Save More Money by Concentrating on The BIG Stuff.
Wouldn't that be nice? Saving big chunks of money focusing on a couple of big things rather than a little here and there on a handful of little things :)You could always do both, of course, but are you really going to? Concentrating your energy on the main stuff will get you a lot farther than only poking around the small beans. It may not be as fun or easy, but it works. Just ask my man Ramit:
"It's far better to focus on cutting 25% off the two biggest areas of your spending than to worry about saving 5% on 50 things."He makes a valid point. Why spend all your time on the little things? When you concentrate on the biggies like home mortgages or car loans, you get more bang for your buck. Or bucks for your time, I should say! A lot easier said than done, but in theory it kicks ass.
Instead of driving 15 extra minutes to the grocery store that has the cheapest food, why not try calling your credit card company in that time and asking them to lower your rates? With the latter you could save hundreds of dollars depending on your debt, whereas you may save $5 at Food Lion.
Same goes for spending a few extra hours researching the best mortgage rates or car loans around. The hours you put in there will go muuuuuuuuuuuuuuuuuuuuuuuch farther than not drinking a coffee today or cutting out a few .50cent coupons. We're talking lots of benjamins up in hurr.
Again, you could always do the small things AND the big things to really max out savings, but more often than not you just won't do it. I know I don't - I spend a certain amount of time on this stuff when on my mind, and then it's off to something fun! At the very least it's worth some thought. What's the worst that can happen?
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PS: If you liked this, check out my review of Ramit's new book: I Will Teach You To Be Rich. It's my all-time favorite one to pimp out - esp for the younger generation.
Labels: advice, money hacks, personal finance
posted by J. Money at
7:44 AM
15 Comments:
I have been following Ramit for the last year now and much of his stuff really makes sense. He offers more options and info then sometimes one individual can handle, so the key is to use whatever best applies to you from what Ramit spits.
We waste too much time on the tiny things in our budget when the large things (like my Sallie Mae loan and car loan) are what dominate our monthly finances. When can we expect J Moneys Budgets Are Sexy eBook to be published?
totally, you're right on the money. and even if you just followed a tenth of his ideas your finances would be seriously in check - the guy is brilliant whether you agree w/ his style (and offbeat humor) or not ;)
as for my eBook, you can expect it when I finagle a way to go full-time up in hurrr. either that, or when Obama hires me to blog @ The Black House. it would be a helluva lot more interesting to read about, no?
I tend to disagree a little. While it is obviously true that you can save more in the same amount of time on the big things than on the little things, I think most people tend to naturally focus on the big things. The little things are what get overlooked. The money you could be saving each week on groceries if you used coupons or bought the store brand can really add up over time. Little things make a bigger difference than most people realize. So, while it is definitely important to make sure you get the best deals on the big things, it is equally important to make sure you are not over-spending on the little things.
I disagree as well. Yes, spending time on big things is good, but those little things add up. I switched my home insurance, and yes, that saved me about $200 a year. That's fabulous, but is that all I should do? All the effort that took was calling my insurance agent. However, I also work very, very hard on dropping my utilities. I put in cfls and am diligent about turning off lights when I don't need them. That halved my electric bill which saves me only $25... a month. That's $300 a year. I don't think you should focus on just big things or small things - you should look at all of them. Review the big items and make changes whenever you can, but in between work on the smaller things. Or make them work together - by changing my fsa I was able to get an extra $36 in my paycheck each month (small?) which I applied that to the $75 credit card payment I was making and and paid off my credit card 6 months earlier, so now I am not spending that extra $111 each month (large.)
Speaking of which, the last time I went grocery shopping I saved over $25 with coupons - If I go twice a month, that would be $50. $600 a year is no small change.
Of course you've got to look at the big things, but I find people sometimes decide to gloss over the 'little' things because they don't realize how much they add up. Often the 'big things' are one time only deals, but the little things save up more over a period of time.
Like Dawn, I clip coupons and shop sales for groceries. A $0.25 coupon doesn't seem like much, but I save $200-300 a month for about $3,000 a year. That's more than we were going to save after shopping around for new car insurance (heck, even refinancing our mortgage was only going to save us ~$150 a month, and that doesn't factor in the huge chunk cash for closing costs).
That's not to say ALL little things are equal to the big deals. Frankly, saving $0.09 on a load of laundry will not convince me to spend the time to make my own laundry detergent. I'd rather spend the time comparison shopping for our next big purchase or negotiating with the credit card company.
Sure, it's great to save money on big things when you can, but I don't think that means that you shouldn't spend time saving money on small things. Small things add up quickly because there are so many small things. And because there are so many, you have more flexibility to pick and choose without sacrificing what's really important to you.
