Financial Friday
Friday, February 10, 2012 at 6:00AM 10 Money Saving Ideas
- Do it yourself,
- Find someone to talk money with,
- Actually eat your leftovers,
- Pack a lunch,
- Wait until things go on sale,
- Sleep on it before buying,
- Negotiate,
- Cut up credit cards,
- Take out cash, when the cash is gone stop spending money,
- Start an auto draft to a savings account.
Last week we looked for accountability partners, this week we are talking about leftovers and packing a lunch. For some reason this is the hardest for me to do. I’d rather eat junk food then leftovers. Which is dumb in more then one way. First I’m eating unhealthy food multiple times a week. Second I’m spending tons of extra money. I already paid for the meal, but am deciding to throw that away and buy something else.
From a purely money stand point, every time leftovers go bad and are thrown away, it’s like throwing away money. You paid good money to buy food for that meal, and then let it sit. It would be kind of like taking part of your pay check and letting it sit for a week and then deciding you don’t need that money and throwing it away.
My typical fast-food lunch while I’m on the road is somewhere between $3 and $7. Call it an average of $5. I know a lot of us eat way better then that (i.e. more expensively), but lets just look at $5 for simplicity’s sake. If I took leftovers everyday instead of the lunch, I’d have the extra $5 everyday. That’s $25 a week, $100 per month, and about $1,250 a year. That’s almost enough for a vacation!
Now if we look at the “opportunity cost” of lunch (just a fancy term meaning we could invest that money instead of spend it). We’ll say $20 a week for 50 weeks a year, because everyone needs to eat out once-in-a-while. If you take that money and invest it during your working lifetime, call that 30 years, and assume there is no inflation and you never get a raise, that looks like a lot of money. If you only made a return of 6% you would have $80,762.89. That’s a nice chunk of change, and that’s really conservative. If you invested in an S&P 500 index fund and follow the trend over the last 30 years, the average has been about 13% (I used 1980-2010 from the S&P 500 off of About.com). That includes the last decade where the news has said the sky is falling (a little side on that, from 2000 to 2010 the S&P 500 averaged 2%; better then my savings account over the last 5 years). So if I use past performance on the stock market and invest that money I would have $353,652.76. That amount of money looks like a nice house to me.
Next week we’ll look at buying things on sale.
Stay Safe,
Ben