This isn’t a new article, but I came across it again the other day and found it interesting. The article asks whether it’s better to penny pinch and save on the little things (like making coffee at home rather than buying it) or if you should forget the small stuff and just make big changes (like getting rid of your second family car). The article also offers the obvious third answer – do both.
One financial planner interviewed said “Pinching pennies is the most emotionally draining way to save.” I don’t know that I agree. I suppose you are cutting out little things and making sacrifices and not seeing a huge amount of savings, and for some people, that can be tough. Penny pinching can be time consuming. It can require lots of planning ahead before grocery shopping and giving up your daily latte. But it does add up. Maybe not in the first day, but the money does accumulate.
For example, I bring my coffee every day. If I bought regular coffee, it would probably cost $2 a day (but I would likely splurge on lattes sometimes). Now, that doesn’t mean I save $2 a day because I’m still buying coffee. I buy coffee that costs around $7 a bag. Let’s say I get 20 days out of that bag. That means that in 20 days, I’ve saved over $30. Sure, it’s not a lot, but it adds up. Try it yourself with one of your regular expenses. Or you can just check out this coffee calculator.
Do you save clipping coupons? Yes, if you use them on products you normally buy. Sure, it takes time. But again, those little things add up.
Now sure, it would be “faster” to save by getting rid of a second family car or moving into a smaller home, but not everyone has the ability to take those steps. But if you can, why not go for it? And if you’re looking to buy something expensive, do your research and make sure you’re buying the best you can get for your money. Shop around.
And hey, splurge on that $4 latte every so often. You deserve a little fun, after all.
How about you? Are you a penny pincher or do you choose to save in bigger ways?
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
I’m assuming “faster way to save” used along the lines of “instant gratification.” So in that stream, if you could just pick the right numbers in lotto, you’d be rich. Or you can choose the draining way of getting rich is by living a financially responsible life. Hmm.
I’m a penny pincher and I’m proud of it. I feel it is because I don’t really have nickels, dimes or quarters to pinch, so that is why I’m pinching pennies. When I do have a home or a car, I wonder if I will think of cost cutting on a grander scale. I don’t believe so. I think I’ll carry my penny pinching ways with me to the grave!
I’m all about the Big savings, sprinkled with a little mini-savings here and there. I think it all depends on what peoples goals are though. If you’re trying to save XXX amount of money to by ____, then doing anything and everything you can to get there is awesome. If, however, you’re just trying to trim down costs and live a more down to Earth lifestyle, then focusing on the big ones is as you making a tweak or two there will save a lot more in the long run (ex. refinancing mortgage, finding cheaper place to rent, getting older car, etc).
There are some things I just enjoy doing like spending money for lunch most work days rather than packing, but at the same time I’ll only buy clothes that are at least 25-50% off 😉 All a balance between keeping yourself and your wallet happy.
Interesting post though! I always enjoy reading these kinds.
Save money in the places that it doesn’t matter. If you buy that latte because you love it, keep it. If you buy it because it’s what you do, cut it. If you’re never home, have a smaller place. If you spend most of your time in your home and love to garden, get a nicer place with room for a garden. It’s all about priorities.