Monday, July 08, 2013

Money Saving: Saving on Expenses Over the Year

I'm a saver. And I'm also really cheap -- self-noted and noted by others. I don't know when I'm being which sometimes. Whichever part it is, it makes me overanalyze all things money related. That means second-guessing almost everything I buy and feeling guilty about it despite it all -- thanks, mom.

With this in mind, I'm going to look at something that seems obvious, but is ignored often: the price of small regular purchases or expenditures. A lot of these things seem cheap when paying for them on a regular basis. Add them up over the course of a year and the picture looks a tad different. They can be anything from your monthly cable, cell phone, coffee, lunch, breakfast, candy, etc.

Common Expenses Over a Year
Here are some common items that one may spend money on over the course of a year. Many of the prices above are based on what I've seen or heard. Assuming it's accurate and that you actually had time to do all of the things I listed, you'd blow about $12k per year.
Regular Expenses Over a Year
Making Changes
Alright, now you know where the money hole is. Time to make a change. Time to cut back, choose a cheaper plan, bring your own coffee, pack a lunch, or rent movies. Right?

It really isn't as simple as saying, "oh, I spend $2340 on lunch per year, I should stop". Why do I buy lunch? Because I hate carrying a bag to work; when I do bring a bag, I don't want it weighed down with a pound or two of food; I want to eat a warm and nutritious meal; I don't want to eat frozen food or the same sandwich again, etc. To me, the $10 a day is worth it for all of these reasons. There are a lot of intangible factors that are difficult to monetize.

That's not to say it's a bad idea to try to make a change like finding a cheaper alternative or cutting something out completely. Again, it comes down to a number of factors including ones that can be easily monetized and ones that can't. Do I have to save, or do I want to save? What are my financial goals? Everyone's living situations, finances, wants, and needs are different. There is no blanket answer.