You hear this from people all the time, “I saved xxx much money.” “I got a great bargain; on sale, it was $xx but I paid $yyy”. “I found a way to only pay, $xx for thus and such; I saved so much money.”
As many of you know who read my other diaries, I am someone who believes in the power of language. I believe that words and their meanings have almost a magical quality to change our thinking. Think about the phrase “Homeland Security” – think about what THAT’s done to us.
Aunt Toby is here to announce the opening salvo (remember that detergent?) in my war against any of the words starting with the letters: S-A-V. That word and all of its daughter and sons (saved, saving, savings) have basically lost complete meaning. And here is my reason why: People think that ‘saving money’ (that is, paying less for something you are going to buy anyway, or buying something based on the discounted price) is SAVING MONEY.
What you really DID was “not spend money”or, perhaps more clearly, “not spend as much money”. You did not actually SAVE MONEY. That is: You did not take the difference between what you would have spent and what you did spend and stick that in a bank account, an envelope under your mattress or a coffee can out in the dirt in your yard.
In many cases, people are actually encouraged to buy more and spend more when they are in that situation (the “buy two; you’ll save twice as much” issue).
There is a huge difference between:
— ‘not spending as much money’ on an item and then using the money you did not spend on X and then going out and spending it on Y, and
–‘not spending as much money’ on an item and then taking that money and “socking it away. “
So, I want us to NOW replace any words that start with the letters S-A-V and replace them with other words:
‘Socking it away’….a little old fashioned, but comes from the period when people would put extra money into a sock in their dresser drawers to save it.
‘Hoarding’…think of yourself as Smaug – it puts a friendlier face on this word
See how this changes your thinking, because you can no longer say, “I saved xxx on this”; you have to say, “I’m putting $xxx aside,” or “I’ve got $xx that I’m socking away.” It’s an entirely different mode of thinking, created by using different words..words that have specific and actionable meanings.
Now, to ‘putting words into action’: Actually getting the difference between what you would have paid and what the item/service/whatever is actually costing you and getting it into a ‘socked away’, “stored’ or ‘banked’ state:
First, make sure you have one of the following available to you: a separate bank/credit union account (if you have a credit union available to you, either on an employer or community basis, you ARE a member, right? If you are NOT, then DO NOT GO, DO NOT COLLECT $200 AND DO NOT GO ANY FURTHER with this article until you get yourself registered with them. Aunt Toby is very firm on this: Credit Unions are good things).
Example 1: Buying some THING (item of clothing, appliance, etc.)
1) Do your research – where can you get the best buy?
2) What is the highest price you find vs. the lowest price? Are you going to buy from the lowest price (if ‘service after the sale is not an issue for you, then this is easy)?
3) Now do this: do not question it or think about it..just do it. Subtract the lowest price from the highest price..and either write a check and deposit it into this separate account or, more easily, electronically transfer that amount into this separate account.
Example 2: Taking lunch from home vs. eating out
1) Do your research – how much money on a weekly basis are you spending on eating out? Check all your receipts over a month – you ARE keeping your receipts, right? We won’t consider how much going out to eat costs in terms of if you are charging these on credit cards. We’ll just take the strict meal/tip costs.
2) Divide that cost by however many days (we won’t get into the whole 30/31/28 thing) this is – if you only eat lunches out on weekdays, then it is 20; if we are talking all month, it’s 30 and then multiply by 5 or 7(depending on whether you are looking at work-week eating out or everything)– voila – weekly cost.
3) Put that amount of money – real cash – into your wallet or purse in an envelop – to only be used to buy the separate ingredients you will need to make lunch. Now, if you are taking left overs from ‘big cooks’ on the weekend, that is separate, but if, for example, you would be buying a salad every day then it looks something like this:
Salad’s out: $7.50/day x 5 days = $37.50
Now, my salads out have: mixed greens, 4 cherry tomatoes, a handful of nuts and about an ounce of cheese in them. To buy at the grocery store:
Mixed greens – 2 packages should do it = $5.00
Package of cherry tomatoes – 1 pint – has about 30 = 2.50
Cheddar cheese, 1 ounce, $3.00/pound, 5 days = .94
Nuts, ¼ c. per salad, 5 days, $2.99/#, 4C. to a pound = .93
Total Cost: $9.37 for the week for the salads; on a per salad basis, that is $1.87
4) So, $37.50 less $9.37 is $28.13. Take that money out of the envelop – don’t use it to buy anything else and put that money into your bank account, a big sock in your dresser drawer or whatever you want, but do not use it for another thing.
5) You might want to think about the whole thing with buying coffee/Danish/breakfast on your way to work or eating dinners out as well. But it all adds up to the same thing:
Example 3: Getting your spouse, BF, GF or SO to cut your hair.
1) We all start the same way: do your research. How much are you spending to get a hair cut now? $10? $20? $50?
2) If you offered money of any amount to your spouse, BF/GF/SO, they would probably be insulted – that does not mean you can’t do something nice for them, like bring them a cup of coffee in bed or buy them a cup of coffee later. Just figure that into the equation.
3) Take the difference between what you would have spent on the service and what it’s costing you. $20.00 minus $0 = $20.
4) Bank that – or, take them out for coffee – a nice cup of coffee locally (not Starbucks) is $1.50. If you want to go fancy, get a spritz of syrup and spend $1.75. Then, bank the difference – really do that. If you get a hair cut once a month, then you are going to accumulate a lot of money – Even if the difference is only $8.00, that is $96 a year. If it’s $18, that is $216 a year.
You can actually accumulate money if you actually put it aside. Just getting discounts on things does not ‘save money’, nor does ‘failing to spend’ if you are not putting it away. Savings is an ACT – you must actually DO IT and DO IT REGULARLY. Think of this as your Financial Wellness Program – all Wellness Programs only work if a) you actually DO THEM and b) you perform them on a regular basis.
This post is also cross-posted at Aunt Toby’s new blog: Kitchen Counter Economics