Saw this by my good friend Terran Williams on Facebook and having just come out of our study of the book ‘Free: Spending your Time and Money on what matters most’ [which i would highly recommend that you and a group of friends get hold of and work through over 8 weeks!] a lot of this looked similar and definitely worth taking a look at especially as we gear up to the Christmas season with goodwill and debt for all… it doesn’t have to be that way…
If you want to spend less, here’s 59 ways how.
Reading this won’t cost you anything, but can save you a lot of money – especially in silly season when sellers conspire to get you into a feeding frenzy of purchases.
When it comes to money, if your outflow exceeds your inflow, the shortfall will be your downfall. Conversely, if your inflow exceeds your outflow, what remains is retained.
And what is retained can be used for giving more, saving more and getting out of debt. Now, we’re talking.
On facebook, I started a conversation asking people their best advice for spending less. I did not expect the sheer amount of potent insight that would arrive. I have edited through close on 60 comments. And have added in my own stuff, which I have collected over the years from financial wizards the world-over.
1. Decide on what is enough years ahead of the time. Most people simply increase their standard of living to fit the income they receive. In the book ‘The millionaire next door’ the case is made that most millionaires don’t appear to be as wealthy as they are, because they have learnt to limit their expenses. Though their income has increased, they don’t increase the lavishness of their lifestyle along with it. They didn’t become wealthy through making more money than you, but through spending less.
2. Draw a circle – the circle of ‘enough’ – and put what’s enough for you in the next decade inside of it: What kind of car will be enough? What kind of house? In which area? What kind of holidays? Then – even if you can afford more than this, don’t go beyond this. Need inspiration? Think of Warren Buffet – second wealthiest man in the US – who lives in the same modest house he bought in 1958.
3. Ignore the Jones’. Don’t buy things you don’t need, with money you don’t have, to impress people you don’t even like. Comparison is a curse.
KNOW THE FACTS
4. Get into the habit of keeping a simple record of how much you spend and on what. Seeing it in black and white should be enough to shock you into spending less.
NEEDS AND WANTS
5. Ask yourself if you need it or want it. My 3 year old told me, ‘Daddy, I need choccy.’
I responded: ‘Eli, need or want? Need means you can’t live with out it, like air and water. Want means it’s nice but you can live without it.’
‘Daddy, I NEED it,’ was his unflinching reply. The consumerism of our day has blinded us to the difference. Do you really need Levis jeans? Won’t Mr Price’s denims do? Buying your first house – do you really need a third room, garage and pool? Your first car – do you really need rims?
6. When retailers say ‘save’ they mean spend. Don’t ask, ‘Is it a deal?’ Ask, ‘Do I need this?’ If you don’t need it, you’re a sucker, not a saver.
7. Get three quotes before buying something expensive.
8. Re-use. Secondhand will do.
9. Don’t buy every new gadget. Use your phone and computer for at least two years.
10. Buy good used cars – a brand new car usually loses 10% of its value as it is driven from the showroom.
11. Have loyalty cards where you shop – Pick n Pay, Clicks, Vitality for example. If used diligently, every month you will get back in vouchers a few hundred bucks.
12. If with Discovery, make sure you get to gold status and milk the rewards. Many families of four get back about R12000 a year – and are forced into healthier lifestyles too.
13. Eat before you shop. A hungry tummy causes you to buy stuff you never intended on buying.
14. Waste not, want not. Reduce wastage – don’t throw food away. Left overs are great. Get creative with how you use them to make another dish.
15. Cook with less meat per week. Start adding beans and lentils to food for protein.
16. Less coffee. Spending R20 a day equals R100 a week equals R400 a month.
17. Take lunch to work. This will easily save you between R600 – R1000 a month.
18. Date night? What about date afternoon or morning? A coffee and dessert date, or a picnic, can sometimes be more special than a full meal out.
19. Buy food in bulk and do once monthly cooking of large quantities, and freeze.
20. Plan a weekly menu (e.g. Monday chicken night, Tuesday no-meats night, Wednesday fish night). This way you are less lightly to buy take-away or pre-made meals.
21. Stop throwing hundreds of rands on your lawns, and rather save hundreds by growing a vegetable garden.
22. Eat at restaurants less. You’ll enjoy them more anyway.
23. Shop online and order a delivery. The delivery cost is always less that the ad hoc spend you undertake when walking the aisles.
24. Don’t spoil kids at Christmas time. Buy them something to wear, something to read, something they need (e.g. a tooth brush), and something to play with.
25. Keep unneeded presents – and pass them on. (Try remember who gave you what, so you don’t give the same gift back to the person a year later!)
26. Look at your bank fees. Take a bank statement and add all those fees to see what you really pay. Compare with other banks. FNB and Capitec seem to lead the pack at the moment when it comes to less fees.
27. Take your Homeowners Insurance off your bond a/c and add it to your Householders Insurance – you could save up to 50%.
28. Make use of the amazing factory shops – whether it’s baby food or clothing or household goods you’re looking for.
29. Reprice household and car insurance, without forfeiting the required levels of coverage. Make the effort to phone around, and request better deals. Don’t use Hippo – it owns all the companies it will get quotes from for you.
30. Get a cheaper phone contract. Cell C leads the cheaper-rates charge at the moment.
31. Save up for things you want (even if you have the cash already, pretend you don’t!)
32. Tear up your credit cards. If you don’t have the courage to do this, then tear up all but one, and set a low limit on the amount you can borrow from the creditor.
33. Freeze your credit card in a tub of water. If you really need it you can wait for it to defrost. Seriously.
34. Don’t use a credit card unless you have the discipline to settle the full balance every month. Credit card interest is extremely expensive.
