To Save Big, Think Small

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A few days ago, I was bewildered about my recent activities and how it relates to my finances.

During the last three months, I traveled to five different places totaling 20,000+ miles. For most people, this type of travel schedule would cause a budget crisis but surprisingly, mine still turned out okay.  The result got me thinking about why this is the case and how I could alert you of my findings.  One thing led to another and the true reason surfaced: we are usually misled into thinking that certain activities are costly.

Surprise surprise but let me give you a few examples of what I mean.

  • Vacations are not expensive – the meals, hotels, transportation and gifts are.
  • Eating out is not expensive – the drinks and deserts are.
  • The movies aren’t expensive – the popcorn, drinks and dinner beforehand is what trashes the budget.

In fact, I was talking to Emma about a particular restaurant that surprised me the first few times when we got the bill because the per person cost is always triple the cost of each entree. A quick study shows why:

  • Appetizer: $10 – $15
  • Entree: $12 – $15
  • Drinks: $5
  • Desert: $7.50
  • Tips and Taxes: add another 30% of so to the bill

We normally don’t order deserts at restaurants but the cakes are the only reason why we go to this place. Another interesting fact is that we are more prone to ordering drinks at this particular diner because (and this is my theory only) we subconsciously figured that a drink goes well along with the cake, not to mention that it has become a habit for us to order one now.

So from all this, we can safely assume that some people can spend something like $15 ($12 + tax and tip), while another person can pay as much as $40 for eating at the same restaurant. Quite a difference.

What I’m Trying to Say

You see. Whether it’s continually changing cars, eating out, living in a big house or traveling continuously, it doesn’t mean anything about how much is being spent.

Now why is this important? The obvious is of course the fact that you can trim your expenses much further by eliminating some unneeded details, but there’s more.

It means that:

  • There is No Need to be Jealous of Other People – Are your neighbors always changing cars? Maybe they aren’t really that rich but are just going out to dinner less to compensate. Perhaps they are actually making money every time they change vehicles because they are buying used cars with good value and turning around to sell them, in which case you should talk to them more and learn from them.
  • We Can Still Have Fun and Save Some Money Too – Arguably, going out to eat is about having a good time with your friends and family (as opposed to the actual food consumed), and also getting out of the everyday routine of eating at home. Instead of paying $40 every time you go out on Friday night, why don’t you buy the $12 entree and go out Friday and Saturday? How about the vacation trip that you’ve been dreaming about for ages? There are tons of ways to budget travel.  Why not study what others do and make your dreams come true?

Little matters count, because the small details probably account for most of the cost.

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{ read the comments below or add one }

  • Wilson Pon says:

    Ning, you know what? When I go to the cinema, I never buy any popcorn or drink, as my main objective is watching the movie, not to stuff myself with the junk foods. In this case, I can save up much money than anyone else…

  • afif says:

    You right. You just buy something that you really need it.

  • audrey says:

    I agree. If you try to save little by little, the savings eventually accumulate. And this will probably add to your savings, just don’t buy the things you won’t need.

  • Jason says:

    I agree completely that you are giving away the secrets of the retailers. That’s also why there are so many free offers and discounts because they know you will end up buying stuff once they get you into their stores.

  • Thicken My Wallet says:

    You point out the fact that most businesses actually don’t make on what we consider the “extras” like MacDonald’s making little money on their burgers but lots on their drinks or many retailers making little money on their inventory but lots on their credit cards.

  • Miranda says:

    You make excellent points. Most of our expenses come in the form of “little things” that we think we must have to enjoy ourselves. Of course, when I travel I do budget to spend a great deal. I can’t go to a Yankees game when we visit my husband’s family in New York without buying a couple of hot dogs and nachos. Even if it does cost a lot. I just save up and budget for it…

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