By Vicki & Grantley Morris
We have nothing to sell. We live to give, not to get. We do not charge nor even receive income through advertisements because we have found it is better to give than to receive. (Of course, we are by no means the first people to discover the joy of living this way; Jesus beat us to it by two thousand years and neither do we match the perfection with which he lived it.) Anyhow, this joyous approach to life helps keep our income low and gives us practice in learning how to spend less. We admit to being weird, however: we hate spending money. You are sure to be more normal but perhaps you can benefit from what we have learned about how to save money. |
For those who are still learning English, we have tried to use simple English. The tips apply to most developed countries but they especially apply to Australia.
Saving money takes a little more effort. Whether you consider it worth the effort is entirely your decision. We will simply give you the facts. Something worth considering, however, is that money saved is more valuable than it first seems. If, for example your extra effort saves you about $60 a week ($3,000 a year), another way is to work longer hours at your job and earn extra money. However, to equal what you save, you would have to earn not $3,000 but $3,000 plus income tax. On a low income in Australia in 2013, that is $3,615 (including Medicare surcharge). If you earn over $35,000 a year, it would be $4,020, or $4,400 if you earned more than $80,000 a year. Moreover, if instead of saving $20 a week on your shopping, you had to keep charging the $20 a week to your credit card and you kept being unable to pay back any of this credit card debt, after 20 years you would end up adding to your debt by more than a staggering $100,000 (Details). Or if you used that $20 a week to pay off your home loan, you would end up saving over $24,000 over 20 years (Details). (If your saving was $30 a week, over 20 years it would be $169,000 saved in credit card debt or over $34,000 saved on a home loan.)
Or, of course, you might decide to give the money to those who need it more than you do.
Seeking low prices is smart and nothing to be ashamed of. A millionaire owner of several successful businesses told Vicki that he refused to pay full price for anything. But how can you avoid paying full price?
An important thing is your attitude.
* Patience can save you huge amounts of money. If you must have something the moment you see it in a store, you might as well burn your money. When we see something we could use but can survive without it, we deliberately wait for as many weeks or months that it takes for the store to lower the price, while keeping our eyes open for a better price elsewhere.
* And if it is slightly costly, we start saving up for it. We would rather go without than go into credit card debt. The interest you have to pay is way too much and it can soon become a poverty trap.
* Also, realize that you do not have to own everything to enjoy them. For example, Vicki loves reading but uses a library instead of a book shop. If there is a book you want, a library can usually get it for you even if they do not stock it. You can enjoy many things simply by looking at them in a shop without having to buy them.
In some countries, you can bargain with sellers over the price of almost anything. In Australia, there is usually a fixed price in each store for items that do not cost much. We will explain later how to get lower prices on these. With more costly items such as furniture or a washing machine, however, there is a displayed price but shop assistants are usually told by their managers to offer lower prices if you ask. They make lots of money out of people who pay the full price without question but they still make money if they sell it for less. You can usually save more than a hundred dollars per item by using the method we are about to describe.
If, for example, you want to buy a refrigerator, go to several shops to see what is available and note the prices. Ask shop assistants to explain the advantages and disadvantages of each different type of refrigerator. Some types will use less electricity and so be cheaper to run. Some will be better quality or have features you like. As you go from shop to shop, gradually decide which refrigerator is the best value for money and best suits you out of those you can afford. Ask the shop assistant in each store if the price shown is the best he or she can offer. Don’t say what other shops have offered but if the price an assistant gives is higher than another shop for the same brand and model, tell the person you can get it cheaper elsewhere. He or she might then lower the price further. Only tell assistants the price you can get elsewhere if they ask you to tell them because then they are likely to offer only slightly less. When, after going to several stores, you have got what seems to be the best price, it might still be worth returning to some of the other stores and give them the chance to lower their price even more, now that you can tell them you can get it cheaper elsewhere.
You can also phone electricity and gas suppliers and by comparing them and telling them you can get it cheaper elsewhere (if that is true) they are likely to provide gas and electricity for less than they first said they would. With some banks, you can even talk them into giving you a better deal on bank accounts (be careful, however, they usually offer you a good deal and then change it in just a few months – that’s the time to talk to them again).
Sometimes you will be too tired or busy to follow some of these ideas in this webpage. In such cases, buy the minimum you need but on occasions when you have more time, walk through stores and become familiar with what is available and what is a good price.
