The following is a guest post from Wayne at Young Family Finance. He writes to help young families tackle financial challenges, like how to have Cheap Romantic Dates.
Have you ever been annoyed by someone telling you that you should reduce your expenses? I’m not sure if you are like me or not, but I think the idea of reducing every possible expense is a bit overrated. Too many people tell me that I could be saving money if I just stopped to calculate how much I spend. While I do believe it is important to live within my means, I also believe in moderation.
In my opinion, extreme frugality is a waste of my time. The popular ‘latte factor’ (understanding how the small daily costs can add up over time) is great for individuals who have a spending problem. For someone who already has his spending in check, I ask myself a different question: is the savings worth my time and hassle. I want to focus on the big items – the things that will save me the most money with least amount of sacrifice.
Why You Should ‘Sweat the Big Stuff’
I bet you have heard a million ways that you can save money. Stop doing this or start considering this option. It gets old, doesn’t it? Even though saving money can get old sometimes, I have to admit that if it were to save me a huge chunk of cash with little sacrifice on my part, I am sure it would keep my attention. In fact, it does!
After being inundated by the suggestion to increase my deductible in order to save money, I looked at the savings. I currently have a low deductible and so I figured I could save quite a bit of money based on the popularity of this suggestion. When it came down to it, in my particular situation, if I increased my deductibles significantly ($100 to $500 on comprehensive), I would save a total of $12 every six months. Yes, a total of $2 per month. I don’t know about you, but that doesn’t excite me in the least. Instead, I felt like I wasted my time just for considering this option.
Instead of focusing on the small things, I think it is better to focus on the big stuff. The expenses that can really add up. For example, one of my most popular suggestions to young families is to dine at home instead of going out to eat. This may be a huge sacrifice to some, but it can save you a lot of money! Some people eat out 10-20 meals per month, if not more. If you average $10 per meal, that’s a total of $100-200 per month for one person. While this may take a little more of adjustment, talking about a larger impact on my finances makes me more motivated. To make it even sweater of a deal, my wife and I make two big meals on the weekend and eat leftovers throughout the week. There’s no easier way to save money and time than eating leftovers. Less than 3 minutes to have a cheap, healthy dinner for two prepared in the microwave? That’s what I’m talking about!
Other Big Item Expenses
While dining at home is one of my favorite ‘big ticket’ expenses, there are many others that are well worth your consideration:
Daycare: The cost of daycare can lead some families to consider being a single income family because it is so expensive. Finding an affordable option when it comes to daycare is well worth your time.
Cars: Choosing between a new and used car, or even the type of car that you drive can be a huge money saver. A choice between a SUV and smaller car can result in thousands of dollars in savings.
Housing: Choosing to live in a smaller home or apartment can keep tens of thousands of dollars in your pocket. Before you convince yourself that you “need” the house of your dreams, consider how much money you could save if you went for an older or smaller home.