I saved over N$19,000 by cutting these expenses

 

Sometime mid 2018, I went through an adjustment that affected my finances. That year, my main financial goal was saving towards an emergency fund, which I didn’t think I would achieve because of what was going on. So, I printed out 3 months of my bank statement to see if there were any loose ends I could tighten up. Using the same method I outlined previously in this blog post, I summed up similar expenses from the statement. The intention was to find any recurring expenses that were higher than I liked, so I could reduce them. To make sure that I saw the results of this, I challenged myself to save every penny I got from cutting down on these expenses.

After a year, I had saved over N$19,500 from this challenge. I’m sharing in this post, the method I used to save when I thought things were tight, with the hope that it might inspire someone in a similar situation. This is how I did it:

 

Bank Charges

Because bank charges are usually small amount fees, it’s easy to discount and ignore them. But like all small expenses, they add up.

My monthly total cheque account bank charges averaged to N$540.00. After calculating the annual cost of this, I knew I wanted to shop around for some account options to see if I could get something better. So I called different banks to look at similar products. I moved to a different bank that charged about N$145 per month; saving a whole N$4,740 on annual bank charges!

It’s important to note that I did a little research before I changed banks:

1. Research on different products; just to make sure that I would get a similar or better transactional account.
2. An informal customer satisfaction survey with the people I knew that were banking with the bank I wanted to move to, just to make sure they have great service.
3. I also took time to understand what’s included in the bank charges and how they were charged. Is it a monthly, once-off or pay as you use charge?

 

Internet

I had pre-paid, portable internet, which I still love because of the convenience that comes from taking it wherever I want. However, since this was a preference and not really a need, I decided to prioritize savings. So I changed to post-paid, unlimited wi-fi, which cost N$266 monthly. Unlimited pre-paid cost N$1,000 monthly, so this saved me N$8,800 yearly.

To get post-paid wi-fi, I had to buy a router and enter into a contract that is not so flexible to break. For example, if I decide to break this 3 years contract before the term ends, I will need to settle the account in full. However, the full post-paid contract amount (for my contract) is still much less than N$12,000 (annual cost for pre-paid). So I’d be okay with settling the account if I get a good reason to breach the contract. I haven’t found a good one yet. 

The decision to go pre-paid or post-paid also has different aspects to consider that cannot be limited to finances. Most of these are technical, so I can’t get into them. But internet providers are very helpful at providing information on their products, so always talk to the experts and ask questions before you sign anything. Also make sure to ask if they have a strong network connection in your area.

 

Food

I’m an under-eater (i’m working on it) who loves to buy food (it’s weird). I can fill a shopping cart with food, because I have all these recipes I want to make, plus the food just looks good in the shop. But I can have all that food go bad because I don’t have the appetite anymore or I just don’t feel like eating spinach ‘today’, until it goes bad. I was also the queen of take away lunch at work because I didn’t take food with to work. I’d need to buy lunch at least three times a week.

I reduced the amount of food I buy per trip to only what I will need the next week. Before I go shopping, I take stock of what I already have and make a shopping list to avoid going off-track. I also started taking lunch to work. I reduced my food and entertainment budgets by a total of N$500 per month (N$6,000/year).

 

& Now The Take Aways:

 

1. Go through your statement at least once (twice is recommended) a year. This way, you can pick up patterns in your spending behaviour that you might not have been aware of.

TonG tip: Some expenses may seem small, but they add up. Find out the total monthly and yearly charge and base your decision on that amount.

2. Question your expenses. Do I really need to keep paying for gym subscription when I haven’t been to the gym in 6 months? Also think about all the subscriptions you forgot to cancel before the trial expired. What about TV streaming? If you are paying for more than 1, there’s a high chance that you don’t watch one of them enough.

3. Unless you are cutting down to afford something else, do not spend the savings from this challenge on mindless expenses. Save it. That way, you will be able to track your progress and maybe use the money on something productive to you.

As we should all know by now, personal finances are personal. What I might deem necessary might not have the same importance to you. Same goes to the significance of a certain amount of money to different people. Everybody’s financial situation is different. Take the method and apply it to your situation. It might just help you.