I was asked not long ago what my number one best frugal tip is.
If you Google best frugal tip, you’ll find articles that have 141 best frugal tips, 66 best frugal tips, 50 frugal tips… There are potentially thousands of ways to be frugal.
But the best one? THE NUMBER ONE most important frugal tip?
Put on the spot, I found myself uncharacteristically speechless.
I pondered and I concluded that if we all only do one frugal thing, it should be this:
Money has a sneaky habit of creeping out of our wallets while we’re not paying attention. It slips unnoticed into bins or down drains or lurks in the back of cupboards with a sale sticker on it, gathering dust until eventually it’s thrown away.
We wheel it out to the curb in the rain dutifully each week, during the ad break enticing us to spend more, so we can forget about how much of it we’ve already thrown away.
Almost all frugal tips can be boiled down to the simple philosophy of reducing waste. Below are 8 ways it’s easy to waste money and how to reduce the waste and save.
8 ways you could be wasting your hard earned money
We’ve all been there: when our eyes (and our refrigerators) are bigger than bellies. And at the end of the shopping week, there’s something limp and furry hiding at the bottom of the crisper.
On average, we throw away around 20% of the food we buy. According to this source, that adds up to $1,000 a year for the average Australian household. Doing the maths, that would suggest the average household spends $96 on groceries a week. I’m betting that for some households, that grocery expense is much higher and therefore cost of waste could be higher as well.
Some of the tips for reducing food waste also save you time and effort, making them a double bonus. Check out the resource page for reducing food waste.
It’s easy to waste electricity because we don’t actually see it. While throwing food in the bin is a tangible reminder of money gone, we can’t see the electricity used when appliances are on standby, for instance.
According to the ABS, the average Australian household spent about $99 a week on energy in 2012. Approximately 3% of energy usage is appliances on standby, which adds up to an average of $150 a year.
Of course, there are lots of other ways we can waste electricity besides standby, so the bills can quickly add up. You can find detailed saving tips for each area of energy consumption in the home on the saving electricity resource page.
The average Australian uses around 200 litres of water per day. Of this only 5 – 10 litres is for basic survival (drinking and cooking), the rest is for washing, showering and flushing. About half the domestic water supplied ends up as waste water [source].
At $2.30 per kilolitre (how much I currently pay for water), a household of 4 could be potentially flushing over $300 down the drain a year unnecessarily. It’s quite easy and cheap to save water. Check out these tips on saving water for ideas on how to reduce water waste.
In our modern, busy world, convenience can be such a blessing. The problem is, rather than buying an item once and using it over and over, we use a disposable once and buy it over and over, which of course eats away at your income and isn’t much good for the environment either.
Maintaining the things we own helps them to last longer. We can choose to work a little to maintain the things we have or to work a lot to continually replace things as they wear out.
Unfortunately, we can no longer fix everything we own. Think of a broken TV, where a service man (if you can find one) either can’t repair it or will tell you it’s not worth it. Thanks to the economics of designed obsolescence, things can’t always be repaired. So it pays in the long run to choose quality over cheapness,look after what you buy and use it until it no longer works. It pays to avoid fashion trends and the trap of constantly upgrading to the latest and greatest gadgets.
It is the neglect of timely repair that makes rebuilding necessary.” Richard Whately
Most of us are drowning in stuff we don’t need, myself included. That stuff represents hard earned wages doing nothing but taking up space and gathering dust. Clutter also wastes your personal energy as you clean, store, organise and otherwise deal with all that stuff.
The best way to deal with clutter is to stop buying it. That equals money that can be redirected to something much more important. Ask yourself: do I really need it? Can I borrow it? Hire it? Make do without it? Improvise? And if I do really need it, can I buy it second-hand or on sale?
[See also: Decluttering for busy people.]
7. Unnecessary Debt
What are we using to pay for all our new goods and clutter? More likely than not, debt.
Gone are the days of save now, buy when you can afford it. Instead, the mantra of buy now, pay later, has left Australian households as one of the most indebted in the world [source].
According to the ASIC’s MoneySmart website, the average Australian credit card holder owes around $4,300, paying around $700 in interest each year. Compound interest is great if it’s increasing your savings, but it adds up quickly to a lot of wasted money if it’s compounding your debts.
For information on getting out of debt, download the free debt elimination eBook.
8. Being disorganised
Have you ever paid a fee on a late paid bill? I have. It was $15 down the drain for being disorganised. What’s worse is I did it two months in a row!
There are many ways being disorganised can lead to wasted money: late fees, eating takeaway because you haven’t got any food at home, buying things to replace what you can’t find at home amongst the clutter, getting speeding fines when you’re running late.
Despite what Pinterest have us believe, being organised has nothing to do with schedules and calendars and command centres and storage systems. That just adds an extra layer of complication, stress and work. It’s not getting at the root cause of the problem which is too much stuff and too much stuff to do.
The foundation of being organised is simplifying. Simplifying your schedule, getting rid of the clutter, simplifying your life. But that’s a story for another day.
Financial freedom starts with the knowledge that we don’t need to waste money on stuff we don’t need to live a thriving life. When we cut out all that waste, it makes room for what’s important, and focusing on what’s important is the path to true contentment.
What other ways is it possible to waste money? What are your tips for stopping the waste?