Episode 4: How do I save money?
We all know that one person in our lives, on our TVs or in our phones that are stingy, frugal, or just plain obsessive about saving money. From cooking food in a dishwasher to ignoring expiration dates, or eating ramen for every meal, these kinds of habits can seem uncomfortable at best or life-threatening at worst. Does that mean you need to be stingy to save money? Absolutely not!
When we save money, what we're doing is essentially minimizing our cost of living - we're being efficient about how we spend. As we've discussed in the budgeting section, what you spend on will be very, very subjective. Your needs, priorities and wants are going to look very different depending on who you are, where you're living and what your specific needs, interests and goals are. Everything from your dietary requirements to your gender can make those differences for your budget!
Yet, even when we have a budget, you might notice that the overall amount of money that you spend doesn't actually decrease, regardless of your attempt to allocate. That's where saving money can make up the discrepancy - we want to keep spending on the stuff we are, but in a way that we're paying less or being more efficient. That's the line between efficiency and frugality - rather than seeking to actively make our quality of life worse for the sake of a few bucks, we're trying to maintain our quality of life with less resources and capital.
Consider grocery bills - there are a thousand tiny factors that will actually impact how much you pay for your groceries. Let's track a typical groceries Saturday - if you have a car, you drive to your nearest supermarket (let's be real, even if there are cheaper supermarkets in proximity, you probably will not actually go unless they have something your nearby supermarket doesn't) and walk into the store. Maybe you have specific dietary requirements that mean you have to look for specific products like gluten-free or vegan food. You also might naturally gravitate to certain flavors that are more or less widely available in your region. If you try to buy strawberries, your favorite fruit, when they're off-season in your region, they are just going to be more expensive than if you bought them in-season.
Once you realize and recognize these little things that affect your bill, you can go in and change them! Instead of buying fruit that's off-season, you could maybe search for fruit grown locally during that season, or even buy from farmer's markets, and still enjoy fruit! Or, you could look to see if buying the specific fruit or item you want online is cheaper than the transport and specialty costs of getting the item yourself. By making small changes, you are using less money and less energy to actually get something you want, instead of simply not getting it or doing absurd things to avoid needing it.
It can be difficult to find reliable and widely applicable advice on the internet when it comes to saving money. That's because saving is often limited by your specific lifestyle needs, and is a subjective process. There are three simple principles to follow when figuring out the best way to save that works for you. Rather than trying every random hack you see, you can instead find your own ways to save based on your context and critical thinking.
Be selfish with your stuff
This doesn't mean stop buying birthday presents for your friends. Think about it this way instead - we want to buy things that bring us actual gains and happiness in our lives. What we want to do is keep ourselves alive and thriving - so we want to invest in what actually helps us do that, and not all of the things we often buy actually do that. In order to save money, we can identify the things in our lives that don't actually bring us any actual benefit, whether through health, joy or any other priority.
For health, it's important to consider that we are made to feel that we "need" things that we actually don't - everything from expensive supplements to branded beauty treatments are given to us as necessities for a healthy, long life. Often, these are associated to standards of what healthy looks like - for example, in Southeast Asia, extremely rigid beauty standards around fairness of skin color have increased the use of skin-bleaching products which can actually lead to severe facial burns and other skin conditions.
Another aspect of the health motivator for buying unnecessary things are safety myths. There are many products out there that exist to address safety concerns that don't necessarily exist. Additionally, we are often inclined to think that more expensive, branded versions of products are actually the safer ones. In some cases, this is true, like when considering jewelry. Often, cheaper jewelry is made from metals that oxidize and flake easily, that can cause irritation and can be detrimental for sensitive skin. Alternatively, some brands conflate the actual safety concerns for products. For example, some grocery stores will call into question the safety of farmers' market products since they aren't pre-washed or packaged. In reality, produce from markets are not particularly more likely to be rotten or fresh than products at a grocery store - the same quality checking and maybe an extra wash are often sufficient to find a good product.
The first step to being selfish with your money is making sure that you recognize when someone is making false claims to your health or safety to get you to spend money that you don't need. With these claims, it's important to recognize that there is no one cookie-cutter image of what healthy living looks like, or what is safe in your specific context. Often, a google-search or conversation with a medical professional can help you identify when something isn't actually that bad for you, especially when it can help with your finances.
