Want to know how to save money fast? These are the exact strategies I used to save $100,000 by age 25, with a few bonus extras thrown in for good measure. The original essay explains the ‘why’, so it’s important to go and read it first. This article is all about the ‘how’.
Over the years, I’ve written hundreds of columns and countless feature articles about money. Now I’ve crunched all that research down into a summary of 100+ money saving tips.
I suggest reading the overviews, then clicking through to the original news article if you want more details. It might pay to bookmark this page, because I’ll be regularly updating it with fresh money saving tips.
The tips are written in the imperative form (Do this! Do that! King of the castle!) to save time. Don’t be put off by the tone – if any of the suggestions don’t tickle your pickle, just move on to the ones apply to you.
For international readers
Some of the linked ‘Read More’ articles include New Zealand dollar figures. For reference, the kiwi weighs in at about three quarters of an American dollar. However, the actual figures don’t really matter – the principles are what’s important. There are a few topic areas, like tax and consumer law, where you will want to find country-specific advice.
Feel free to skip ahead to a specific section using the links below:
Move in with mates
My home city, Auckland, has some of the most unaffordable house prices in the world. Renting was my only option.
I lived in a few different houses, with anywhere from two to eight flatmates.
The more of us banded together, the less rent we paid. My last flat was 10 minutes bike ride from the city centre, and cost the grand old sum of NZ$110 (US$80) a week. With utilities split nine ways, it was crazy cheap.
Occasional flat dramas are inevitable, but the people were generally great.
I got to live with my best friends, and made new ones. If the only roommates you can find are always assholes, maybe it’s time for some self-reflection.
Yes, property managers and landlords are a pain, and you can’t even fart without getting written permission. I still had a blast, and would happily share a house again.
Swallow your pride
If you have a good relationship with your folks, consider moving back home. I paid my parents a token amount of board to live with them through university, which helped keep my student loan from becoming too monstrous. Admittedly, I was out the door like a shot the instant I got a job.
Open your home
If you’ve got a spare room or two gathering dust, you’re sitting on a goldmine of extra earning potential. Bringing in a couple of flatmates or signing up to Airbnb will go a long way towards smashing the mortgage in the early years.
Of course, you’ll be sacrificing the freedom to strut around in the nude frying bacon, and might have to rein in your shower-time Pavarotti impressions. It’s a tough call.
Work from home
While I was never the best-presented employee, becoming a remote worker has helped me discover new depths of informality. On the financial side, it’s definitely a game-changer too. There are a few reasons you should ask your boss whether you too can spend an entire working week in your PJs – no commute costs, no expensive suits -but accommodation is the big one. If you don’t need to live in the city, you could move to a much cheaper area and save a fortune.
Work from overseas
I’ve taken this concept one step further. My home office right now is a studio apartment in Thailand. At various other times during the past year, it’s been a beach shack in Cambodia, a teahouse up in the Himalayas, or a Burmese coffee shop.
Western wages and developing world prices is a potent combination for saving. I live comfortably on $580 a month in Thailand, which is insane. The ‘digital nomad’ lifestyle is obviously not for everyone, requiring a certain set of skills, a lot of flexibility, and a lack of pre-existing commitment. But for the right person – someone unattached and adventurous – it’s a powerful strategy for saving some serious cash, bootstrapping a business, or seeing the world.
Keep moving costs down
Assuming you don’t own too much crap, you can borrow a trailer or hire a small truck and get your mates to pitch in.
If DIY isn’t doable, be smart about calling in the pros. Get three quotes, and check reviews online. Make sure you’re as prepared as can be – it’s not an efficient use of resources to have three burly blokes helping you pack the contents of the linen cupboard.
Pack your work lunches
My fondness for brown bagging would put seasoned alcoholics to shame. Every Sunday evening, I cooked up a big feast and divvied it up into portions for the work week ahead. This saved me about a grand a year. Over a working career, with compound interest, that’s well over $100,000 right there. I bought my lunches on Fridays to stay sane. If you want a fresher lunch or more variety, make an extra portion for dinner and put it in a container for the next day.
Resist supermarket mind tricks
Retailers have spent millions of dollars researching mind manipulation, so every single aspect of the supermarket is optimised to separate you from your cash.
You can’t fight back unless you know what the tricks are. Even once you’re clued up, it’s best to only shop once a week, stick to a list, and never go to the store with an empty stomach.
Always check unit pricing
On your next shop, keep an eye out for the “unit prices” on the shelves. These little numbers tell you how much something costs per 100g, 100ml, or per item. This consumer superpower gives us X-ray vision which can penetrate complicated pricing, different pack sizes, promotional gimmicks, glitzy packaging, and all the other assorted bullshit.
Buy in bulk
I just about wet myself when I heard that Costco is coming to New Zealand. Living in San Francisco, where everyone is earning big tech bucks but still poor, I loved the ritual of jumping in the minivan and doing the weekly Costco run.
Bulk-buying is a great strategy for saving money, but only if you keep a few principles in mind:
Stop buying bottled water
Evil marketing geniuses have somehow tricked us into paying a 3000 per cent premium for something which literally falls out of the sky. They’d have you believe it comes from a pristine stream that carved through granite mountains, tumbled over a waterfall and then seeped out a thousand-year old aquifer.
To break the spell, remind yourself that every drop of water on earth passed through the bladders of dozens of dinosaurs and humans before it ended up in your bottle.
Unless you live somewhere with water quality issues, fill a reusable bottle from the tap and get a filter if need be.
Eat out without going broke
I deliberately started eating out less often, which meant it became a treat that I actually enjoyed way more.
If you’re getting together with friends or colleagues, put your hand up to organise things. That way you can suggest somewhere with a price range that doesn’t give you heart palpitations, and make sure the venue is OK with splitting the bill.
Remember, it’s not compulsory to order an entree, a main, a dessert and three cocktails either.