Tips we Don’t Follow
I have heard of two tips about buying food and I don’t follow either of them. Here’s what I’ve been told:
1. Make a shopping list before going to a supermarket and buy nothing else
2. Decide on how much you should spend on food per week and spend only this amount.
This advice is given because many people lack self-control, and shops use every trick they can dream up to tempt you to waste money on ice cream, candy, junk food and so on. One thing that can help you remain strong is to not shop when you are hungry. If you cannot control yourself, then you need to follow the above tips but if you are strong you can save much more money by taking advantage of any real bargains that were not advertised. This makes it best not to plan your meals until after learning exactly what the prices are on the day you shop. For example, the store might suddenly lower the price on some meat that they must sell quickly before it gets too old to sell. You can make the most of this bargain by buying as much as you can freeze or immediately cook.
One of the tricks that supermarkets use is to put poor value items at eye level and place better buys high or low on the shelves. (If you cannot reach something, ask for someone passing by to get it for you.) Just because something is on sale for a special low price does not mean that elsewhere on the shelves or in another store there is not a cheaper brand that is better value. For example, I like rolled oats. I don’t bother to cook them; I just add some fresh fruit, a little raw cracked wheat (soaked in water overnight), and cold milk. There is a famous brand of rolled oats that at the time of writing costs $6.30 a kilo. Lower on the shelves are rolled oats in a plain package with the store’s name on it that sells for only $1.60 a kilo. Even when flashy signs boast that the expensive brand is on sale, no matter how much they say you are saving by buying it this week, it is always much more expensive than the other oats. On the other hand, there are other processed breakfast cereals in the same store that sell for up to more than $17. I’ll stick to $1.60, thanks.
Just because something has a plain package and is cheaper does not mean it is poorer quality. The store buys huge quantities and so gets them at very cheap prices. Sometimes the products are actually made in the same factory as much more expensive ones and the only difference is the packaging. The factories do not allow the stores to say it is their product because they make more money when people buy the same thing at a higher price in a different packet.
When comparing different brands, it is helpful to compare ingredients listed on the packet. Usually the order in which ingredients are listed indicates the proportion of each ingredient, with the main ingredients (by weight) being mentioned first. One ingredient to watch out for is palm oil. It is used because it is cheap but is thought to be bad for one’s health compared to most other oils.
Comparing different brands can be very difficult when they have different quantities or different shape packaging but thankfully most Australian supermarkets display next to the price on the shelf the cost per kilogram (or 100 milligrams – multiply by 10 to get the price per kilogram) or per litre. I expect that many people who want your money do not like this because it makes it harder for them to cheat, but large supermarkets are required by Australian law to show this information.
Having a good memory for prices is a big help in smart shopping. If your memory is only average it is good to write prices down and compare them with the prices at other shops and on different days in the same shop. If you do this you will discover that what is advertised as a “special” (unusually cheap) is often dearer than the same item at another shop or about the same (and sometimes dearer) than what the same shop usually charges.
You will also discover that in most stores, low prices on various items repeat every few weeks. How quickly prices cycle up and down depends on the item. It is also worth knowing that although small price changes can occur every few weeks, bigger savings might take months to repeat. Prices repeatedly going up and down can be frustrating but you can use them to your advantage and save much money by buying when they are really cheap (and not just when stores claim they are cheap) and refusing to buy when they are not. For example, we buy long life milk because using fresh milk would force us to buy every week, which would make us a slave to whatever the shop charges each week. Buying something that lasts longer lets us buy enough when it is on sale to last for months until the price is low again. After some stores permanently reduced the price of fresh milk, the situation changed. Now, even when on sale, most stores will sell long life milk no cheaper than the cheapest fresh milk. There is one store, however, whose rare sale price on long life milk is cheaper than the cheapest fresh milk. We do not usually go to the shop but we keep our eye on its advertisements and buy up big when long life milk is exceptionally cheap. And when we go we buy nothing but the milk, unless we find something else that is actually cheaper than elsewhere. An alternative to long life milk is powdered milk, and this is usually still better value.
You need to note the expiry date (the “use by” or “best before” date) that appears on many products. Sometimes items are on sale because they will soon pass this date. This is fine if you intend to use or freeze them within that time. As food items get older, however, they often lose some of their vitamins etc. A useful hint is that often items are stacked on shelves to encourage people to take the oldest ones. In other words, the freshest ones are often put towards the back of the shelf. If the price is the same, you might as well buy the freshest.
How much you can make the most of sales depends on how much of the item you can use and/or store. Vicki has to drive a long way to work, so we have to buy fuel often. This gives us less choice as to when we can buy fuel. We can still usually buy a day or so earlier or later, however, and so make some savings.
Prices for fresh food often vary according to the time of year. It can be quite a saving to change what you eat according to the season. (Previous generations usually had no choice but to do this.) Another thing to consider is that when, for example, certain vegetables are out of season, it might be cheaper to buy them frozen or in cans.