Beyond that, it's important to make sure that what you're spending on actually brings you real gains in your quality of life. Your purchase should make you feel better about your life in some way for a significant amount of time, not just momentarily. While we already explored the idea of financial priorities in Episode 4, we can also look at the difference between short-term happiness, often known as pleasure, and long-term happiness, more commonly known as joy. We want to ensure that we're buying for joy more than we're buying for pleasure. This is a subjective process that needs you to reflect on your own stuff and question what brings you long-term satisfaction!
Price is not always equivalent to quality
One common financial misconception is the idea that the price of the goods and items you will buy are equivalent to their actual quality and longevity. This is based on a very traditional economic view. Remember the supply and demand rule? We can see supply as tied to demand - if something is expensive, it's less accessible, which means that there's a low supply of it. We might also be inclined to think that it's better in quality, since the demand, and subsequently the price, is higher. Unfortunately, the real world is full of marketing and other methods to artificially drive up the demand for items because of perceived exclusivity or importance.
Consider luxury fast-fashion, for example. Many luxury brands produce their clothing line in the same manufacturing plants as other fast-fashion brands. As such, the quality of clothing is often not at the expected quality for those items. This is because their brand model is driven on quantity purchasing instead - they can maximize profit by coming out with new trends and designs, and then getting consumers to spend a lot of money on them. Other stores will often mark up prices significantly for arbitrary labels or measures that don't necessarily qualify as being better or a higher-quality than a product that is cheaper. The term "free-range" for chickens, while possibly implying a very-happy bird in a wide open field, might actually only mean that they had a square meter to move around.
As a result of this trend, many brands also build-in planned obsolescence into their products. This is a design feature that will cause a product to become unusable after a set period (often a very short one), after which they can incentivize a consumer to buy a new product. For example, IKEA furniture and other retail furniture will use plywood and other cost-effective materials to create furniture that don't necessarily last for a long time.
That's why we can't automatically assume that something is better just because it costs more. Instead, we can challenge that by doing our own quality assessments. Regardless of where you buy and what you're buying, you can assess the quality of an item by running a quick google search or finding a product review or YouTube video to tell you more.
Make time work for you, not against you.
When it comes to saving, time can be your best friend or your worst enemy. That's because when we save on things, we're actually only making very little immediate gains. Saving $50 cents on your coffee or $5 on your groceries doesn't seem like that much of a gain to most people! This makes it tempting to see small purchases as nonexistent or unimportant, which has serious long-term consequences for your financial status.
Consider the model of after-pay also known as buy-now-pay-later (BNPL) wallets. These are essentially companies that help you pay for smaller consumer items and bills in smaller installments. Companies like Klarna, Afterpay and Affirm can help you make bills more manageable. For example, instead of paying for a pair of high-quality shoes up-front, you can pay for them with four installments that become easier to actually meet with your income.
However, this can be a slippery slope, as you begin to buy too many things through BNPL systems. Let's say you buy an iPhone 15 that costs $700, but you only pay the first installment of $100 dollars, and then buy deodorant that was $80, but only had a first installment of $10. This might give you the false impression that you only have to pay $110 for both items, but over time, you have $780 to pay for! Over time, this can lead to the formation of bad debt and credit score, which can have further ramifications on your financial situation. Worst-case scenario, your stuff can be "repossessed" or taken away.
That's why being mindful of how small purchases can compound, or build up over time, is a key part of saving in daily life. Try to think of a thing you buy regularly that doesn't seem to cost a lot of money. Now, count the number of times you've bought it this year! You'll probably find that you pay for it a lot more than you think. Event though a single coffee order might be $5, paying that every day, multiple times a week, over months, can lead to a $2000 bill at the end of the year, just for coffee!
We can use the same principle to keep ourselves motivated when saving. Even though you might only save $3 dollars on a purchase now, if you keep saving little amounts, it will show for big game in the future. Keep chipping away and stay motivated, and we promise you will save a lot more than you think!
At the end of the day, the savings that you do are really dependent on who you are as a person, your specific geographic location and context, and how you want to spend your money. Following these three general principles can give you a starting point to begin saving, and you can always add to this knowledge in your own unique way.