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Sunday, October 25, 2015

Ways To Save A Ton of Money On Grocery And Household Items

One of my secrets to having money has never been making a lot of money, although I have managed to make my fair share. My secret to having money lies in what I spend. Or, put another way, what I don't spend. And the cost savings are enormous. Aside from all the ways you can make more money than you earn from any job, such as concepts such as pay yourself first, investing in the stock market, contributing to IRA's, 401k's and other retirement plans, there is a ton to be gained by following a few simple rules when it comes to spending your money on the everyday things we need and that are the bulk of our daily expenditures. Groceries and household items.

  • Know your prices and establish a threshold price. In other words, what is the most you are willing to pay for any particular item? When an item is at or below your threshold price, stock up on it.
  • Forget brand names. Brand name items are products of marketing, not quality. Marketers will have you convinced that their product is better through marketing, but if you test off-brand products you will easily find they are comparable, if not better than any brand name items you have been convinced are superior.
  • Shop more than one store and DO NOT buy any item that does not meet your threshold price just because "you are there." If you are managing threshold prices properly, and stocking up on goods that meet your prices you should have plenty of supply on hand to wait for a good deal or when you might be at the store that has the best price.
If you are not running your household like a business runs its warehouse, you are doing it wrong. A business keeps a few key factors in mind. Cost of raw materials, upfront cost of supply, days-on-hand of supply, and of course, inventory management and control. If an airline sees oil prices are low, it will buy contracts for oil at current prices in larger number to ensure that tomorrow's cost of use of oil in jet fuel will be lower even if the price of oil rises and thusly the cost of jet fuel. The business has established a price threshold and will take advantage of low prices to save money in the future and it will stock up when the price is good. The same goes for producers that use sugar, corn, and other raw materials in their goods.

Many business also hire purchasing agents or purchasing managers whose sole job it is to buy raw materials and other products for businesses at the best price available and of course to shop the best price. You should be running your household the same way. Again, know your prices, maintain your inventory, and schedule your purchasing both on need AND price. If you are buying because you need it now, you are probably paying more for what you need by default. The cost of doing it this way is enormous.

Why do businesses do so well and make so much money? Because they know how to save and they know how to spend and they know where to buy and they know a good deal when they see it. That's not greed. That's business smarts. We should all be paying close attention to this when we run our household budgets for items that are key and regular items we use. If we are not, we are spending more money than is necessary.

To be very truthful, that is waste due to ignorance and laziness. No business succeeds using an ignorance and laziness model, so why should you?
  • But I do not have the time to do all of these things. I have a busy schedule, a busy life, and convenience is just better for me.
Consider this, if you will. One very simple question. Why is life so chaotic? Why is time so limited? In part it may well be that there are jobs to be shuffled in amongst the many other demands life has to offer. So what is the purpose of a job? To make money to maintain the living expenses and to maintain the household and to buy the groceries and household items that we need to get through it all. How much more time does the average person spend working to make the money to pay a higher price for goods to maintain the household due to lack of time to do the due dilligence? You would be surprised to learn that the numbers are in the thousands of dollars per year. We could actually maintain the same quality of life with less hours on the job and have more time to spend doing other things if we knew the cost of doing business without a plan. The dollars we spend over and above what we could spend if we maintained our households better equals many more hours at work to make up the difference. So therefore part of the reason we have to work long and hard hours is because we do not take the time to do the things that are essential to require less money to get it all done.

I harp on all of this because the key factors in longer hours at work, and higher need for credit use, is a simple misunderstanding of the cost incurred from ignorance and laziness to do these very simple things that could save us enormous amounts of money.

When I think of spending, or cost, I don't just look at it in terms of how much out of pocket it immediately costs me. I think of it in terms of time. How much time do I have to spend at work to make the money I am willing to pay over and above what my cheapest cost can be?

Let's say I make $15 an hour on my job. That's 25 cents per minute. I ask myself one simple question. Am I willing to spend four extra minutes at work to pay $1 more for what I am about to buy for convenience?

Pennies add up. And again, the amount we spend over and above what we could spend is actually in the thousands of dollars per year. In effect, if we ONLY spent $1,000 per year extra on things at $15 an hour, we would require an additional 67 hours to pay the difference. You have to ask yourself whether or not saving a little bit of time for convenience saves you 67 hours of additional labor hours to pay the difference.

Your chaos in life therefore may well be self inflicted by your spending habits and your desire to "save time" for convenience.

The problem with money that most people face in this world is a simple thing. They do not know what the cost of their decisions are. They do not know what the cost of their actions are. And they do not know how much time $1 equals. People look at the top line and the bottom line, and they fail to read between the lines. If I am getting by, what else matters? I just keep on keeping on. The cost of this logic is astronomical. The hours spent working by this logic is astronomical. The chaos in our lives, the accumulation of debt, and other factors are the key reason why so few get ahead and so may just get by. The fact is that we are always too focused on the here and now. We say we cannot afford to save, and we say we cannot afford to take the extra time to shop around and shop more than one store, and the biggest reason why that becomes the truth is because we have to work so much longer to make up the difference.

Part of what separates the haves from the have-nots is largely due to the ability of the haves to understand these very basic concepts and to capitalize on the them and ultimately, to benefit largely FROM them.

If you think life is tough and expensive, it is probably because you are working to pay for ignorance and laziness when you could be living well, saving money, spending less, and working less, and even maybe paying debts off sooner and be considering early retirement.

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