Likewise, prices on, for example, summer clothes are usually higher at the beginning of the season than towards the end of the warm weather. This makes it cheaper to buy clothes for the next year, rather than for this year (provided you don’t change your weight or can predict your children’s growth). If you are a slave to fashion – if everything you wear must be the very latest color or style – you send the companies that make clothes laughing all the way to the bank.
When fresh food that was originally marked at one price is changed to a lower price for a quick sale, it usually takes a little more time for people operating checkouts to enter the correct price in the cash register. So some of these people will try to talk you into paying the full price. Keep an eye on what they do and don’t let them cheat you. The supermarket management lowers the price on goods that are near the end of their shelf life because it increases the store’s profits. They need to sell food items quickly before they get too old to sell and become a total loss. It is their decision to give those lower prices, so they are legally required to charge no more than is marked.
Ask to speak to the manager if a checkout assistant does not want to charge the advertised or marked price, or makes some mistake and expects you to pay for his/her mistake. For example, Vicki uses a store discount card (a “flyby” or “rewards” card) to get extra savings, but a checkout assistant forgot to swipe the card. That mistake would have cost Vicki an extra $11. The assistant wanted Vicki to bear the cost but Vicki refused, suggesting instead that if it was too much trouble for the checkout assistant, she was happy for the assistant to pay her what Vicki would lose. That gave the assistant a new way of looking at it! A man in the queue was getting upset with the delay. “Would you like to pay me what I lose if this mistake is not corrected?” asked Vicki. That kept him quiet. She got the full saving she was entitled to. Many people, however, would give up and let the rich people behind the store get richer at the expense of people on lower incomes, just because of a checkout assistant’s laziness.
Vicki has briefly annoyed many check-out assistants by insisting that they do what is right, but she has gradually turned most of them into friends by her friendliness and by explaining to them how they can save money on their own food bill and sharing recipes for cheap meals.
Other Shopping Tips
* Try not to be shy about asking people where they get good prices.
* Consider buying things second hand at charity shops, garage sales, over the Internet and so on.
New Eating Habits?
If you have moved from one country to another, it is important to note that what are the cheapest types of food in one country might not be the cheapest in another part of the world. For example, apples are often dearer than mangoes in tropical countries but the opposite is true in colder countries; Mexican food is cheaper in America than in Australia, but lamb is much dearer than in Australia. Many other examples from other countries could be given. So if you are in a new country, it can prove quite expensive to eat the foods that were cheapest in your previous country. Changing one’s eating habits can be awkward but it can save a lot of money.
I am referring to cooking ingredients, however, not to ready-to-eat food. I am not suggesting that the eating habits in richer countries are better. Most (thankfully not all) so-called foods in supermarkets are a waste of money because they are high in what health experts say we should have less of – such as sugar, fat and salt – and low in things that keep us healthy. Like cigarettes, junk food and drinks are designed to get us addicted to harming our health.
The makers use all sorts of tricks to hide the truth, such as, when forced to list ingredients, avoiding the word sugar by using many other words (such as corn syrup, fructose, maltodextrin, treacle, etc.), advertising things as being low in fat and not mentioning that they are high in sugar, or charging more to add a trace of something that sounds healthy when you can get more for less money in another food. Some even charge more for the same thing just because it has less salt!
It is your choice whether you eat junk food, but at least be aware that its food value is low compared with the cost. Usually, the more processed the food, the less healthy it is and the less value for money it is. The less cake, biscuits, ice cream, potato crisps, sugary drinks, and so on that you buy, the more money you will save and the healthier you are likely to be.
Unless you use lots of fat, sugar, and so on, in your cooking, the more you do your own food preparation, the healthier and cheaper it will be. In fact, many fruit and vegetables lose some of their vitamins, fiber, etc when cooked and are better for you if they are not cooked at all. If, for example, you are able to take some lunch to work (some raw fruit, sandwiches you have made, some food from last night’s meal, or whatever) it will be much cheaper and often better for your health than visiting a fast food place. Also, in Australia, food that is ready to eat has a 10% tax added to it (GST).
There are many foods we choose not to eat, and others that we never have more than a small amount per meal, simply because there are equally healthy foods that are a lower price per kilo. For example, meat usually costs more than vegetables but with clever cooking you can eat less meat and more vegetables without sacrificing taste. I love fruit juice but I choose a cheaper alternative – tap water. (Though better than almost all other drinks, fruit juice is not as healthy as I used to suppose – see Juice Note.) Not having a favorite food or drink seems a big sacrifice at first but, like giving up cigarettes, the body adjusts and eventually you do not even miss it.
