Last year for Christmas we released an article explaining a saving game I apply and love, found on another finance blog. Some time before that we also provided the digital alternative to a Piggy bank. Well, now that I’m in a break I was thinking of creating a sort of series of “savings tips“, I stumbled upon or/and used, and I will add this tag to all relevant articles, so you guys could see them in the Related Articles content.
Just to create a summary of all the articles till now:
This time, we will talk about a nice savings break-down I found in the book “Master the Game” by Tony Robbins. I am not applying this savings strategy, but will do an exercise just for the fun of it. Maybe I will be inclined afterwards, who knows.
The Saving Method
There are six steps to this method of filling a table with your expenses.
Step 1: Do a list with all the recurrent spending you have and can eliminate: car insurance, phone bills, lunch money, activities money, etc.
Step 2: How much do they cost? See which one is the biggest and do a breakdown of it. See how frequent it is (number of times per week) and see the total monthly costs
Step 3: Quantize the joy that brings you from a scale of 1 to 10 (1 – it brings distress, 10 – extremely pleasant). For this step I will also quantize the need ( 1 – no need at all and 10 – definitely need it) and replace the emotion with need.
Step 4: To help you cross the spending of the list, imagine how Financial Independence feels or will make you feel. How much money will you need now? And for this, we did an exercise found in this article: How much do you really need.
Step 5: This step is a bit tricky. You have to decide for the spending whether it’s worth it to have it or not. Could you be happy without it in FI? or Not? Well guys, i think this step can be merged with number 4 if you ask me. And I will do the judgement on that criteria.
Step 6: Write down three of the expenses you want to cut off. See how much you can put in the savings account.
And to do this, our friendly advisor, Tony, offered us the following table:
How would we complete it
First of all, I started by writing some recursive expenses I had in the past, some of them we still have. The second step was to add a new column in the table to represent the replacement cost.
As you can see, some of them are bills that you can’t cut off and the others have a high grade of joy. I purposely took these items, as the ones that bring less excitement are already reduced to minimum (like clothes).
We had two phone bills, that totaled around 20USD per month, so we reduced the cost by replacing the monthly subscription with better prepaid credit options. Now we have better benefits at half the price. We loved taking one or two lattes in town, at least twice per week. Well now we cut that cost and we are buying just when we take the lunch out and we bought a Nespresso machine at home, for the same taste ( that’s also why we have a high cost in the Coffee department). We try to drink less coffee, but you just have to enjoy the taste of life from time to time.
I used to buy at least two pc games per month, now I add them to Wishlist and buy the games when they are at least 50% OFF or I get a good discount at bundles. For the internet provider, there was a negotiation that reduced the cost in half for the same benefits ( that were of interest).
By doing part of this exercise, we were able to save 84 USD a month that can go into a saving account (1008 USD a year).
What is your opinion on this exercise? I would like to see your examples.
Also because I like this method of savings, tomorrow I will be back with the “Latte Factor” from David Bach.
Thank you guys for being here. Stay safe!( and tell your friends about this blog – I am trying to raise the subscription base)
Disclaimer: I am not a financial consultant, all the information you find here are my decisions, I taken at that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money.
P.S. Header Image from TheDigitalWay on Pixabay