The Big Impact of Your Little Financial Choices

When a person starts looking at their personal finances and seeking to make changes to improve things, most personal finance books and websites encourage people to look at making big changes right off the bat:

  • Sell off all the stuff in your closet to earn a big pile of money in a weekend.
  • Sell your car and start using mass transit and a bicycle to save hundreds a month.
  • Move to a smaller home or apartment and trim your insurance, rent, mortgage payments, property taxes, energy bills, and maintenance costs all at once.
  • Renegotiate your major bills – car insurance, homeowners insurance, cell phone bill, internet bill, cable bill, and so on.
  • Cut out cable entirely and use your internet service for your entertainment.

All of those big ticket items are great, but they only provide part of what’s possible. There are many, many smaller moves that also have a lasting impact on your finances that are often overlooked by people hoping to catch the big savings with one single move.

I thought it might be worthwhile to talk about the long-term impact of several of our little financial choices in terms of the broad picture of our lives. How much impact do little things like smarter grocery shopping or buying energy efficient light bulbs or buying generics or inflating tires really make? Here’s how much impact some of these common frugal tactics have actually saved us over the last few years.

Trying ‘Smart’ Grocery Shopping

For Sarah and myself, the weekly (or, sometimes, every other week) routine of downloading a grocery store flyer, assembling a meal plan, making a grocery list, and heading to the store is simply the way we do things. It ends up taking about the same amount of time as just heading to the store directly without any plan in mind and it saves us about $30 per grocery store visit. You can read about our family’s meal planning strategy in great detail if you’re interested.

That’s $30 a week. For some people, that may seem like a lot; for others, that seems pretty small next to saving hundreds a month by moving to a smaller home.

Yet, over time, it adds up to a lot. Sarah and I have been using this system since late 2006 or so, so let’s figure that it’s eight years. Let’s also assume that we go to the store fifty times in a year – as I said, it’s roughly weekly. Fifty times per year times eight years is 400 grocery store visits. Saving $30 per grocery store visit times 400 visits (over eight years) is, get this, $12,000.

That’s right. Our meal planning system, which doesn’t require us to burn any more time than we would just running into the store, has saved us $12,000 during our financial turnaround.

Practicing Proper Tire Inflation

Many gas stations offer a free compressed air pump that people can use to inflate their tires to the recommended amount. This amount is listed in your car’s manual and is usually measured in PSI. If you keep a $1 gauge in your glove compartment, you can quickly measure the pressure in each car tire and then use the free air pump to inflate the tire properly. Why would you do this? Well, when your tires are deflated even a little, it hits your gas mileage. For every missing PSI from any of your four tires, you lose 1/8% of your gas mileage.

I fill the tires on our automobiles monthly. Each time, I find each tire is about 4 PSI low, almost like clockwork. So, when I refill them, I’m improving the fuel efficiency by about 2%. In the past, I would just let the repair shop do the refilling every three months when I would take my car in for maintenance, so essentially I’m trading about three minutes once a month to improve a car’s fuel efficiency by about 2%.

Our SUV averages about 18 miles per gallon under proper inflation, which means that without proper inflation, it would average 17.6 miles per gallon. My wife’s commuter car gets about 42 miles per gallon under proper inflation, which means that without proper inflation, it would average about 41 miles per gallon.

In an average year, the SUV gets about 10,000 miles on it. My wife’s car gets about 20,000 miles on it per year.

Thus, in an average year, proper tire inflation saves us about 13 gallons of gas on the SUV and 5.8 gallons in the commuter car. We’ve owned the SUV for about six years, so that adds up to 78 gallons. We’ve owned the commuter car for five years, so that adds up to 29 gallons. That’s a total of 107 gallons of gas saved in that timeframe.

Assuming gas is at an average of $3 per gallon – which is pretty close to the average over the lifetime of our cars, that’s $321 in gas savings due to proper inflation.

