If you want to save money, there are a few tried and true techniques that almost every personal finance expert will tell you. Brown bag your lunch. Make your coffee or tea at home. Cut the cable. The list goes on and on and on. The “hardcore frugalists” might go as far as to suggest splitting two-ply toilet paper or cutting open your toothpaste container to get that very last bit (I don’t do this now but I would consider it on the basis of just not wasting it, not to save money).
Unfortunately, while those savings are nice, they don’t impact your financial life as much as they appear based on sheer effort. A lot of them take a significant amount of effort for a less than significant amount of savings. While that’s obvious for those tips like splitting two-ply toilet paper (yes, I’ve seen that suggested before ), it’s less obvious for the suggestions to brown bag lunch every day or make your own coffee.
The perfect analogy, and I apologize if this sounds cynical, is TSA security at airports. As a result of 9/11 and security concerns, we now have to go through a long annoying process to get through “security” at airports. It’s security theater.
Are we more secure? Their own testing shows that the security checkpoints can be defeated. Other lapses in security can result in a recent parolee just sneaking onto a flight . We pay billions for this but does it make us safer? It’s hard to say and an expensive tax on our system.
As an aside, I personally have no problem with it until they started using those useless body scanners , which subject you to radiation (you can argue whether or not the radiation is dangerous but all I know is that I’d be subjected to less radiation, harmful or harmless, if I didn’t have to walk through that scanner). I just wish I bought stock in the company that makes those scanners and the people who convinced us we need backscatter x-rays.
Where can you focus on real significant savings? Here are a few quick suggestions:
- Review insurance policies – You can save hundreds of dollars a year with a simple phone call or internet inquiry. If you’ve had a recent life change, such as marriage, divorce, or move, you might find a much lower rate. Just stick with a reputable insurer, don’t go with a no-name company offering cut-throat rates.
- Check your investment fees – Check the fees you pay for any investment accounts, retirement and non-retirement. Over many years, just a few tenths of a percent can mean thousands of dollars to a broker, rather than to your nest egg.
- Renegotiate fixed costs – See if you can do better on the rates you pay for things each month like your cable bill, internet, and others. Armed with a competitor’s flyer, you could find yourself paying much less.
Focus on real savings and not savings theater.