
Putting an extra jumper on, or thick socks, or a beanie could save you a heap of money if it means you turn off the heater, burn less wood, or lower your central heating temperature. It’s really not a major inconvenience once you get used to it.
18. Grow your own vegetables
This may or may not save you money depending on how good you are at it, whether you live in a suitable climate for what you want to grow, and how cheap and plentiful fresh vegetables are in your area. At least investigate a window box, or a raised garden bed if the idea interests you. If you have pests like rabbits in your area, consider building an enclosed vegetable garden. In some ways, getting a fresh crop of vegetables from your own garden can be even more satisfying than the money you saving doing it! Plus they taste unbelievable.
19. Start a price book
When you do your regular weekly shop, start a spreadsheet or list of items that you regularly buy. Then record how much you are paying for them until patterns emerge. Soon you will find that certain products are cheaper at different times of the year – like seasonal fruit and vegetables. Then you can plan your diet around the best value items. Also, with products that last forever, like canned food, buy up big when a supermarket has a huge loss-leading sale on.
20. Stop eating take away
This is such a huge way to save money. It is not uncommon for otherwise sensible, rational adults to spend $15-20 per day on food simply because they are too lazy to plan ahead and bring their own lunch to work. This is absolute madness. Making food for lunch is no harder than making more dinner the night before and reheating it at work, or putting together some sandwiches before you leave for work in the morning. If you have a communal refrigerator at work, put some food in it! Cook ahead and save stupid amounts of money EVERY_SINGLE_DAY!
For example, lets compare a person who spends $20 per day on lunch and coffee to one who spends $1 (I’ll show you how in future updates). I will assume 240 days work per year for a full time worker with 4 weeks off per year. 10 year numbers include compounding interest at 7%, because after all that’s the historical gain you’re giving up if you plow your money into pizza and deep-fried food.
$20 per working day is $4,800 per year, or $70,961.28 after 10 years!
$1 per working day is $240 per year, or $3,548.06
I know which I prefer.
Best money saving tip of all:
Think before you buy. Consciously decide that something is worth the money you are spending rather than acting on auto-pilot. You don’t have to go to lunch because your co-workers go to lunch. Suggest free alternatives like walking in the park or just tell them that you’re trying to save some money. It’s much easier than you think!