Eat the same meals every day
There are little variations, and it’s never set in stone – I’ll happily abandon my packed lunch to go out with friends – but I end up eating more or less the same thing most days.
This is incredibly liberating, and saves a ton of money.
UPDATE: I’ve expanded this into a full post explaining the many benefits of repetition: Same Salad, Different Day
Grow your own vegetables
The most useful stuff to grow is greenery – lettuces, spinach, silverbeet, broccoli, cauliflower and herbs.
Personally, I’m too lazy to garden. I usually buy cheap snap-frozen veggies, which are often more nutritious than the ‘fresh’ stuff sitting around in produce bins.
Crock pot mastery
Long, slow, cooking is perfect for rendering even the toughest slab of chewy old leather into melt-in-the-mouth goodness, which means you can buy the cheaper cuts of stewing meat.
A crock pot is often more efficient than an oven, with some models only using as much power as a single lightbulb. You can also cook several portions at once, make ‘pantry soup’ with random bits and pieces, throw everything in a pot and walk away, and have one single dish to wash. What’s not to love?
Stop wasting food
My countrymen waste about 100kg of food per person every year, or 20 times more than the residents of sub-Saharan Africa. That’s some bullshit. Expiry dates should be taken seriously, unless you happen to enjoy bouts of explosive diarrhoea. But ‘best before’ dates are about quality, not safety. The good old-fashioned sniff test has never failed me.
Freeze any uneaten leftovers or wilting fruit and veggies before they begin to moulder. Investing in a good set of tightly-sealed containers goes a long way, as does checking the seals and temperature on your fridge.
Learn how to cook
MasterChef I ain’t. But I’ve got the basics down, and a couple of killer recipes up my sleeve for romantic dinners. I also get a lot of satisfaction out of cooking delicious breakfast foods for a fraction of the price of going out to brunch. People whinge about how it’s more expensive to cook healthy food than to buy takeaways, but I’ve run the numbers – it’s a bullshit excuse.
Consider meal delivery services
If you have the time and inclination, I still reckon the best strategy is to cook up a huge batch of meals on Sunday for the week ahead. It might get boring eating the same thing, but you can use your freezer to get a rotation going. After a few weeks, you’ll have stockpiled a variety of tasty, healthy, heat-and-eat meals, for all of $3 or $4 a serving.
If you don’t have the time, or you know you’ll just buy takeaways when you’re left to your own devices, the delivery kits might just be worth a shot.
Eat less meat
I say this through gritted canines, but there’s no escaping the fact that plant-based protein sources such as lentils, beans, and whole grains are way cheaper than meat. I’ve lived with vegetarians, and their food is often tasty as fuck. Your colon will probably thank you too.
UPDATE: This article is pretty funny to look back on – I moved to a plant-based diet three years ago, and have no regrets whatsoever. Here’s my reasoning why.
Get on yer bike
The bicycle is a magic machine that makes you richer, happier, healthier, sexier and a little more adaptable, each and every day. Few things are as satisfying as whizzing past lines of grumpy commuters trapped in their smelly cars while your blood is pumping with adrenaline.
Cycling can be a bit daunting, but there’s safety in numbers. Come and join us.
Biking not for you? Don’t like public transport? I was traumatised by a large bus commuter falling on me and someone vomiting on my suit pants, so I understand.
In my student days, me and my mates used to carpool into town for classes, splitting the gas and parking costs between us. Now there are various carpool apps which are well worth checking out.
Own as few vehicles as possible (preferably zero)
The depreciation, running and maintenance costs of cars make them a huge drain on your finances. I didn’t manage to get rid of mine altogether, but I did share it (and the expenses) with a friend for a while, which was great. Buying a new car is almost never a good idea.
Buy secondhand vehicles
Buying a brand-new car is the equivalent of tossing great fistfuls of cash into a hole in the ground. Let’s say you want to buy a new Ford Falcon or similar car for around $50,000. As soon as you drive out of that yard, its value begins to plummet faster than a skydiving elephant.
You better make the most of showing it off to your mates, because after a few years, your shiny set of wheels is worth just $23,000.
Never buy a car on finance
Buying a brand new car is generally a bad idea. Buying a new car by spending every cent of your savings is a no-good, very bad idea. Then there’s buying a new car by not only spending all your savings, but borrowing a whole lot more at a double digit interest rate. This is classified as a terrible, horrible, no-good, very bad idea.
Don’t ride motorcycles
On the face of it, taking to two wheels seems like an inspired idea. Lane-splitting through traffic slashes commuting times, you can ride in most bus lanes legally, and score free parking almost everywhere you go.
Surprisingly, that size and maneuverability advantage doesn’t translate very well to fuel efficiency – and then there’s the risk of death or injury.
Learn to drive properly
You can cut your petrol costs in half if you get good enough at driving efficiently. I made it into a game, trying to go further on each tank of gas than the last one. It’s not exactly Grand Theft Auto, but it does make driving much cheaper, safer, and more entertaining.
Take a financial fast
Dry July is for amateurs. If you’re looking for a real challenge, try Austere August on for size. Instead of giving up the evening tipple, commit to buying nothing but the bare essentials for a month.
Most of us are stuck on the hamster wheel of consumerism. Every new purchase gives us another hit, but the ecstasy soon fades and the cravings set in again. Going cold turkey is a good way to break the circuit.
Use the $1 per wear rule
My rule for clothing is that I have to get one wear for every dollar I spend. If a shirts costs $50, I have to be able to wear it and wash it at least 50 times. My best buy yet is a pair of leather boat shoes I found in an op-shop for $5, years ago. I’ve worn them several hundred times, which means the per-wear cost is approaching one cent.