Obviously, time is a factor here. I spent three minutes inflating the tires eight times a year (the other four times would happen during car maintenance at a repair shop), so it’s 24 minutes per car per year. We’ve had the SUV for six years and the commuter car for five years, so that adds up to 4.4 hours spent airing up the tires spread across those years. Now, some (I’d even say most) of those air refills happened when we were stopped at a gas station to refuel and a child had to use the bathroom so I had a few minutes to kill, so at least some of the 4.4 hours would have been just idle time had I not been topping off the air. Still, we saved $73 per hour of my time spent inflating car tires.

That seems worth it to me.

Buying Generics

In an average grocery store visit, I put somewhere around ten generic items in my cart. I’ll buy things like store brand ketchup, store brand tomato sauce, store brand hand soap, and so on. I don’t buy generics of items that don’t work well for my family – I only buy generics that are either identical to the name brands or make no difference. For example, I don’t buy generic trash bags as I’ve had some bad experiences with them.

Let’s say that, on average, I save a quarter per generic item compared to buying the name brand. This is probably a low average, actually, but we’ll use it.

As I mentioned above, we shop fifty times a year and we started being careful with our money eight years ago, adding up to 400 visits. Let’s say we buy ten generic items per visit – only generics that have no impact on our life quality – and those save $0.50 each, adding up to $5 per visit.

We’ve saved $2,000 over the past eight years buying generic versions of items. Again, these items have no impact on our quality of life compared to the name brands – we just buy generics of items that are pretty much equal to the name brand for our purposes.

In other words, we’ve saved $2,000 to have somewhat less pretty labels on some of our household and food items.

Installing LED Light Bulbs

In 2011, I gradually started shifting the lights in our home away from incandescent bulbs (after a bit of experimentation with CFLs that I never really found to be all that good). At that point, LED bulbs were good enough for secondary lighting, but by 2012 or so, I found them to be good enough for most lighting purposes and, now, I basically wouldn’t use anything else.

So, why LED bulbs? What’s the reason for using them? For starters, they’re far more energy efficient than normal incandescent bulbs. A normal incandescent bulb that uses 60 watts is replaced by a LED bulb that produces roughly the same amount of light while eating only 13 watts of energy. They also have a longer lifespan – I have yet to replace a LED bulb in my home, even though some of them have been in use for four years now. They’re estimated to have a life span of 20,000 hours, compared to the 1,000 hour life span of an incandescent bulb.

What’s the drawback? They’re expensive up front. I can consistently get LED bulbs in the $8 range right now, and that’s substantially lower than they were even a few years ago. Compare that to a price of $1 for an incandescent bulb and you can easily see the problem.

Yet, it turns out that the LED bulbs save a ton of money. I have, on last count, 43 lightbulb sockets in my home. We’ll assume that they all take 60 watt bulbs (some take more, some take less). Let’s also assume that I use each bulb for an average of 4 hours a day (again, some bulbs I use more, some less). This means that the bulbs in their sockets should last thirteen years, the lifespan equivalent of 20 incandescent bulbs.

Over the course of 20,000 hours, a LED bulb, using energy at a rate of 13 watts per hour, will consume 260,000 watts, or 260 kilowatts. An incandescent bulb, using energy at a rate of 60 watts per hour, will use 1,200,000 watts, or 1,200 kilowatts.

Let’s assume that, on average, energy costs $0.12 per kilowatt hour from my energy company. That means, over that 20,000 hour period, that the LED bulb will cost me $31.20 in energy, while the incandescent bulb will cost me $144.

Also, for every single LED bulb I buy at $8, I would have to buy 20 incandescent bulbs at $1 each for a total of $20.

The total cost of LED lighting over 20,000 hours? $39.20. The total cost of incandescent lighting over 20,000 hours? $164. That’s a savings of $124.80 per bulb.

Thus, over the thirteen year period that it takes for us to wear out an LED light, over the 43 sockets in our home, LED lighting will save our family $5,366.40.

