Friday, March 21, 2014

Is Any Amount Of Money Too Small To Be Worth Saving?

I don't think there is any such thing as an amount of money too small to be worth saving.

The only criteria is that it must truly be "saved". When I was an associate dean, a recent immigrant from Poland worked as my student assistant. Her family was on a very tight budget and she often complained that her dad drove to three grocery stores each week to get the lowest prices, but that they spent more in gas and time than they saved.

I didn't realize it at the time, but if that young woman had such a clear grasp on the value of money at age 18, she is likely well set now, ten years later. Kudos to her!

And her complaint about her dad's actions is valid. You really need to take the time to know your numbers. According to AAA, driving a mile costs over 50 cents as of 2007.

In coming up with the estimates below, AAA figures in average fuel, routine maintenance, tires, insurance, license and registration, loan finance charges and depreciation costs. Fuel prices are based on late-2006 national averages.

Composite national average cost per-mile for 2007: 52.2 cents

So if five items are each $1 cheaper at another store, but you have to drive four miles each way to get there, you are spending four to save five and clearing only a dollar.

Likewise, there is a dollar value to time. If you could spend an hour and earn $20 mowing a neighbor's lawn, the extra half hour at the shopping center to save $5 is clearly not going to put you ahead. But if you would otherwise be watching television, then it might.

Another benefit to saving even the smallest amount is that it makes you much more conscious of the bigger amounts. If you worked hard for 15 minutes to create a grocery list, stuck to the list and dropped $25 off your usual weekly amount, you are far less likely to blow it on over priced popcorn at the movie theater. You're more likely to stay in the savings mode, pop some at home and feel great about saving another $5.00.

Isaac Newton taught us that a body in motion tends to stay in motion and I think the same holds true for the happy tightwad. If you know the exact cost of your Chamomile tea bag (10 cents) and choose to reuse it at least once, you're more apt to pass by McDonalds despite the kids' clamoring and eat at home, saving another $12.00 or so.

So don't let anyone bully you into thinking some amount is TOO penny pinching. As long as you're still enjoying life and accumulating assets, only you can determine what your cut-off is. And of course, in time, those pennies become dollars, which become thousands, which become a retirement fund.

Best wishes! Eileen
P.S. Just for fun for you garage sale addicts out there - the popcorn popper was $1 and works great.

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