Buying good quality stuff often saves you money in the long run, if you can afford to pay top dollar. One rule of thumb is never to stint on things that come between you and the ground; shoes, tires, and mattresses. I think this mostly holds true, and I’d extend it to cars, too. However, there are other categories where it doesn’t make as much sense.
UPDATE: I’ve since thought about this more carefully and fleshed it out into a system detailed in The Barbell Strategy for Buying Quality Stuff
Buy clothes secondhand
This might conjure up images of food stains, sweaty armpits and various other bodily fluids, but there’s no need to wrinkle your nose. Lots of clothes get discarded precisely because they’re never worn. We’re not buying smelly, worn-out rags, but the drunken online purchases and impulse buys of our non-enlightened peers. If you want a designer jacket, let some other sucker pay for it first. Just like buying a car, the moment it leaves the rack, its value plummets.
Learn to haggle
It’s normal in most parts of the world, but Westerners are weirdly squeamish about it. Done right, you’ll save a packet without hurting anyone’s feelings. Aggressively demanding a discount is bad form, as is nickel-and-diming over small items with an obvious fixed price. Save your silver-tongued negotiating skills for the big-ticket stuff.
Store your stuff online
The US self-storage industry is so huge that every single American could comfortably stand under its canopy. There’s already an excellent place you can “store” stuff almost for free – eBay, Craigslist,or your local equivalent. Whenever you need something, buy it secondhand. Once you’re done, sell it again. Chances are, you’ll recover all or most of the purchase price. Think of eBay as an enormous virtual warehouse, with millions of items on the shelves. Provided it’s not a unique item or sentimental, you’ll always be able to find it again.
Own less stuff
Storage costs are an obvious waste of money, but that’s only the tip of the iceberg.
The more stuff you own, the bigger the house you have. The bigger the house you have, the bigger your mortgage or rent payments, heating bill, and maintenance costs. Insurance premiums are higher, and so are moving costs.
Buy multipurpose tools
The Japanese have elevated gimmicky tools to an artform. Chindogu items are designed to solve very specific problems, but have no practical use in real life. While Westerners might laugh at shoes with built-in umbrellas, they should first open their own kitchen drawers. Single-purpose cooking implements – like a dedicated banana slicer – are stupid. Use as few tools and gadgets as possible.
Think hard about big purchases
Truly, the two happiest moments in any man’s life are the day he buys his boat, and the day he sells it. This memory is still painful, so that’s all I’m going to say about it.
Extended warranties are bullshit
For New Zealanders: It’s recently become clear that extended warranties are a giant scam.
They’re usually no better (and often worse) than the protection we already have under the Consumer Guarantees Act.
While the well-off can pay bills upfront and often get a prompt payment discount, poor people borrow. Debt breeds more debt, and the vicious cycle keeps turning. Companies can squeeze more from you if you borrow to buy, sign up to tricky finance schemes or rack up penalty fees. Pay bills upfront wherever you possibly can.
Instalment payments are a good way of tricking people into paying more for something – often around 10 per cent. You might think you can’t afford to pay a big lump sum upfront. The truth is, you can’t afford not to.
Use free cloud services
When I purged my possessions to head overseas, I uploaded my life to the cloud, emptying a concertina file of bulky paper documents. Lots of companies provide a limited amount of free space, but it won’t last long. Expand it by signing up with several providers, or make multiple accounts with the same company.
This piecemeal approach works fine for some people, but I struggle to remember what I ate for breakfast, much less where I stored the holiday pics from 2008. I ended up paying a couple bucks a month for 100GB with Google Drive. Before you make a decision, compare prices and check to see if you already qualify for freebies.
Reuse and repurpose
One man’s trash is another man’s treasure. If you want lumber, metal or other stuff for DIY projects, get familiar with your local transfer station. It’s a triple whammy: Anything you can repurpose rather than throwing in a landfill helps to save the environment, puts more cash in your pocket, and increases your #skills.
Be careful with Daily Deal coupons
Sure, you can get great discounts – sometimes as high as 90 per cent. Companies offer their services at a loss, hoping to get repeat business from the flood of voucher-wielding customers. However, plenty of those losses are made up for through ‘breakage’, when people are too lazy or forgetful to get round to using the vouchers.
Impulse buying and daily deals go together like spaghetti and meatballs. The golden rule is that you can only win by buying stuff you were going to spend money on anyway. I’ve saved a bomb by using vouchers to get my teeth checked and cleaned at a couple of local dentists, for example.
Buy your own whiteware
Renting appliances is generally a dumb idea. In one flat, I figured out we could save up and buy a really nice fridge for the same amount we were spending on a rental each year. There are also all sorts of hidden fees, for late payments, insurance and other stuff. One company wanted to charge an extra $65 to hoist an appliance around a tricky corner.
Check every contract
Once a year, check all your financial pipes for blockages or dangerous build-ups. That means reviewing your insurance, power, internet, phone, TV and other service providers. Make sure you’re getting value for each and every one of them, and don’t be afraid to ask for a deal. I usually do this financial spring-cleaning during Austere August.
Make the world your gym
There’s something perverse about climbing into a large, gas-guzzling vehicle, driving a single passenger across town, and proceeding to run on a treadmill while flicking through magazines or watching TV before driving home again. If there are no decent tracks to run or power walk around your neighbourhood, at least find a local park or reserve you can drive to.
If you’re into building muscle, take it back to basics with the art of calisthenics.
UPDATE: Check out ‘The Portable Travel Gym That Fits in Your Pocket‘ for an introduction to bodyweight fitness.
Watch out for gym fish-hooks
Some people need the gym for the social atmosphere and classes, to train for their sport, or to smash weights. Self-improvement is almost always a great investment. Just don’t get so pumped up with enthusiasm about your new beach bod that you forget to read the fine print.
Gyms often charge joining fees, cancellation fees and transfer fees. You should be able to negotiate joining fees to nothing or take advantage of regular special offers, so keep an eye out.