Clothing accounts are a definite problem. Buy clothing cash.
35. Slam the phone down on the sweet salesperson who kindly offers you more credit. No, they are not the answer to your prayers.
36. Be weary of paying via debit orders. R200 a month doesn’t sound like much, but that adds up over time. Rather save up for a few months and pay cash for the item.
37. If you do have debt (loans, store cards, store credit facilities) try and consolidate the debt. This may reduce the total installment and use money saved to further pay off the debt.
38. If you don’t consolidate the debt, list them and conquer them one at a time. Pay minimum amounts on all, but pay all excess money you have into the smaller ones until they are wiped out. That feeling of crossing it from the list, will give you the boost to wipe out yet another debt.
JUST SAY NO
39. Don’t buy if you can’t afford or don’t need. (Write this somewhere you can see everyday.)
40. Think ‘functional economics’. This means that you weigh up what the item will be used for (how important is it?) over the cost of the item. Example:
41. Should you use that extra money on new tennis shoes and racket (if you play twice a month) or on a bigger dining table (which your family will use twice a day)?
42. The word budget has gotten a bad rap – it is basically just a plan. When you budget, you’re spending on paper, on purpose, before the month begins. But many people view a budget as a straight jacket that keeps them constrained. Freedom and budget just don’t seem to go together. However, when you see that a budget is just spending your money with intention, you’ll actually experience more freedom than before. Some pointers: Give it three to four months to start working. It won’t be perfect the first time you do it. Spend every dime on paper before the month begins. Over-fund your groceries category – most people underfund that category. If married, spouses budget together (and husbands – if applicable – need to loosen up and quit using the budget as a whipping tool on their wives).
43. Use the time-tested envelope system. Each month draw a large lump sum of cash from your account, which reduces charges for the month. Then take a pile of envelopes and label them each with the different things that need to be paid – e.g. petrol, house-cleaner, gardener, toiletries, cleaning products, food etc – and place in the envelope the relevant monies for that month. If, say, you allow yourself R600 for petrol in the month then when that is coming to and end you just go out less in the car until you have seen that month through. Always allow an envelope for emergencies. Once all these bills are accounted for in envelopes, then you know exactly how much you have spare to spend on incidentals or a luxury perhaps.
SPEND MORE TO SPEND LESS
44. Spend more in the short term to save more in the long term. Two examples: solar geysers pay for themselves in no time, and a low fuel consumption car may cost a bit more, but it quickly pays for itself – and you start to save considerably.
45. The most substantial debt people face is their home loans. When purchasing a house, fight for lower rates – get at least two bond originator agencies competing for your business. Whenever you get a pay rise, be sure to increase your monthly repayments by that same amount. If you get a pay rise of 10% per year, and follow this plan, then you will save yourself in effect nine years of repayments!
46. Discover the potential of Ubuntu – the collective and co-owning of some of the things of life. You don’t have to own everything to enjoy and use it.
47. It could helps to grocery shop with a friend. Often there are 2 for 1 but you don’t need 2 and it won’t keep, shopping with a friend can help keep grocery budget down.
48. Join a co-op of people who order food with you.
49. Arrange a toy swap group.
50. Buy big items which you will not use often with a friend and share the cost. Lawn mowers and boats are examples.
51. Ditch DSTV and borrow DVDs from friends, or the library. Read more.
52. Use public transport. Golden Arrow busses are cheap, as are trains, and you avoid expensive parking and petrol costs. Finally, some reading time too.
53. Ask yourself searching questions like, ‘Can you really afford the car you’re driving? And the house you’re living in? And the school you’re sending your kids to? And the restaurants you’re eating out at? And the shoes you’re wearing?’
54. Stop using shopping as therapy. Emotional spending causes a lot of people to end up in serious debt. 79 percent of women go on spending sprees to cheer themselves up, according to a 2009 study released by the University of Hertfordshire, in England. 40 percent of the women surveyed named ‘depression’ as a reason to go shopping.
MAKE IT LAST
55. Take care of your stuff. Bottom line – purchasing something is the start of the relationship, the hard work has only just begun. This means: don’t put your clothes in the wash after wearing them once (the machine damages it over time); get your car serviced regularly etc.
MORE ON CONTENTMENT
56. Discontentment is the root of greed. Friederick Nietsche said it best: ‘What causes one man to use false weights? Another to set his house on fire after having insured it for more than its worth? Three quarters of our upper classes to indulge in legalized fraud? What gives rise to all of this? It is not real need … for their existence is by no means precarious. No, they are urged on day and night by a terrible impatience at seeing their wealth pile up so slowly, and by an equally terrible longing and love for these heaps of gold.’
57. Love people and use things, rather than use people and love things. Many of us spend far more time weekly buying stuff than playing with our kids. For example, in USA the average parent spends 6 hours a week shopping and only 40 minutes playing with their kids. Don’t be that guy.
WORK AT IT
58. Financial planning and living is like being on a diet. If you are serious about losing weight, you draw up a plan of what you should and should not eat, you avoid temptations and get excited about even the smallest change or success. With money you need to plan what you should and should not spend (not can and cannot), avoid temptations and get excited about the smallest change or success. Imagine if you joined a financial Weigh Less club called “Save More” and every week you had to bring in your credit card and bank statements for the weekly weigh in. Yeah, spending less requires a rigorous, constantly re-inforced decision.
59. Abundance tends to undermine discipline. Yet discipline is what undergirds abundance. So keep disciplined, and your life will head in the direction of abundance.
Thankx Terran Wiliams [https://www.facebook.com/terran.williams.7568] and friends…
What about you? Do you have any helpful suggestions to add to this list that have worked for you?