• Log in

Thicken My Wallet

Everything to do with thickening your wallet

• Home

Saving Money- what items are you saving for?

Posted by admin on June 25, 2007 in Money Saving Techniques

Someone commented recently that I should be spending more time attempting to save money on big-tickets items, such as house-hold appliances or a car, than on smaller items such as groceries (this comment was made as part of the supermarket experiment). I believe that saving money on the small items many times over will save me more money than getting the best price on a big ticket item every few years. I believe in this money saving strategy for two reasons.

The first comes down to opportunity cost. Do I spend days on end researching who offers the lowest price on a depreciating asset, such as a car or a washer/dryer set, or do I spend that time making money at work or doing research on investments (i.e. appreciating assets) or thinking about my financial future? Don’t get me wrong- I want to save money on big ticket items. However, at some point, the opportunity costs outweigh any savings that you may have. To quote the book Millionaire Next Door: “There is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one’s financial future.”

The same book found that the more one planned their financial future, the more likely they were to be financially independent. Thus, at some point in time, it makes no sense attempting to spend hours on end to find the best bargain on a big ticket item if the cost may be a less secure financial future (I am not even going to mention maintanence costs on big ticket items wiping out most of your savings).

Saving money on big ticket items is still important to me. What I have done is adopted a strategy that a friend of mine uses. My friend has to purchase vehicles every other year for work-related purposes but simply doesn’t have time to visit every dealer in the city. Thus, when he has to purchase a vehicle, he conducts a quick review of the market prices. He test drives the vehicle at one dealer close to him (it also makes it easy to service the vehicle if its close to his house). If he likes it, he tells the salesperson to call when the price is below X Dollars (usually slightly below the lower end of the spectrum). They will have an immediate sale at that point. If it is not below that amount don’t bother calling him or you will lose this sale and all future sales. It saves him time going from dealer to dealer attempting to haggle prices.

The second reason I concentrate on saving money on smaller items is frequency. I have to purchase milk and eggs every single week. Over time, the savings on this will begin to add up. If anyone has read a financial aid book on the amount of money you can save by packing a lunch or not buying Starbucks coffee, you understand how this adds up especially if you have the discipline to invest the money saved into investments.

I would like to know what people are doing to save money- are you concentrating on the big items or the small items? Any strategies on negotiating the purchase of big ticket items?

One last thing, since I am writing about saving money… John Chow dot com, a blog that helps you make money, is giving away a 24″ wide screen LCD monitor! Since I am a sucker for promotions, this is my entry.  Now give me the monitor! The contest is sponsored by BlueFur, who wants to let you know that they’re hosting Canada and the rest of the world. Wish me luck.