A big part of the gym business model involves exploiting suckers who buy a $1000 membership in a burst of enthusiasm and then never use it. Don’t be that person.
Declare war on mould and moisture
Asthma, allergies and infections mean visits to the doctor or hospital, expensive meds, sick days, and lost productivity. Vinegar or diluted bleach works fine for tackling mould, and it’s literally five times cheaper than the magic potions at the supermarket.
Prevention is the best strategy. Keep windows and doors open as much as possible, wipe down condensation on windows and sills, and leave a gap between furniture and outside walls. Don’t dry laundry indoors if you can help it, and cut down on indoor plants. Keep pots covered on the stove, and always use extractor fans.
Ditch commercial cleaners
Baking soda is useful for much more than achieving a tray of perfect muffins. As a mild abrasive, it’s great at wearing away stains. The results are explosive when it’s paired up with its trusty sidekick, white vinegar.
There’s no need to have 17 expensive (and toxic) bottles of chemicals under the sink to tackle different cleaning tasks. With these two ingredients you can make your own toilet cleaner, kitchen spray, carpet cleaner, oven cleaner, drain cleaner, shampoo, teeth whitener, and body scrub.
Brush your teeth
When you think about the word “investing”, what springs to mind? Probably not standing at the basin, floss in hand, trying to dislodge a stubborn morsel of meat from between your molars.
Dental work is notoriously expensive; a lesson literally drilled into you each time you get a filling.
Put your money where your mouth is by spending five minutes a day taking care of oral hygiene. It will pay enormous dividends. File this one in the “Thanks, Captain Obvious” category.
Operating on your health insurance bill
Health is the last place you want to pinch pennies. But if you take a scalpel to the wasteful bits of your insurance policy, you should be able to slice the bill in half.
Insurers like it when you have some skin in the game, and committing to healthy lifestyles might earn you a discount of 10 per cent. If you manage to stay in rude good health for a couple of years, you may qualify for a no-claims bonus that can net another 10 per cent or so.
If you’ve made a decision to get cover, your first port of call should be your employer or union. They’ll usually get better deals by buying in bulk from the insurer and will often further subsidise the costs themselves. Otherwise, be sure to shop around and get plenty of quotes. There can be thousands of dollars of difference between similar policies.
Shave like your grandad did
The business model behind the shaving industry is pure genius. Razors are cheap, even from the top brands. The catch is that they only work with specific cartridges. That means you’re locked into buying eye-wateringly expensive replacements for the Turbo-Mach Titanium ProPower 3000 until the end of time.
Old-school single blade safety razors like your dad or grandad used are the way to go. They’re about 10 times cheaper per shave, and dermatologists say they’re just as good (if not better).
It’s about six inches long, vibrates, and may be the greatest item you ever buy.
I’m talking, of course, about a multipurpose hair clipper. This handy tool is cheap to buy, and should last more or less forever. Cutting hair is not exactly brain surgery. Over the years I’ve had my flatmates, girlfriends, and relatives trim my hair. Apart from one unfortunate divot the day before a big presentation, there’s never been a problem.
It might be tougher for ladies, but it’s good enough for Beyoncé. Trainee hairdressers are always keen to practice their salon skills too, which might be a slightly less terrifying option.
Kill your hot water bill
If your hot water cylinder has an adjustable thermostat, it should be set to about 60°C. Any higher, and you’re burning cash. Don’t try and set it any lower, or it could become a cosy home for a family of Legionella bacteria that will bring you to a painful, chest-rattling death.
If you’re hard enough, take cold showers. Otherwise you could get a waterproof timer and program it to scream at you when you’ve been “thinking” for too long. If you love long, luxurious showers, at least switch from a 12 litre showerhead to a low-flow one.
Using your dishwasher is more efficient than pulling on rubber gloves and washing up by hand. Make sure each load is full, and use cold water for any rinses.
Keep the heat in
Insulation is key. If you’re renting, you can’t exactly rip open the gib and start stuffing fiberglass everywhere, but there are a few makeshift measures that help a lot. Fill in old chimneys with rags or old pillows to block off chills. Use draught-stoppers along the bottom of doors, and lined curtains to keep the heat in at night.
Double glazing for windows is crazy expensive. If you can’t afford it or you’re renting, hardware stores have temporary stick-on plastic films that do a good job on the cheap. If you’re not too house-proud, tape bubble wrap onto the glass. You won’t be able to see much, but you’ll be warm.
Your own body burns at a toasty 37 degrees, but most of the heat disappears into the air. Trapping it with clothing makes a big difference. Wearing one layer of thermal undies is the equivalent of turning the thermostat up by about 4 degrees.
If your only heating source is a portable heater, go for electric over gas. They’re good for heating small, specific spaces, and should be used only in the rooms you’re actually in. No point warming up an empty hallway.
The 30 year old living in mum’s basement and living off heat-and-eat lasagne toppers isn’t a greasy slob – he’s an energy efficiency crusader! Microwaves concentrate heat waves directly into food, meaning they’re up to 80 per cent more efficient for cooking or reheating than regular ovens. You can also whip up a surprisingly versatile range of foods.
Shut a piece of paper in the door. If it slips out, you’re bleeding precious heat, and need to replace the seals. Keep the door closed as much as possible during cooking. One quick fix is to keep the door clean at all times, so you don’t have to open it to salivate over your culinary masterpiece. Put your food in the oven as soon as it’s preheated, and turn it off 10 minutes before the end of the cooking time. The retained heat will finish it off.
Cook in batches wherever possible. I had terrible nightmares after watching someone cook one single baked potato with the oven on full blast.
Finally, when you’re using the stovetop always choose the smallest pan you can, and keep lids on at all times, or you’ll use three times as much power.