There are moral complications about buying that we do not know enough about to share with you. For example, Australian farmers receive so little for the milk they sell that some have to close down. What makes it complicated, however, is that someone who has studied this has said that often in supermarkets the same amount of money goes to the farmer, regardless of whether it is a cheap brand or a more costly one. The supermarket takes all the extra money. Likewise, for example, buying more expensive clothes does not always mean that the workers who made the clothes get the money they deserve. In America, most people serving food in shops are paid too little to live on, but shoppers give them tips – extra money that goes straight to the worker and not the shop. Our wish is that if people in some countries are not given fair wages, that shops at least have a similar system that allows shoppers to voluntarily give extra money, 100% of which goes straight to the low paid workers who made the product and is evenly shared among them, instead of making rich people richer.
Your Choice of Shop
For things where there is no price difference, we buy from smaller stores to help keep them in business. If they closed, the big stores would have less reason to keep their prices low.
The price of fuel means it is rarely worth driving far to shop but since you might go to other areas to work or visit friends, and so on, it is helpful to know that just as house prices differ according to the area, so even large supermarkets with the same name often have different prices according to the area they are in.
There’s More to Saving than what you Buy
One of the biggest ways to save money is simply not to buy it in the first place. Not even the best bargains save you money if you do not really need to buy them. If, for example, $200 shoes that you do not really need are marked down to $120, you will not save $80 by buying them; you will spend $120 more than you needed to. Start questioning your purchases. Does, for example, bottled water really taste better? When they do not know where it is from, most people cannot tell the difference between bottle water and chilled ordinary water.
Avoid waste. Some people are excited about getting something for 10% less but end up throwing away more than 10% by not using all that they bought. How much is left behind on the dinner plate or not scraped out of the original container when it is thrown out? To say nothing about extra stress on your car (which will end up costing money) how much fuel is wasted by speeding up faster away from traffic lights and using the brakes harder and more often than necessary? How much water and electricity do you waste? Do you leave water running for longer than necessary? Do you flush the toilet more often or with more water than necessary?
Here are some hints on saving electricity and/or gas:
* Reduce heating and cooling by opening and closing doors, windows, blinds, curtains and so on according to whether the outside temperature is better than the inside temperature.
* Since heating and cooling (especially heating and refrigerative/reverse cycle air conditioning) is expensive, rely a little more on the way you dress to keep comfortable and be willing to be just a tiny bit uncomfortable before using a machine to heat or cool your house, and when you use one, use the setting closest to the outside temperature that you can be comfortable with.
* Is your refrigerator set to a cooler setting than necessary? Do you open the door only for the shortest possible time? I’m told that empty space in a refrigerator ends up costing more because whenever you open the door, most of the cold air falls out and is replaced by warmer air. I have not confirmed this scientifically but if the refrigerator is not fully filled, empty boxes might help keep in the refrigerator some of the cold air.
* Even when on stand-by mode (when something run by electricity is not working but it is still plugged in and a tiny light is shining) small amounts of electricity are still being used. By fully switching off lights and everything else when not in use, you will save money.
Pay your bills on time. Sometimes there is a penalty if you do not and it can also affect your credit rating. The simplest way is to set up a direct debit where possible so that the money is always taken straight from your bank account at the right time. It is important, however, to ensure that you always have enough money in your account to cover this or you could end up with extra bank charges.
Credit cards are a poverty trap because the interest rate is extremely high. Do all you can to avoid any credit card debt and if you have a debt, pay it off as quickly as you can. Suppose you owe $5,000 on your credit card at 18.5% interest. If you borrow nothing more and there are no other credit card fees and you pay back $102 a month, you will end up having to pay $9,091. If, however, you pay back $150 a month, you would have to pay a total of only $6,916 (a saving of $2,186). (Work out your own figures.)
Consider carefully the fees on your credit or debit card. Even though I trust myself never to go into credit card debt, I am able to avoid some annual fees by using a debit card rather than a credit card. In some situations I am charged to use a debit card, so I pay in cash. When using a teller machine (ATM) I always use my own bank’s. Otherwise I would have to pay an extra fee. A lot of these charges seem small but they all add up.
Like playing a game, saving money can be fun. Sellers work hard to fool us into giving them more money than necessary. Their goal is to get rich by tricking us into wasting money by buying more than we need and at a higher price than we need to pay. They will still end up with more money than many of us will ever see but we hope you have found the ideas we have shared helpful in giving you the power to fight back a little. Happy shopping!
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