There are basically two schools of thought in the financial community when it comes to saving money on purchases. One is to focus your efforts on saving money on the big purchases in your life, such as a home, a car, insurance, furniture, etc., and to not focus your attention on the everyday purchases.
The other school of thought is to focus your energy on saving money on all of your everyday purchases, such as groceries, gas, clothing, etc. With such a difference in financial perspectives, it was only a matter of time before these two financial schools of thought found themselves in a head-on duel.
Financial Impacts of Habits
So what category do habits (smoking, eating chocolate bars, etc.) fall into? On the one hand, these are daily or weekly purchases. However, habitual by definition means that these purchases are going to be repeated over a lifetime, and so perhaps all of the purchases over a lifetime should be summed and lumped into the category of one large purchase.
I am not here to tell you that you should cut out habits from your budget, like many other financial articles will do. After all, aside from addictions being bad, people create habits because they enjoy consuming the item and should continue to do so. But whether you believe in saving money on the little purchases, or in focusing your efforts on the large purchases only, making a conscious effort to save money on these types of purchases should be a priority because doing so could make a difference to both your monthly budget as well as to your lifetime financial goals.
25 Year Spending on Habits
Let’s take a look at what I am talking about (please note that costs are approximate):
|Smoking (two packs a week)
|Chocolate Bar from Vending Machine (Daily)
|Lawn Service (bi-weekly, 4 months out of the year)
|Manicure (bi-weekly, includes tip)
|Rent Movies (two per week)
25 Year Savings with Alternative Habits
Then consider what some changes in your habits could save:
|Potential Cost Savings
||Monthly Cost Savings
||25-Year Cost Savings
|Purchase One Pack a Week Instead (or quit)
|Purchase Chocolate Bars from Grocery Store and Keep at Desk Instead
|Pay a Neighborhood Kid Instead
|Do Nails at Home Once per Month Instead
|Join Netflix Instead
Evaluate Cost of Habits Over Time
It doesn’t matter which school of thought you prefer. Habitual purchases occur so often, and over such a long period of time, that it matters financially to find what you are looking for at a lower price than others will pay in order to save you a large sum of money in both your monthly budget as well as over your lifetime.
How much do you spend on some of your habits?
I just quit smoking (July 1), so we’ll see how much savings I can accumulate from that. Without a doubt I agree that one is a bad habit. Some others, I have to say, are rather subjective. Everyone sees the same thing in different ways. For me, down here in South Florida, I’d much rather pay someone to do my lawn instead of sitting in 100 degree weather doing all the work myself.
People often don’t realize how much they are spending on useless every day expenditures until they take a look at it on paper. things like coffee and cigarettes can very quickly eat into a persons savings account.
Sometimes, chocolate is a necessary habit. 🙂 I definitely agree that some habits could really rack up the savings when you break them. Cut your coffee costs by brewing your own at home, don’t purchase dry-clean-only apparel, etc… there’s a lot you can do to save, for sure! Thanks for breaking down the costs for us. Really interesting!
The most important thing is to fulfill our basic needs. Apart from that, we’ve some wants to fulfill. We should plan accordingly and try to keep aside a certain amount of money for our BIG purchase. But according to me, it’s more important to fulfill the daily wants first. For the future ones, the desires must be suppressed.
The yearly numbers certainly put in perspective what is spent on “habits.” Although my daily habit, an iced coffee, is not in the chart, it is easy to estimate what my habit costs per year. This is definitely a wake-up call to see if that habit is really worth it. Thanks for sharing!
Once you see the numbers in black and white it really makes an impact!