Pull the plug on appliance costs
If you’ve got an old beer fridge, it’s burning more than a hundred bucks every year which would be much better spent on beer. If you need lots of space, one large fridge is more efficient than a couple of smaller ones. Do the same trick with a piece of paper to test the fridge seals. If it slips out, you’re losing precious energy.
In the lounge and bedrooms, hook everything up to one multiboard with surge protection, so you can switch all the blinking lights off at once.
In the bathroom, the heated towel rail is the biggest offender. Either get religious about switching it off, or install a timer.
Every power company has different contracts, sweeteners, special deals, and gas/electricity combos. You’d need to employ an army of boffins to gather and crunch all the info to figure out which one is best for you. Luckily for New Zealanders, someone’s done just that. The Powerswitch website has a constantly updated database, and offers a free step-by-step process for figuring out which company is best. A grand total of five minutes’ work saved me $250. Overseas readers – let me know if there’s a similar service in your country, and I’ll add it.
Cold water washes
If you think you need hot water to clean your T-shirts, you’re dramatically over-estimating the potency of your own stank. Cold washes work fine for light soiling, and they’re 10 times cheaper. Do a warm or hot wash every once in awhile to clean out gunk from the machine, and dissolve powder in hot water before you throw it in.
Running a clothes dryer is also a crazy waste of money, given that the sun provides bountiful energy for free while also killing gremlins and fading stains. In the depths of winter, you can dry clothes on a hanger inside (somewhere where moisture won’t be a problem).
Clear debt before you invest
Repaying high-interest debt gives you a guaranteed tax-free return which is difficult to beat. Sort that out before you even think about investing. If you have a super low mortgage interest rate, the decision isn’t quite so clearcut.
Avoid overdraft fees
If you keep getting stung by your bank for accidentally going into overdraft, sign up for text or email alerts to warn you when your balance drops below a certain level.
God helps those who help themselves
Under Old Testament law, failing to give 10 per cent of your income basically means you’re robbing God. There’s a lot of pressure to tithe in some communities, which makes life hard for those who are already on struggle street.
There’s a line of thinking that if you’re in financial trouble, you should give even more generously, and the big man upstairs will take care of you. Relying on divine intervention to solve your debt problems is dumb. If you’re in the red already, the big fella will understand you need to divert every spare cent into digging yourself out of the hole.
Take your sweet time on student loan payments
This one’s for New Zealanders who enjoy interest-free student loans. Unlike any other debt, it makes sense to repay it as slowly as possible. Inflation becomes your BFF, nibbling away at the “real” value of your debt over time.
That would be reason enough to dawdle, but there’s another half to the double-whammy. If you repaid your student debt immediately, that money is gone forever. Instead, you could be putting those dollars to work, earning more money through investment income.
Ask the bank to sharpen its pencil
Gone are the days when bank managers sat behind mahogany desks and forced the lowly peasants to grovel before them. If you’re a good borrower, they want your business. Don’t be shy about asking for a better mortgage rate. The worst that can happen is they say no.
Let’s rewind through time to ancient Rome, 45 BC, February 14. If you’re a man, you’ve probably spent the morning sacrificing dogs and goats in a cave. Once you’ve skinned them, you run naked through the streets, hitting ladies with the bloody hides. If you’re a woman, you’re eagerly lined up for a good whipping to boost your fertility.
This is pretty twisted, but I’d argue the modern incarnation of Valentine’s Day is even worse. All the rituals we associate with true love have been engineered by marketers hungry for profit. We’ve replaced a good old-fashioned orgy with an orgy of mindless consumerism.
Valentine’s Day might be a sham Hallmark Holiday, but it’s not beyond salvation. Here’s a rundown on how to restore romance and ditch the crass commercial stuff:
Our immediate family has more or less abandoned gift-giving, instead focusing on the important stuff – eating, drinking, and trying not to murder one another. A less drastic measure would be to do a ‘secret santa’ where you get assigned one person to buy a gift for, and get one in return.
I wouldn’t do that for kids, but spending heaps on the real littlies doesn’t make much sense. Four year-olds don’t know they’re wearing designer clothes, and won’t fit them a year later. Anyone who’s spent time around small children also knows that fancy toys will often be discarded for the packaging they arrived in.
An economist’s guide to gifts
Economist Santa has a lot to teach us. Someone has to be the voice of reason, and give newspaper columnists a convenient cover for their own unpopular opinions.
Regift unwanted presents
Selling or regifting unwanted presents is less wasteful than leaving them to moulder away in your garage, and can save some cash. However, there are a few rules of engagement to abide by.
Jesus seemed like a pretty solid dude, delivering a strong message of frugality alongside all the other stuff. Naturally, we celebrate his death and rebirth by gorging ourselves on treats until we puke, and buying mass-produced plastic junk.
Chocolate’s awesome, so I’m not actually opposed to this. However, I do resent paying literally four times the regular price because it’s been moulded into the shape of an animal or egg.
If you insist on nibbling Mr Bunny’s ears one by one, chewing off his face, and then mutilating the rest of his broken body, wait for the post-holiday discounts. Everyone immediately loses interest in tinfoil-wrapped novelties, and the prices are slashed to nothing.
Get travel insurance
If you head overseas without cover, you’re playing a dangerous game. Always get insurance, and be sure to read the fine print because most insurers have a list of exclusions as long as your arm. To save money, you can self-insure by making the excess (co-pay) as high as possible, and by ditching cover for the likes of missed flights or possessions. Personally, I only want protection for the big stuff, like medical evacuation or hospital bills.
Strategies for cheap flights
As someone who lives on a tiny island at the arse-end of the world, I’ve had to get pretty good at figuring out how to fly internationally as cheaply as possible. Here are my seven strategies.
Cheap hotels and accommodation
It was 2am in Phnom Penh, Cambodia – the wild west of Asia – when someone burst into my locked alleyway ‘hotel’ room, awakening me from my slumber. I screamed my lungs out until they left, wedged a chair under the doorknob, and decided to cancel the rest of my stay. The dead cockroaches and suspicious stains on the walls probably should have raised a red flag but I couldn’t resist the rock-bottom price.
