Money Saving Tip – Work the Percentages
November 23, 2007 | Author: Rob | Filed under: Money Matters
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Money is often an enigma to many people. You never get enough and it never lasts long enough to be productive. Money doesn’t have to be an enigma! One of the easiest things you can do to start having more with what you already have is looking at the percentage price difference between comparable items instead of just dollars and cents.
When I’m shopping if I need product X I’ll go to the aisle and look at all the competition. You only need to do this once or twice in the beginning and then you’ll instinctively know for next time which product is best for you. Let’s say item X has a price range of $2.69 – $3.49. Often times you will think who cares it’s only an extra $0.50 - $0.80. The reality is that $3.49 is actually ~30% more expensive (2.69 * 1.3 = 3.497).
Would you pay 30% more for any other comparable item if it was more expensive? Say a dehumidifier for your basement and the price range is from $269.99 - $349.99. Chances are you wouldn’t because you’d look at the price tags and say “I can save a lot of money going with this item and it’s basically the same.” If you want to make all of your dollars go as far as they can you have to be mindful of percentages. Many of us struggle to find enough money for larger items because we routinely squander our money on smaller items which most definitely add up daily, weekly, annually etc…
Courtesy of Flickr
The grocery store is a great place to get a grasp of percentages. If you aren’t great with math I’d recommend you bring a calculator the first few times. Basically look at all the items you buy on a daily / weekly basis and be mindful of what the overall price range is and what segment you are buying. Most items typically have a generic brand, middle of the road brands and then a few brands that are well marketed, easy to reach, have attractive packaging and the most expensive. Take a look at the ingredients if you are skeptical; they are often very similar if not almost identical. Saving 20-30% on many items is a lot easier to accomplish than you would think. All these small transactions by themselves aren’t much but they do add up. To stress my point I want you to come up with a number in your head for the amount of money you spend on groceries weekly. Let’s say you spend $100 a week on groceries as it’s a very easy number to work with. If you follow the plan above and manage to shave 30% off your bill buying essentially the same stuff you’ll be saving $30 a week. That’s $120 a month or $1440 a year! Isn’t it crazy how all those micro payments add up into a rather large sum of money?
Just to make this post fun I’m going to throw in something else. Let’s say you spend $100 a week on groceries but actually play the percentage game and begin saving that $1440 a year. Over the next 10 years that money is $14,440 before any interest! Considering most of us home owners have a 20+ year mortgage; how nice would it be to be able to pay down your mortgage by an extra ~$14,000 before interest over 10 years while keeping the same work week and eating habits? Chances are if you have a larger family you’ll spend more than $100 a week and therefore save even more. If you have a newborn child and begin practicing this percentage savings game by the time that child is 20 years old you will of saved over $28,880(before interest) on your grocery bills; enough to get them going in college.
There are lots of ways to save big money from our daily lives by playing the percentages. Take the time to see for yourself how much you can save. If you went from all the top priced goods to lower ones you may save even more then the figures mentioned above. Paying attention to percentage differences isn’t only applicable to groceries. With some practice it will ideally become a mindset and something that routinely runs through your subconscious before you purchase anything.
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4 people have left comments
Great tips for saving money you got here! I think link you mentioned the grocery store is an amazing place to make your budget have some extra coin. Even tho I make a nice salary I will never shop at the high end retail grocery outlets in Canada. I would rather go to the economical grocery stores and save tons of money!
Thanks for the tips I really need them my first OSAP payment comes out at the end of this month.
OMG /cry
Solid advice! Trying comparable products not only helps save money but also adds to the spice of life. And who knows, you might even like the cheaper product better!
You are a wise man. I had not thought in terms of percentages, but I do try to save every penny I can. Saving 50 cents once is not a lot, but saving 50 cents often, adds up indeed.
I guess, with all the coupons that I use when I go grocery shopping, my percentage savings would be about 50%-60% ! I never thought of it that way.