Saving is important; however, it doesn’t come easy for everyone. A common challenge is identifying activities or habits in our everyday lives which may seem minimal on an individual basis, but in aggregate account for a significant portion of annual earnings.
“Beware of little expenses; a small leak will sink a great ship”- Benjamin Franklin.
This saying is so true, and I hope to illustrate it in this blog.
The Snowball Effect…..
If I asked you how much you spend per year on dining out, would you know the answer? Do you know the longer term financial impact?
As mentioned in an earlier blog, I track my expenses to get a clear picture of my spending habits. This is used to identify areas that can be cut, and helps me evaluate my needs versus my wants.
Many of us don’t realize how much our habits actually cost. Your daily coffee or latte may seem insignificant at the time, as it’s only a few dollars a day. However, have you done the math to see what that costs per month or year? If you buy a latte every workday, at an estimated cost of $6 you are looking at $30 per week. Not so bad, right? Well that equates to $1,560 per year! Over $1,500 annually on coffee – does that not seem excessive?
What about lunch? If you are one of those individuals who hate packing a lunch and opts to purchase it instead, have you evaluated the impact? At $10 a day (a low estimate), that is $50 a week and $2,600 a year!
Have I opened your eyes to the financial impact of how quickly little expenses add up? If you buy a latte and lunch daily, you spend over $4,000 annually. That equates to almost a full year’s TFSA contribution room.
Track Your Expenses
I challenge you to start keeping track of your expenses to educate yourself on where your money is spent. Only then will you be able to better evaluate your financial position and find additional areas to save.
Sometimes it is the smaller sacrifices that have the biggest impacts.
~ The Savvy Saver