It’s been a steep learning curve at times, but I feel like I’ve finally figured out how to score cheap accommodation while travelling, without sacrificing comfort or safety.
The best way to withdraw money overseas
If you’re not careful, 5 to 10 per cent of your spending money will disappear into the banks’ pockets before you even get the chance to see it. Fortunately, there are a few tricks that can limit the damage.
NOTE: this one’s mostly specific to New Zealanders.
Take a free road trip this summer
Fancy taking a Mercedes-Benz CLK convertible for a spin? Better yet, why not hit the road for a four-day holiday? There’s a free tank of premium gas, and the insurance is all covered too.
Here’s a little secret that’s well known in backpacker circles, but not so much amongst the broader public: Just about every car and campervan hire company offers free or discounted trips to people willing to relocate their vehicles to where they’re needed. If you’ve got your driver’s licence, you’re over 18, and you have a pulse, you’re eligible.
Nab a cheap rental car
Renting a car is only expensive if you get sucked into buying unnecessary add-ons or get stung by unexpected fees. Follow these eight steps, and you won’t have to watch your travel cash go up in a cloud of smoke.
After one of my friends had his second kid, I asked him how people could save money on baby costs.
“Don’t have one,” he said. So far that strategy has worked out great for me, but it’s something I’ll have to face one day.
I consulted another, more helpful, friend. She said the baby industry has exploited the anxiety and stress new parents face by creating an enormous array of unnecessary products. That doesn’t mean you have to buy into it:
Clothes and gear
For the first six months, you only need a bare minimum, especially with a deluge of gifts. Designer labels are ridiculous, given baby is likely to show its appreciation by spewing on them.
All the big stuff like strollers, cots, bassinets and high chairs can be bought secondhand for half price or less, which also makes it more affordable to get high-quality gear.
In the early days, breast is best (if possible). It’s much cheaper, and apparently healthier too. Moving on to solids, my friend buys whatever veggies are cheap, boils them up and mashes them. Carrots, kumara and pumpkin are popular. To add iron, she keeps a steak in a bag in the freezer, and grates it onto the veggies at dinnertime before warming the whole mess in the microwave.
As far as nappies go, you can save a small fortune by using reusable cloth ones. For the hardcore penny-pinchers, there’s even a market for secondhand nappies. For everyone else, there’s disposables. My friend says they’re expensive, but you should never pay full price. Punch “discount nappies” into Google to find the best deal.
The science of pocket money
There’s a big debate in parenting circles about whether pocket money should be tied to doing chores.
The carrot and the stick is so last century. That’s the main takeaway from Drive, a book on the new science of motivation. It’s mostly about management, but it has some fascinating insights for managing little ones, too.
They say pets often resemble their owners, so it’s no surprise that 35 per cent of animal companions in the United States are overweight. The easiest way to save money on food is to cut down portion size. Bulk-buying is smart too, if you can find a place to keep it away from prying paws.
If you haven’t got a pet yet, think about adopting if possible. SPCA adoption fees are much cheaper than buying, and include vaccinations and medical checks.
It also pays to invest in basic preventive care like vaccinations, spaying and neutering. The upfront cost could save a horrendous vet bill down the line. Shopping around between vets is crucial too, as there are massive differences in price.
Embrace the vaping revolution
In New Zealand, cynical tax hikes have made smoking absolutely ruinous to your finances. Telling people to “just quit” is not super helpful. One option is switching to e-cigarettes, which are about 95 per cent less harmful than tobacco. They contain nicotine, but don’t have the other 3999-odd chemicals. Some people use them to quit, by slowly cutting down the amount of nicotine in the fluid.
The long-term effects of vaping are not yet known. We do know one thing for sure: Switching to e-cigarettes will save you a small fortune.
Be a cheap drunk
Nights out on the town are dangerous, as anyone who’s woken up with a killer hangover and an empty wallet knows all too well. Pre-loading responsibly is your friend here, as is bringing a finite amount of cash, rather than a card.
For winos, give cleanskins a try. These are generic-label bottles which vineyards use to sell off extra plonk without diluting their brand power. A $10 bottle could be worth $20 or $30, but you won’t know until you’ve got it home and swirling in the glass. Stick to young, easy-drinking whites like sauvignon blanc or pinot gris, and you’ll have less chance of getting a dud.
If a tumbler of gin or whiskey is your go-to, make sure you always have enough holiday cash left over to max out the duty-free allowance on the way home. Much of the price of alcohol is tax, so you can save a shitload.
For beer drinkers, the options are limited. I brew my own, which is both a lot of fun and dirt-cheap. It’s a bit of an artform, but barring total disaster, the fruits of your labour are drinkable from day one.
Weed vs alcohol
One of the highlights of a recent trip to the United States was visiting a legal weed store.
It’s like Charlie and The Chocolate Factory for grown-ups: a cave of wonders filled with candies and baked goods and vape pens and resins and all sorts of hi-tech paraphernalia that make the traditional Powerade bottle and socket wrench combo look like primitive Stone Age relics.
With a cannabis referendum on the horizon, it’s time to ask the important question: could smoking pot be even cheaper than boozing?
Win the lottery
If you bought a 15 line Powerball ticket every week for 60 years, your chances of hitting the big one would be a measly 0.12 per cent. To put it another way; after a lifetime of buying enough tickets to wallpaper a house, you’re still 99.88 per cent guaranteed to lose. Lotto is a tax on people who can’t do math.
How much would it take to get you dancing around the lounge? Would $350,000 do the trick? Resist buying that weekly ticket, and it’s yours for the taking. With modest interest over the course of an adult lifetime, you’ll literally save a small fortune. Forget superstitions and lucky numbers. The guaranteed way anyone can win Lotto is to never play it in the first place.
