I’ve been asked to come up with my list of the top ways I’ve saved money over the years. When I think of my big budget busters, they have always been, house, car, and food. I’m going to try and take a fresh twist on the subject, with the premise that spending a little more on the front end helps you make better decisions with those big ticket purchases.
1. Buy A Smaller Home
We live in a 1700 sq foot home and although it seemed huge when we first bought it, it’s surprising to me that the median home size of new homes being built is now nearly 2200 square feet. I didn’t realize it at the time because I’ve never lived in a place bigger than 800 ft my entire life, but buying a house that was smaller than the median average was one of the most frugal decisions we’ve made. A rough estimate is we have been saving at least a thousand a month in extra cost of having something larger. Small homes require less cleaning, require less yardwork, have lower utility bills, lower tax bills, need less furniture and require less maintenance than a bigger home. The home we have no longer works for the multi-generational family model we would like to move to someday, but we spent the last 12 years living in a home that’s just the right size for our family of 4. That’s over a decade of cost avoidance that I’m pleased to have had and I didn’t feel deprived doing it either. The other side benefit in my area is that homes at a lower price point usually have a higher turnover rate than their more expensive counterparts. Smaller ranches sell like hotcakes here because they are under $200K.
2. Check Your Auto Insurance Coverage
Insurance is one of those unavoidable expenses and it’s a significant portion of our monthly budget. Between auto, health, home and life insurance, we pay a hefty sum out of pocket every month. Thankfully a good chunk comes directly out of our paycheck so it doesn’t feel as bad as it would if I had to write a check for $5000 for health insurance. My insurance costs have gone up over time because for me, it’s a way to level load spending for catastrophic events. I have more insurance today than I ever did because now I have something to lose. I have assets and children and people’s future’s to think about. For my home, auto and umbrella insurance, I bundled the policies together for additional discounts. A multiple-line discount is a great way to save on annual premiums. This also works with renter’s insurance policies that are purchased through your auto insurance provider. Complete a defensive driving course to remove points or to earn a sizable annual discount. Remember to check your auto insurance quote online regularly.
The unknown scares me. Insurance at least makes me feel better that if something terrible happens, I don’t have to worry about the cost of the catastrophe top of everything else. I may air on the side of being over insured at this point, but it’s one of those voluntary expenses that I think is worth the piece of mind. They say that unexpected healthcare expenses is one of the leading causes of financial ruin. After working so hard to educate myself so that I could get a good job and then scrimping and saving for over a decade, I just can’t see a reason why I would not take precautions against having all that toil and effort get wiped away with a single event.
3. Do an Extended Test Drive
How many of you have known a person who HATED their car? I’ve known quite a few and in some cases, thousands of dollars were lost because they just couldn’t stand the fact that the car was a coupe or had too many blind spots or whatnot. Cars are usually the second most expensive things people buy. Have you ever thought of renting the car you wanted for the weekend and REALLY test driving it before committing to it for 5-10 years? I think you could really learn something from that experience.
Similarly, if you’re moving to a new and unfamiliar area, have you thought of renting in your target area first before taking the plunge into house hunting? You can learn a lot about a place after you’ve been there for 6 months. It really is amazing how many people put their trust in selecting neighborhoods entirely in their realtor’s hands.
4. Ignorance is Bliss
Another car or house hunting tip I have used is the ignorance is bliss tactic. For my first new car and home purchase, I refused to look at something that was outside of my price range. Back in the day when I had my bottom of the line Toyota Corolla, I was totally and hopelessly in love with my car. My soon to be husband would always crack jokes at my little crappy car with no pickup. I didn’t really get it until I took a drive in his Mazda Miata. When I got back in my car I was like…what’s wrong with my shifter and clutch? Why is it so loose all of a sudden? He said “Nothing, you just now know what a nice stick shift is supposed to feel like.” Initially, I learned to drive on a real bear of a 70’s Firebird. It was very hard to drive. It stalled if you didn’t tickle the clutch, it had no power steering so it had the added benefit of giving you an upper body workout when you drove it and last but not least, it was a monster gas guzzler. Going from that beast to a Corolla was like a dream. I didn’t realize it wasn’t the best car ever until I drove something even nicer. I stopped driving the Miata after that experience because I still loved my car and I didn’t want to ruin my experience driving it. And on how many home shows do you see a couple finding their dream home once they upped their budget $50,000. Suddenly there it was, the dream home. Well, maybe it is just a perspective thing. Yeah, it’s way better because it’s a different product altogether.
5. Start with the used or low end version of something
My mom would always tell me to buy the best thing I could afford so that it would last longer. Now she never throws away anything and the word “upgrade” just isn’t in her vocabulary. In general I agree with that premise on items that you know you will use all the time. I’m not going to buy a low end mattress because I sleep on it every night. On the other hand, with discretionary spending like hobbies, I generally do the opposite. I will start with a cheap version of something and made sure I liked it before I upgrade to an item that had more bells and whistles.
My first mountain bike was nicknamed the “paper boy” bike. It weighed a ton, had no shock and was generally not suitable for technical riding. I rode that sucker for 2 years before I upgraded to a good bike. My biking ability improved dramatically after I bought my nicer bike, but I would have hated spending over $1000 on something that could’ve easily turned into a towel rack if I didn’t take to the sport. Buying something with the intention of using it doesn’t make it so. That’s why there are so many treadmills out there collecting dust. If you really want a treadmill, try running outside for a while, say 2 months consistently before making the plunge for the indoor model. If you find you enjoy running, then go for it. If you hate it, then it doesn’t matter how expensive an item you buy, it probably won’t be used to it’s full potential.
6. Find Free Events
I spent a summer with the kids doing free stuff. We spend almost every weekend either at the local playground, the lake down the street or the museum we were already members of. My kids didn’t notice at all. As long as they were somewhere having fun, they didn’t mind if it was in the backyard running through a sprinkler or climbing up the monkey bars at a park. Fun is fun and it doesn’t have to be an expensive experience to be a good time. Some of our local venues also have a community day where entry to those places are free if you live in the region. Our nearby zoo let’s moms get in free on mother’s day. There are lots of options to cut costs if you pay attention.
7. Do It Yourself
I have always enjoyed learning how to do things around the house on my own. It’s amazing what you can learn from google. I know I’m not a master carpenter and one may cringe if they ever saw my work, but I like having the knowledge of how to build stuff. I’ve found that with practice each subsequent project gets a little nicer. The chicken coop was my first attempt at framing a freestanding building. It’s not perfect, but the chickens don’t mind and I learned a ton. I find that that knowledge can often be translated into other areas as well. I want to keep learning so I don’t regress. It’s not only a money saver but also a character builder.
After all this summarizing, I find that living a more frugal life is more of a lifestyle choice than task to check off of your financial planning to do list. Frugal living should never be just about the money. You should be selfishly getting something else out of it besides improved cash flow. It can be learning, piece of mind, sanity, flexibility, calm or all of the above. Readers: What non-monetary benefit do you get out of your frugal living efforts?