Since my husband and I started watching our usage of utilities, we've cut our spending on them by over $200 A MONTH! But that's not a "big thing", it's a bunch of small things like getting up to turn of the 4-bulb overhead light when the single bulb lamp will do, hang drying clothes, and using the fans instead of the AC. Our electric bill is now about $50 -- or less -- a month.
Sure, there are things that don't save us a lot of money. But if they're easy enough, then the question isn't "Why?" -- it's "Why not?" Why be wasteful? And when you factor in time driving, shopping, waiting for a table, etc., you realize that those things aren't as trouble-free as you might have thought! They're just habit!
Yes, there are things that are a bit too much trouble for us. However, I don't look down on people for doing them. Who knows there situation. Maybe they enjoy doing XYZ -- or maybe a $1 savings a week means an extra meal for their kid.
I agree with you on the the Big Stuff, but cutting here and there on the small stuff, can add up over time,. I like the idea of both...unless it truly is a waste of time and energy. Saving a dollar here and a dollar there, next thing you know, you have more money which you can invest and then it compounds. No? Take gas if you where to save 10 cent per gallon but you had to drive a couple extra blocks - 10 * 15 gallons = $1.50 a fill up
$1.50 x 35 fill ups/per year = $52.50
$52.00 x 10 years = $525.00
It adds up over time if you can find a few "small" things - if you find 4 things that you can save 52.50 a year = $210.00 year x 10 years =$2100.00
Then re-invest? Im just saying...
It really does come down to time is money/money is time - if it is worth $3/hr im out, if it is $65+/hr im all in - driving 2 blocks takes extra 30 seconds = 17min year = $52 = $183/hr
you get the point*
*Math might be off didn't have a lot of time
I knew there would be some backlash :) To be honest though, I 100% agree with you guys. Saving money anywhere you can is GREAT, esp if it adds up over time and you can then apply it to debt or investing or whatever. No issue there at all.
What I do see as a problem is when people spend so much time working on all those things but FORGET (or choose not to) work on the big boys eating up their money. Sometimes it's easier to cut out some coupons or change a bill for $30/mo. savings than it is to research and spend some time getting better rates on their debt, or when they buy a new car or home.
That's not to say I'm perfect and do all that stuff myself, BUT It's still very important to keep in mind. And for those who ARE staying on top of their finances and saving money in ALL aspects of their lives? Even better, more power to ya :)
I think true fiscal responsibility focuses on EVERYTHING. However, I like the theory :)
I think your right.. Often people don't spend enough time doing things will will save them the big bucks. Obviously, its important to save money in other areas, but making sure you prioritise will ensure the quickest route to building that bank balance.
I do the same kind of thing with gas prices. I do not comparison shop or drive clear across town to save a penny per gallon like my father-in-law does. I can make more efficent use of my time and cost cutting by focusing on the big savings like you said rather than small things like gas prices.
I think, at least initially, people should focus on the big things. They will save more money. But, as the big things wane, all that's left is the small stuff. And if you don't pay attention to it, it adds up FAST!
Tim and I make sure to avoid late fees (one recent incident as the first exception in over 2 years). We negotiated lower rates on phone and internet. We try to limit the amount we eat out/get delivery. But little things -- like Tim's desire to have little snacks whenever he's out -- were, for awhile, taking away $30-50 a paycheck! That's a pretty good chunk of money. All in dribs and drabs: a pretzel (with cheese, natch) at the mall, some taquitos at the 7-11 by his dermatologist, etc. And when I'd ask him only a week later what each charge was, he would have no clue. He'd have to sit down, retrace his steps and eventually it would come to him. Just proof again that the little, forgettable things can be the most dangerous.
I'd have to agree with Olivia, Abby, and all the other "little" people out there and say that I don't necessarily think Bigger is a better way to think. At least not anymore. I used to call myself a "big picture" person, but then I read The Power of Small by Linda Kaplan Thaler and Robin Koval and it really caused me to shrink my outlook, as they say. It made me take a second look at the way I was spending and lo and behold, the little things were really adding up. So, in my case, I think it was really all about that Latte Factor.
True true, again I think it's a matter of watching all things, as along as you've got the big ones down tight. nothing wrong w/ staying on top of the little things, i just know for most of my friends it's the big ones that get to them.
oh, and i actually started reading that book! haven't picked it back up in a few weeks, but it's on my list to finish :)
I think one should try to save on both the big and the little things, unless the constant search for savings ends up making one's life miserable. Being obsessed with saving can lead to an unhealthy emotional and spiritual life, IMHO.
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