Control your caffeine habit
I’m a junkie – death before decaf – but I’ve got my habit under control. Brewing at home is the way to go, or taking advantage of workplace coffee machines. Of course, there’s no replacement for your favourite blend brewed by a skilled barista. Once again, a really good coffee is a whole lot more enjoyable if it’s an occasional treat, rather than a twice daily routine.
Check your credit report
All your financial indiscretions are right there in red ink, standing out like dogs’ balls. This information is sold to third parties, who will then scrutinise it and pass judgment upon you. The most crucial reason for checking is that there could be mistakes that need to be corrected. Lenders are often slack about updating information with the bureau. That means an old debt you cleared ages ago could still be dragging you down. The worse your credit score, the higher the interest rate you’ll have to pay. That’s if the lender will accept you.
Do your own taxes
Every year, a host of tax refund companies crawl out of the woodwork. “Don’t worry your pretty little head,” goes the sales pitch. “We’ll take care of everything, and if there’s no refund, we won’t charge a fee!”
Once they’ve latched on, they’ll keep their proboscis in your wallet from now until the end of the time. The reason there’s so many refund companies is that it’s money for jam. Most people put tax returns in the too-hard basket, but it’s actually dead easy for ordinary wage or salary earners. I’ve done my own return every year, and have never run into a moment’s trouble. Obviously if you have more complicated tax affairs, an accountant will save you a lot more than their fees.
Claim rebates on donations
Weird fact of the day: The most popular and well-supported charity in New Zealand is almost certainly the Inland Revenue Department. We’re good at giving, which is awesome, but we’re not so good at doing the paperwork.
The school donation is the one that most people forget, but it is tax deductible, so be sure to get a physical receipt and do the paperwork.
Don’t miss out on free cash (New Zealanders)
Apparently, the streets are paved with gold, and even the lowliest urchins are wiping their bums with $50 notes. That’s the only conclusion I can come to, given that almost half the country can’t be bothered collecting $521 of free cash.
If you’re a KiwiSaver member, that’s how much the Government pays out every year as a juicy “tax credit”. All you have to do is stump up at least $1042 towards your retirement savings over the course of the year.
Switch to a low-fee retirement account
If you’re in a really expensive retirement fund, you’ll pay more than $200,000 in fees over 40 years. Fees aren’t the only factor to look for, but they’re right up there. Investment returns can vary hugely from year to year, and a superstar manager one year could be a dud the next. The only constant through good times and bad is that fees are constantly chipping away at your nest egg.
Reconsider life insurance
It is an unpleasant fact of life that every now and again, you have to swallow a dead rat. For the uninitiated: this delightful piece of Kiwi slang refers to finding yourself in a bad situation you have no choice but to accept.
Life insurance is especially likely to stick in your craw. If you live long and prosper, all those premiums you paid were for nothing. The only way to win is to die young and unexpectedly, which is what you might call a pyrrhic victory.
While you can never really win, here are five tips for making sure you gulp the rat down as gracefully as possible:
Once you’ve implemented a bunch of these money-saving tips, you’ll start to free up a firehose of cash. What to do with it all? You could start with the Beginner’s Guide to Becoming a Badass Investor, and follow it up with How a Billionaire Taught Me to Invest Using The Force.
Some other suggestions:
Stay clear of forex trading
The only way you can make money by currency trading is by being consistently right more than 50 per cent of the time. You might think you’re smarter than the average punter, but your opponents are George Soros, Vladimir Putin, and the giant trading banks. You’re playing against the collective intelligence of the entire market at once, and you are a tiny little fish.
Bitcoin is speculation, not investing
Should you invest in cryptocurrency? Anyone who responds with “absolutely” is not to be trusted. On the other hand, anyone who sneers at the question doesn’t know what they’re talking about.
Don’t buy into the ‘ethical investing’ hype
The most fiercely debated question is whether doing good comes at the cost of lower returns for investors. Even after screeds of research, there’s no firm conclusion as to whether shunning “sin stocks” is good or bad for your portfolio.
All of which is a bit of a distraction: I argue that ethical investing doesn’t make a jot of difference, and might even do more harm than good.
Invest like a girl
The world of finance is soaked in testosterone. At the highest level, Wall Street is basically a giant locker-room of blokes competing to outdo one another, complete with chest-bumps and terrible cologne.
If it’s mostly men who are drawn to the world of investing, people tend to assume that’s because they’re naturally better at it. They’re not.
Make sure you’re taking enough risk
Keeping all your retirement funds in defensive assets like cash and bonds could be a $250,000 mistake. That means taking responsibility for choosing the right level of risk for your retirement fund is probably be the single most lucrative money decision you ever make.
Ask for a pay rise
It’s painfully obvious to you that you’re a hardworking legend who deserves to be showered with cash. But you can’t sit around waiting for your boss to finally recognise your brilliance.
Obviously the first step is to actually become awesome at your job. Once you are, convince the powers-that-be how much value you’re adding. Collect examples of the times you saved the business money, suggested improvements, or got great feedback from customers. Get hard figures wherever possible.
Carefully read your job description too. Chances are your role will have shifted from when you signed on the dotted line. Examples of extra responsibilities or new skills are great leverage, as are competing job offers.
Be worthy of a pay rise
The key is adopting an entrepreneurial mindset. Pretend you own the company you’re working for. Rather than do the bare minimum to keep your supervisor off your back, you’ll be looking for opportunities, taking ownership, thinking critically, and planning several steps ahead.
Convert your annual leave into cash
When I left my full-time job in 2016, my final pay was quite a bit fatter than usual. The annual leave I’d accrued over the years had been converted into cash, which made for a lovely little parting gift from my former self.
