Better Late Than Never
People often talk about how they would like to make more money and create new streams of income.
Obviously my aim and goal is to create several streams of passive income and therefore live a carefree life eventually.
What I’ve realized early on, is that a lot of people fail to cut certain spending habits that make their goal of achieving wealth a lot harder.
Sometimes these spending habits aren’t direct conscious costs. Therefore these are often overlooked.
In this post you will:
- See a list of the most common spending habits
- Find out how you can minimize or eliminate these completely
- Spend wisely and start making more money
- Learn how to prevent these unconscious spending habits in future
There are obviously many different good ways to save money, but personally I believe that one of the most effective ways is to start by getting rid of costs.
The less you have to spend the more you can save. Pretty simple solution!
The idea of this post came to me when I was thinking back of my time in London as a student and I had a bank account there.
Each month I would get a bank statement of my current account situation. I kept seeing a small fee of £8 that was automatically deducted for some reason.
Like many other bills I would get by post, I would just skim through the letter and check the total bill and file the paper eventually.
Cut These Things:
As I mentioned above, I would rarely put a conscious thought to the bills I used to get until one day I started thinking about these £8.
My degree was a 3-year course. 12months x 3 = 36 months. This meant that by the end of my degree I would be £288 poorer by doing nothing.
(This roughly converts into $440)
Although this isn’t a significant number, it is still enough to go on a holiday or invest into something.
And as a student this can be enough to survive an entire month!
So this small realization brings me to the first thing you should do in order to save wisely.
#1 Your Bank:
Make sure you know exactly what your bank is offering and what you are paying for. You might be spending more than you need!
There are also a lot of things you could do to pay less tax through your banks. Set up an appointment and speak to someone that can advise you on more details.
A lot of banks in the UK offer a small sum, if you make a move to change your current bank and become their customer.
Not only could you be getting rid of certain random fees for being an international student or for whatever reason, but you could also be rewarded.
The reason I was being charged these £8 is because I was living in student halls/dorms and my address didn’t count as a permanent address for some reason.
Another strong reason for you to check your bank account today, is to see what offers they have.
My current bank offers certain milage points, every time I use my credit card (although I hardly ever use my credit card).
These points could grant me free flights, upgrades, VIP lounge in airports etc.
Investing in funds of my bank itself is incredibly cheap, which is another huge plus.
Usually any type of investment into a fund, can cost up to $20 – $30 per transaction.
This is an outrageous amount, when comparing what I pay, which is around $1.50 per investment.
Of course you are limited to what funds you can actually invest in for that fee but it is worth looking into it. Surprisingly these funds have a very amazing history.
#2 Warranty Add-Ons:
Before I went to study in London, I tried my luck in the Netherlands for 6 months. Turns out the course was absolutely not my cup of tea.
I bought a nice 40″ Plasma T.V. just before moving into a new flat with my friend. When I bought the T.V. it was my pride and glory.
When I was about the pay the cashier, the woman asked me if I wanted to add another year to my warranty (which was already 2 years long) for an additional €100.
Without hesitation I handed over another 100 bucks. After all I didn’t want anything to happen to this giant T.V. and end up with nothing if it broke.
This was in 2008 and I still own that T.V. now which works just as fine as it did back then.
The lesson of the story is, that I will never invest another dime for additional warrants.
Especially now that I have a pretty amazing house insurance. Any electronic possession I own is covered by it.
For instance, the other month my dishwasher broke and it cost me over $300 to repair it.
However thanks to the house insurance, this will be covered (it just takes forever to get that money back).
My girlfriend also got her iPhone stolen on a night out, which was covered by the insurance.
These two expenses alone are worth feeling safe and paying for an insurance.
You can see how having a good insurance is worth a lot more than an additional warranty on something which is most likely not going to break in a long time.
So I highly encourage and advise you to look into a good insurance, as well as ignoring the add ons.
This also goes for health insurance by the way. You’d be surprised how much you can save through a good health insurance.
Besides you never know what could happen to you and being covered by insurance makes me sleep better at night.
I’ve previously mentioned how I like to do my shopping online because it saves time.
I have a very short temper when it comes to crowded places and having to do something I don’t particularly like doing (like food shopping).
Doing it online not only makes things more efficient, it also saves a lot more money.
There are several reasons for this:
- Promotions/ sales
- Delivery/ Pickup time
Let me break this down a bit more in detail. When I shop online, everything is sorted into each category and sub category.
For instance if I’m looking for a particular meat such as chicken breasts, I just have to go into the fresh food section > meat > poultry > chicken breasts.
