Are you a frugality maestro looking for even more ways to save money? As an enthusiast, it amazes me that there are always parts of my life I can trim expenses from. Without further ado, here are the 8 ways that I find a lot of people miss:
1. Opportunity Cost
The opportunity cost of an action is the potential foregone benefit you could have had if you took the alternative. A lot of people don’t consider the opportunity cost of a so-called “frugal” activity.
For example, I often read personal finance “gurus” recommend that people cook their own food. Yes, it saves a lot of money but do it only if you like cooking! Cooking your own food – especially if you want it to taste good and you want it healthy – takes time… time that you could’ve spent doing something else. For most people, that time could’ve been spent freelancing, and thus make more money than they could save from cooking their own food.
If you don’t feel like freelancing outside of a full time job, you can always spend more time with your family, or pursuing a hobby – so that missed opportunity is the opportunity cost of cooking your own food.
This doesn’t apply to everyone, of course. It assumes you want to do something else with your time. It is, nonetheless, important for you to consider the opportunity cost of every “how to save money” advice you get.
Did you know that as a country, America throws away up to 50% of their food? That’s about 51.8 million tons of food – and it’s costing the country approximately $1 billion just to dispose of it. Our surplus alone, the U.N. World Food Programme said, could have satisfied “every empty stomach” in Africa.
The easiest way I know of to save money, without changing your lifestyle or depriving yourself, is to simply eliminate food waste. There are techniques that I used to do that. First, always take away your left-overs in a restaurant and reheat it later. Second, if I plan to cook or throw a party, I plan for exactly how many people I need to prepare for.
If I need a backup, “just in case”, I get something that can be stored if they are not used. Like a frozen lasagna or pizza.
3. Supermarket Tricks
Supermarkets are businesses. As such, they are designed to extract as much money out of you as possible. For example, you’ll notice that staples like milk are always to the back of the store. They do that because they want you, the customers, to walk through isles of other higher-margin products before you can reach for what you want. The more products you are exposed to, of course, the higher the chances you’ll buy more unnecessary stuff like a bag of chocolates.
This is why it’s crucial that you make a list of what you need. Eat a nice filling lunch, leave your kids at home, THEN drop by the supermarket with your list. If that doesn’t work, try reducing your supermarket trips from twice a week to once every two weeks. You’ll see a marked difference in your grocery spending immediately.
4. Store Brands
Multiple studies have shown that there are absolutely no difference in quality between store brand and premium brand products in most industries. In fact, many of them come from the same producer.
The premium you’re paying for branded goods are going towards the marketing dollars they spent to get you to believe it’s really superior. Unless store brands taste significantly different in blind taste tests for you, keep to it.
Electricity is one of those things that people never consider when they want to save money. There’s a reason for that: because you assume it’s negligible. But it’s not true at all. According to the Green Blogger, the average American family spends about $1400 a year on electricity alone.
The good news is it’s easy to save on electricity. Reducing your water heater from 140 degrees to 120 degrees – which is negligible, temperature-wise – will save up to 10% of your heating cost. And if your phone, laptops, digital cameras aren’t charging, plug it out. Americans spend about 8% of our electric bills simply because they didn’t plug their electronics out when they finish recharging.
Last, heat and cool your house sparingly because they are responsible for about 50% to 70% of your electricity bill.
You’ve probably read about all the ways about how banks rip their customers off, so I won’t go there. My only advice here is this: bank loyalty is dead. If anything, new customers are always treasured more than loyal ones, what with the special rates offers and other bonuses. CEOs are incentivized for the short-term, so they always choose short-term tactics to increase their bonuses.
So don’t get lazy with switching banks! Compare credit card offers, savings accounts and even home loans at least once a year. The larger your debt, the more you can save in interests by actively switching and making the banks compete with each other.
Want a surefire way to save at least $50 a month by tomorrow? Ditch your gym membership. A gym membership is useless unless you want to build your body. Everything else can be done in the comfort of your own home, or in the great outdoors.
For example, doing body exercises like push ups, lunges, pull ups, crunches, skipping, etc, are great ways to tone your body and lose weight. If that’s not enough, go for a quick walk/jog around town.
You don’t do taxes on a daily basis but you sure are getting taxed every single day you’re making money. So it puzzles me why people only get busy with their taxes at the end of the financial year.
For example, I intentionally attend educational conferences throughout the year so I can then claim the expenses against my income. I also often work from home so I can claim part of my home office expense. And if you’re unemployed, make sure you keep track of your job-hunting expenses – they can be claimed in the U.S.