I enjoyed my job and didn’t have any kids or other responsibilities, so I’d deliberately walked the fine line between taking as little leave as possible without annoying the payroll folks too much.
NOTE: not sure how applicable this is outside of New Zealand.
Become a jack of all trades
Everyone knows someone who’s good at everything; a capable pair of hands in every situation. For me, it’s my dad. He built the house I grew up in, despite not being a builder. He can fix just about anything, butcher and dress out an animal, program a website, cook a decent feed, or change a nappy – you name it. People like my dad exemplify the Kiwi tradition of resourcefulness and getting on with the job.
Becoming a jack of all trades is something we should all aspire to. If you outsource as little as you can to others, and learn as many skills as possible, you can effectively turn spare time into cash.
UPDATE: I’ve expanded this idea into a full post, Specialisation is For Insects.
Start a side-hustle
If you have some spare time on evenings or weekends, you can convert it into cash by working for yourself – creating a micro business that you can put as much or as little into as you want. Sounds great, right? The only question is – what makes a good side-hustle?
Sell unwanted stuff for top dollar
Most of us end up with more stuff than we can ever actually use, which accumulates in garages, junk drawers and the back of the wardrobe, slowly collecting dust.
Depending on how big a hoarder you are, this can be a surprisingly valuable asset – especially if you use a few simple selling tricks to get the most coin for your cast-offs.
Higher study is a good investment for most people, but too many kids are pressured to go to uni simply because it’s expected of them. They’re square pegs hammered into round holes, so it’s no surprise they choose their courses poorly, drop out, or rack up big student debts for no gain.
We should continue to celebrate higher education, but we should also champion the trades, entrepreneurship, retail, online freelancing and other useful and lucrative careers. A degree is not a meal ticket for life, and those that choose alternative paths can do just as well – or better – than their learned peers.
Yes, money can buy happiness
Research makes it clear that incomes are strongly linked with happiness. The interesting thing is that the relationship has diminishing returns, and breaks down completely after a point. According to the most famous study, once you get past US$75,000 there’s no difference in happiness.
I reckon you can keep buying happiness all the way up Maslow’s pyramid. Those who earn a lot but remain miserable must be spending their money on the wrong things. The best thing money can buy is freedom: Freedom from debt, freedom from stress, freedom to spend time with loved ones, freedom to pursue passions and interests.
Squeeze the most joy out of every dollar
Research suggests experiences, not things, provide much better bang for the buck. The key is that experiences are inside you, not an external object. They literally become a part of who you are. While you could argue your iPhone is basically fused with your arm, it’s not quite the same thing.
The other factor is that experiences are unique. They don’t have brand names or model numbers, so it’s easier to avoid getting bogged down in the ‘keeping up with the Jones’ trap.
Practice delayed gratification
The famous ‘marshmallow experiment’ involved leaving young children alone in a room with a marshmallow. The instructions were simple. Eat the marshmallow now, or wait and get a bonus marshmallow after 15 minutes.
The researchers followed all the children throughout their lives. They found that those who waited the 15 minutes were much more successful in almost every field. The financial rewards of delayed gratification are the most powerful of all.
UPDATE: Psychology is having a bit of a replication crisis right now, so take this with a grain of salt. It may be that willpower is not as ‘trainable’ as we thought, and even the concept is still ill-defined.
Treat yourself without the guilt
If you try to resist all life’s finer pleasures, you’ll end up fighting a constant battle against yourself, and draining your limited pool of willpower. On the other hand, shrugging your shoulders and indulging your every whim is not a good solution, either. Fortunately, there is a middle-ground here.
Get your partner on board
Studies have consistently found the number one factor for relationship breakdown isn’t infidelity, or whose turn it is to wash the dishes. It’s money. If you’re not on the same financial wavelength, you’re doomed. Here are some golden rules for helping a loved one see the light.
Overcome an online shopping addiction
Are you on first-name terms with the DHL guy? Is your spare room overflowing with bubble wrap and styrofoam pellets? Have you ever accidentally called out ‘Amazon!’ instead of your partner’s name?
Out-of-control online shopping is one of the more disturbing side-effects of the internet age. Psychologists are still trying to figure out whether it’s a form of OCD, an impulse control disorder, or an actual addiction, like alcoholism.
While they argue over labels, let’s look at solutions.
Be wary of freebies
If you’re not paying for something, you’re not the customer – you’re the product being sold. Television has been doing this since forever. They gave us free shows to watch, and then sold our eyeballs to advertisers. Most people were happy to make this trade-off, because the creep factor wasn’t so obvious. Sure, the morning cartoons ran ads for kids’ toys and Happy Meals, but the targeting was pretty broad.With Google and Facebook et al, we’ve crossed into a new era of mega-creepiness.
Physical freebies also come with strings attached. Marketers have learned how to exploit the rule of reciprocity, a hard-wired social norm from our tribal past. As soon as we get something for free, we feel an obligation. The instinct is so powerful that it works even when the ‘gift’ is uninvited, or it’s something we don’t enjoy.
Set smart goals and New Year resolutions
Each time our planet completes another lap around the nuclear fireball at the centre of the solar system, we mark the occasion by a) getting really drunk, and b) committing to improve our lives during the next rotation.
Everyone manages to nail the getting really drunk part, but not so much the self-improvement thing.
The problem is that the goals we set are terrible. We dream them up on the spur of the moment, so it’s no surprise they quickly fall by the wayside. If you want to join the small minority of people who actually succeed, block off a couple of solid hours for the following exercise.
UPDATE: Check out Goals Gone Wild for an overview of the many ways in which goals fail us.
There you have it: 100+ money saving tips. Hopefully you picked up a few useful ideas. Now you’ve got the knowledge, it’s time to put it into action. Having a system to track your progress and stay motivated is crucial, so be sure to check out my post on Net Worth Tracking and get your free copy of the best net worth spreadsheet on the Internet.