I don’t have to look in the different aisles to search for items, hope they’re in stock. I simply click on the item and add the quantity in my basket.
Additionally I can see all the promotions/ sales on a category of it’s own, rather than luckily stumbling upon it in the supermarket.
As you might know, I love to buy in bulk. By shopping online and seeing all the discounts in one spot, I can see which things could be bought in bulk for cheap.
You make a nice saving by doing so and it’s one of my favorite things to save money on.
You can’t eliminate essentials, so might as well buy them when they’re cheap.
If the supermarket you shop at offers loyalty cards or anything similar, make sure to use these too.
At least twice a year I can do a full shop worth of $100 – $200 for free, simply by using the loyalty card and collecting points on it.
By shopping online, I don’t risk of not bringing the card with me either, so I always get my points.
Another small bonus of shopping online and picking it up or getting it delivered, is that you don’t pollute the environment with unnecessary plastic bags.
Instead I always have durable bags stacked in my car and everything is put in these instead.
When I didn’t own a car as a student, I would make them deliver the food straight to my place, which was also very efficient and cheaper actually.
Everything I just listed, might be nice and dandy but there is one source that will make your bank account bleed and drain your money heavily.
That one source is debt. If you have student loan to pay off or credit card debts or any other form of debt, you have to get rid of it ASAP.
Not only is it something that heavily sits in the back of your mind and painful to think about, but it just accumulates every month.
Every month you pay a little interest on those outstanding fees and feels like it drags on for eternity.
Before you can think of investing and more you should get rid of the debt you have outstanding.
There’s so many ways you can do that as well.
- Just set fixed amount to be paid off automatically every month.
- You will learn to live with it. Make sacrifices and it will be gone before you know it.
- Pick up something that pays you extra on the side like these options here.
Once you managed to pay off your debt, not only will you have more money to spend, you will also be a lot better at saving and investing it.
The money you put away to pay off your debt can now be put away to invest.
Honestly there is no better feeling than being debt free (besides financial freedom).
Something To Think About
There are obviously tons of other smart ways to save money, but one thing that really struck me, was this article I read the other day.
(Unfortunately this is a German article so for those of you that can’t read German you will just have to trust my summarized translation).
In the article, they write about the amount of things the average household contains, which isn’t necessary.
In other words, the average European owns about 10,000 items in their house. This is obviously an excessive unnecessary amount. Can you relate?
If I look at the amount of useless things I personally actually own I feel a bit embarrassed.
I always considered myself to be quite wise with my spending habits, but looking around I realized I might be more of a consumer than I believed to be.
That precious T.V. I mentioned in the beginning hasn’t been switched on in over a year!
It serves more as a decoration than anything else. Yet it is plugged in with all my old Playstations, Xbox’s etc. which I haven’t touched in a while either.
The article also describes how a student looks around her belongings and writes all the essentials on a list. As you can imagine most of which are unneeded.
If you want to make an extra few bucks, you could do the same and look around at the things you don’t use and sell them on places like eBay for instance.
This might even help you become more productive, since you will end up with less clutter and distractions.
Additionally this might help you prevent buying unnecessary things in future by thinking twice before buying a GoPro or a Drone.
As you can see, there are some crucial steps we can take to drastically minimize certain costs we carry with ourselves each month.
Some are unavoidable but they can be minimized and used to our advantage. If I had to estimate how much I save yearly by doing these 4 things I’d guess around:
- $1,200 on investments (average fee is around $25 per transaction and I make 4 every month)
- $100 – $200 insurance coverage (Not that we get robbed or break things yearly, but since getting the insurance we’ve had one thing go wrong per year)
- $800 – $1000 on food
All together adds up to over $2,000. That is quite a lot of money!
I’ve also drastically minimized my weekend spendings by going out less. This was probably the worst habit I had as I would easily spend over $70 on a Friday.
Usually this would be followed up by a take-away on the next day of around $30. So initially by not going out I save up to $100 a week.
That turns out to be $4,800 a year!!!
These figures are worth thinking about. It only becomes clear how high these costs are after you’ve added them up yearly which is the danger in them.
During the spending we don’t actually realize what we’re doing. It’s only in hindsight that we make the conclusion.
Therefore I wanted to write this post to possibly help some of you cut your spending habits.
Of course I do still go out occasionally but a smart way to cut your spending habits for that or even shopping, is to set aside a small budget!
I hope that you found these points useful and that you can make use of them.
Thanks for reading and don’t forget to share this post if you did in fact enjoy reading it.
Make sure to leave any comments below. Do you have other ways to cut spendings? How do you save your money?
If something wasn’t quite clear, I’m more than happy to clarify it, just write your question below.