After a big weekend, you’re in the middle of complaining your dangerously low bank account to your colleagues when one of them turns to you and says: “You should stop going out so much. You’ll save loads.”
Cue the groan. How many times have you heard ‘sage’ advice like this?
So many finance and money tips about saving money seems to feature small but effective cost-cutting measures along these lines.
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But as much as people don’t like hearing this advice, they’re often repeated for a reason: they actually work.
For example, cutting out coffee can mean more than $2,000 in savings over a year, while packing your lunch could mean saving around $4,000 a year.
Speaking to Yahoo Finance, financial planner and On Your Own Two Feet consultancy founder Helen Baker put a price on some well-known but unpopular money-saving tips.
“Stop buying coffee”
Savings: $2,290 per year
No one wants to give up coffee, but you will save loose change every day if you make this cut.
“If we assume a consumption of two per day at an average of $4 per coffee, that’s around $8 a day,” Baker said. “Including weekends at that sports event and catching up with friends for breakfast – it’s $2,290 a year.”
If you can’t give up your daily barista-made coffee, there’s a more cost-effective and environmentally friendly way to go around it: Baker said some cafes offer a discount if you bring your eco-friendly cup, so you could save anywhere between 20c to 40c every time, bringing it to $146 to $292 a year.
“Make your lunch at home”
“If we assume lunch is $15 per day, five days per working week, that would be $3,900 per year in lunches,” Baker said.
If you can’t say no to those Friday team lunches, just bring lunch from Monday to Thursday and treat yourself on Friday.
“Quit your online shopping habit”
There are a lot of variables here, and they all add up, Baker warned.
First of all, shopping online can see you spend more than you intend to thanks to the algorithm throwing up more ideas, the cost of shipping or postage, and currency exchange rates. These impulse buys and extra costs can come to $50 a month, or $600 a year.
Secondly, you might buy more when shopping online because you’re tempted by so many other products on the website – so according to Baker, excess purchases can come to another $500 a year.
A lot of people also get caught out by thinking the price tag is in AUD, not USD, an oversight that can instantly add 30 per cent to your purchases. “If we assume $2,000 a year spend, then that could be $600 extra you didn’t account for.”
And then, if the clothes don’t fit or are nothing like the description and you don’t get a refund, you’ve just paid for something you don’t want: that’s another $100 to $200 down the drain.
“Don’t go out so much”
Baker acknowledges that quitting your social life is simply unrealistic; besides, how much you spend will depend on the individual and what you’re doing, she said.
However, there are measures to help you save more than you otherwise would spend on a big night out: Baker advised bring cash with you, so you can see it dwindling throughout the night. If you’re having a lot of food or alcohol, think about the bigger picture: it’s not just what you’re buying, but the gym membership or personal training sessions you pay for to work it off, she added.
“Rather than doing nothing, maybe just cut those last few out, switch to water and you’ll avoid a nasty hangover at the same time.”
Just buy cutting out those last few drinks, or having pre-drinks at home before going out can save you about $2,000 a year, she said.
“Just get a better-paying job”
Savings: $10,000 – $20,000
Making more money does not equate to good money management: those on lower salaries but savvier with their money could well have more in their savings account and less debt than those on higher salaries but more expensive lifestyles, Baker pointed out.
But jumping ship, and being paid for it, can pay off.
“If you can find the dream job though and get paid more, most people move for an increase of at least $10,000 to $20,000 a year,” she told Yahoo Finance.
But if you do nab that new job with the higher pay-packet, don’t fall into the trap of thinking you can start spending more: put some of that extra pay away to build for the future, she advised.
“Get the discount version”
Don’t knock it until you try it: while you might be attached to some brands for the quality, when it comes to other products, you might not even notice the difference.
Pick a weekend and do some blind taste tests to see if you can taste the difference – but be sure to pick the right brand for you to avoid having to throw the whole lot in the bin, Baker said.
Be smart about purchasing more expensive brands: buy them when they’re on special to save down the track.
“Statistics indicate we throw away 20 per cent of our purchases each week. That’s approximately $2,600 a year.”
“Only spend a certain amount of money a day/week/month”
Savings: $1,040 to $5,200
Think about it as a challenge to simply help you think more intentionally about your choices, Baker said.
Challenge a friend to do it with you, and see who can save more on the same budget. Start on easy mode by just cutting $20 a week from your weekly spend: that’ll be $1,040 a year. If you’re aiming to save $50 a week, you’ll claw back $2,600 by year’s end, said Baker.
And if you’re cranking it up to try save an extra $100 per week in your hip pocket, you’ll save $5,200 a year.
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