You want to spend one week on an All-Inclusive vacation to a 5-star resort in the Caribbean. However, when you look at the prices for a trip there, you see that the average cost for such a trip is $4,000.00 according to www.oyster.com. Sounds like a lot to set aside for that trip. Sounds like even more to put on a credit card considering the interest you’ll likely incur while you pay off the trip. You may doubt your desire to travel and determine it’s not worth it because you can’t afford it. Before you opt-out of that trip though, or ANY purchase you believe you can’t afford, let’s examine small ways to save big money. How are we going to do this?
Managing Disposable Purchases
What are disposable purchases? Essentially, they are low costing purchases which have very limited use that you cannot re-use or get back. Those things may include food, tampons, juice, etc. Whether necessary or not, you cannot re-eat food or re-use the same tampons, henceforth, disposable purchases. What does this have to do with anything? And how does managing those purchases help you save money?
Let’s use another example. Think of the everyday businessman or woman who starts their day by going to Starbucks in the morning. He or she may purchase a latte’ and a muffin as part of their daily routine to start the day. That total comes up to $9.00. Small amount you may notice, however, can this muffin be re-eaten or re-used? What happens after you drink half the latte’ and leave the rest alone for a few hours? Well, it’s no good at that point. But, this is part of an everyday routine, so it’s okay because tomorrow you’ll be back making the same purchase all over again.
Do the Math
Let’s break down the cost of this routine though. $9.00 per day multiplied by the 5 days in a week is $45.00. Not much right? How about the amount per month? $180.00 per month. Still, not enough to put a dent in that All-Inclusive trip, is it? How about the annual cost? The annual cost rounds up to being $2160.00! Now, how’s that for a dent in your trip?! That’s more than half the cost of the trip. When you reflect on these totals, what seems more wasteful, a cup of latte and a muffin every day or an All-Inclusive trip to the Caribbean? That’s up to you to determine. However, to a lot of people, there is no question of what they would’ve rather spent that money on.
When you finish with your meal, you have to go back the next day to get that food again. When you return from your trip, you’ll likely return refreshed and with a tan. You’ll have plenty of pictures and lasting memories and likely trinkets for everyone in your office. And that’s just breakfast! You likely spend more money on lunch. Imagine how much you’d be able to save if you managed the money spent on those disposable purchases!
How to Save Disposable Income
The money you don’t spend on disposable purchases now turns into disposable income. Its money you WOULD have spent on items you may or may not need. But not spending the money on disposable purchases is only half the battle. To win the war, you must now save this money. There are many ways you can save it. You might be disciplined enough to keep it in that checking account along with your other funds you keep for rent, or may take the money out in cash and place it under your mattress.
Those are not incorrect ideas to have, however, it’s easy to tell yourself that you NEED to take that cash from under your mattress to take someone out to dinner, or to fix your car or something related. However, this money should be viewed as DISPOSABLE income. Its money you WOULD NOT have had anyway because you were in a habit of spending it on low-costing disposable items. So it must be somewhere or in some type of account where your access is severely limited or restricted.
Disciplined Savings and Options
To save money, it requires discipline. If you have trouble with discipline, you may find it easier to deposit the additional funds into another institution away from your primary one such as a credit union. Certificates of Deposit are a viable option. With a variable rate CD, not only would you incur interest on the balance you keep in the account, you’d also be able to make deposits continually.
Try this: For every time you DON’T spend money on breakfast or lunch as part of your daily routine, deposit the money you WOULD HAVE spent into your CD. This way, the funds are still out of the account and you’re saving at the same time. CD’s often have a penalty you pay for withdrawing the funds before it matures so that in itself should be more incentive to resist the urge to pull from it. It can help you think twice about an “emergency” before withdrawing the money from it.
Read through some articles on cloudswipe and find Try those small ways to save and look at your results midway through the year. You may just save big…