Falling victim to convenience can cost household budgets thousands every year. When you aren’t double-checking the pricing of the regular things you buy, you might not realize that costs went up while you were happily allowing the automatic debit to happen.
Ah, convenience! There is something so comforting about knowing that the checkout girl at your favorite grocery store will have stickers for your kids, that your cell phone bill will be paid automatically and on time because you have been with your service provider for fourteen years, and that your insurance broker knows you by name and that you will be vacationing in Branson, MO this summer with your in-laws. Relationships. Comfort. Loyalty. Convenience. But at what cost?
Assess Your Spending
There are simple ways to check your spending that don’t take a lot of time or research. Grocery stores send out weekly advertisements. Cell phone companies publish rates online. Do you take advantage of business loyalty programs for splurges like Starbucks or the massage provider? Sometimes looking at one thing can save more than a thousand dollars a year.
When was the last time you checked the weekly grocery ad to see if store A has a better deal than store B, or clipped a coupon for that buttery spread you love so much? When was the last time you priced out cell phone service providers to see if you can get a better deal? When was the last time you compared home and auto coverage rates? If you’re like the majority of us, it’s been a while. The truth is, we all like convenience. In fact, most of us seem to be addicted to convenience and this can end up costing us more than a few bucks. So how can we turn this around and save some money?
For myself and my husband Jeff, we were that family that had the same cell phone provider and cell numbers – that all our contacts knew – for over fourteen years. I knew we were overpaying for our service and I was always curious about those ads for less mainstream cell phone service providers. Then I noticed that some of the bigger name service providers were jumping on the bandwagon – including ours. Had we been missing out on some serious savings here? I was getting a little pissed that I had not looked into this sooner.
Crunching the Numbers: How Much Will You Save to Switch
We browsed phones – we favor androids – and found some great new phones for less than $159 each. Pretty good deal! While speaking with the Samsung specialist about the phones and what they can do, we realized that we could save $100 per month by switching to a new plan. We had been paying about $150 per month for our two phones with our provider, but by switching to one of their new plans (same provider) we would only be paying $25 per line, per month!
What? Seriously! We could save $100 per month with the same provider. The only requirement was that we buy a new phone (which we needed anyway!) and that we get new numbers. That caused Jeff to take a step back as he “liked” his number and everyone has his number. All his contacts, colleagues, even employers he had sent resumes to.
Then my frugal persona kicked in and said “wait a minute! You’re happy to pay an extra $100 per month because it’s convenient to keep your number? Send a message to everyone, post on Facebook and LinkedIn and wherever else you need to that you have a new number. We still have unlimited talk, text and data so we can let everyone know.
As for his resumes, this is a great opportunity to reach back out to potential employers so they can remember who you are and let them know you have a new contact number. Genius! I personally love the idea of saving $1,200 per year! Awesome! Turns out, we noticed no difference in switching plans, other than we had better phones. That made me wonder where else we could save money?
Moving Through the Household Budget
Car insurance is another significant area of savings when you know how to shop. Keep in mind, you don’t want to sacrifice quality coverage for a few bucks. But you should look for ways to keep costs down. Moving to Florida, we saw our car insurance rates almost double from California. Turns out that our home insurer we had been with forever, doesn’t cover Florida due to too many hurricanes and sinkholes. But they would continue to cover our cars – for double! I looked around. After having a lengthy conversation about why each coverage option existed and whether we really needed it, we adjusted and deleted some coverages that ended up saving another $100 per month. Cha-ching!
We just saved another $1,200 over the course of the year for a total savings of $2,400. Where else could we save? This was getting fun!
A Family Financial Plan Starts With Budgeting
As a financial planner, one of my favorite things to do is a comprehensive financial analysis – helping people understand their budget, or lack thereof. As such, I reviewed our own family spending habits as we had gotten a little “sloppy” lately; eating out a little more, grabbing take-out more frequently because it was just more convenient with our busy lives. But what was that convenience costing us? Now, there is a monetary cost to convenience, but there is also a physical cost too as we had all gained more than a few extra pounds. And what type of example was I setting for my children, my husband and my clients? We needed a do-over. A review of our entire household budget.
Defining Budget Priorities
I started reviewing our bank statements more carefully to see how much we were actually spending on dining out, drive-thrus, grabbing lunch and quick snacks. A budget isn’t about stopping certain activities altogether. We were not going to stop eating out, but instead, we were going to plan on when and where. This made it a family outing to look forward to. One of my mentors used to say that when he was growing up tv dinners were a treat and if you were eating shrimp it was probably your birthday!
Nowadays people have forgotten how to cook – or just don’t feel like it, eat mostly convenience foods and eat shrimp because they feel like it, even if it exceeds the budget because “thank goodness for credit cards.” Even my kids had learned to say “use the blue one mommy” when I would tell them that the game or cereal that they wanted to have was not in my budget.
Moving from the Convenience Mentality
Environmental and social influences teach our children convenience. They teach us the value of convenience. But is it really value or expense? We are programmed to strive for convenience. But how much more convenient would it be to admit to ourselves and to our friends “oh, I’d love to grab lunch with you, but its just not in my budget this week. Let’s have lunch another time though.” We feel it is more convenient (easier) to comply with social norms and expectations than to accept our financial reality.
If we are being honest with each other, we could all stand to have a few less lunches out and a few more packed lunches. You may even find that your friends follow suit. I can guarantee most of them would prefer to spend less money too. Instead, plan a picnic lunch out where everyone brings their sacked lunch and we all sit in the park. Now that’s a great lunchtime; fresh air, grass in your toes and probably a more nutritious meal. You might even strike up a conversation about how much you just saved on your car insurance or how much you saved by switching your cell phone provider.
The Bottom Line: In the Black
Overall, for our family, by re-assessing our conveniences and budget, Jeff and I saved $7,795.64 over the course of a year ($1,200 in cell phone service charges + $1,200 in car insurance + $575.64 in drive thru breakfasts + $1,440 in lunches + $3,380 in family dinners out). That money allowed us to book four flights to London to attend a family wedding and four Silver Annual Passes to Disney World. On top of that, I love that we are in more control of our budget and that we are more conscious of where our money goes. Screw convenience, I much prefer control.