That’s a lot of savings.

Buying Nonperishable Goods in Bulk

Virtually every home you go into has a bunch of nonperishable goods in the cupboards and closets, from cleaning supplies to dry foods. It’s easy to pick these items up at the local grocery store, but it doesn’t take a genius to notice that the “jumbo packs” almost always cost more than the smaller packs… but they actually cost less per item in those packs.

Let me give you an example. The particular brand of bath tissue that my family prefers costs $2.99 for a four-pack at the local grocery store, but if we buy it at our nearest warehouse club, we can buy it in a 36 pack for $20.48. At the local store, the cost per roll is $0.75, but at the warehouse club it’s $0.57 per roll.

Eighteen cents? What’s the big deal? Well, let’s then assume that we go through two rolls per week at our house, which adds up to 104 rolls per year. That’s $18.72 in annual savings just from buying bath tissue in bulk. We’re buying the exact same brand and the exact same size of bath tissue we’ve always purchased, but we’re just saving a bit less than $20 per year by buying it in bulk.

Now, let’s start multiplying that across the nonperishable products we buy in bulk. Garbage bags. Paper towels. Dishwashing detergent. Bath soap. Hair spray. Shampoo. Hand soap. Rice. Flour. Beans. Pasta. Tomato sauce. Oatmeal. School-safe cereal bars. The list goes on and on.

Let’s say that I save $20 a year on each of those items – we won’t even name any more. I’m pretty sure we save more on some items and less on others, but we’ll go with the average here (and I’m not including many other things we buy in bulk, like salt). That’s fifteen items, so that’s $300 a year.

We’ve been warehouse club shoppers for about eight years, so that adds up to $2,400 in savings.

What about the cost of the membership, you ask? Since our local warehouse club gives us a $0.10 per gallon discount on gas, we gas up there most of the time and that alone ends up paying for the membership. The other savings is just icing on the cake.

Cooking Ahead One Day a Month

I like making meals in advance for one simple reason: it saves time. Never mind the money, it’s the time savings that really makes this strategy worthwhile for me. When I make a meal in advance on a lazy Saturday, for example, it enables me to grab a homemade meal out of the freezer late on a Monday evening, go through a crazy busy Tuesday, and be able to put it in the oven or the slow cooker and still have a home-cooked meal on the table for my family during that twenty minutes we all have together during a very jam-packed evening. So, basically, I’m borrowing hours from a not-busy day and giving them to a busy day, but it’s even better than that – it takes less time to prepare four pans of lasagna at the same time than to prepare each one individually from scratch on different evenings.

Here’s the kicker – it saves money, too! I can take advantage of bulk buying when I make meals in advance because I’m making four meals at the exact same time.

Let’s say, for example, that I’m making that pan of lasagna in bulk one Saturday afternoon, which enables me to make four pans at once. Instead of buying the pasta sauce in individual jars at the grocery store, I can buy a jumbo pack of three or four jars at the warehouse club, saving $2 across all of the pans. I can buy a jumbo pack of lasagna noodles, saving $1 across all of the pans. I can buy a large block of mozzarella cheese, saving $3 instead of buying the smaller amounts. I can do the same with cottage cheese (my family’s substitute for ricotta, since a few people don’t like ricotta), saving $2 across all of the pans.

That’s a savings of $8 across four pans, or $2 per meal.

Let’s assume that’s an average savings for every “make ahead” meal that we prepare. Let’s also assume that once a month I manage to devote a Saturday to making two different sets of “make-ahead” meals. That’s eight meals, times twelve months in a year, giving us 96 meals in a year. Over the course of eight years since our financial turnaround, that all adds up to $1,500 saved because I made meals in advance.

That $1,500 in savings is pure icing on the cake. As I said at the top, the real reason I make meals in advance is that it saves time on busy days and actually takes less overall time than preparing the meals individually.

‘Shopping’ for Books and Movies at the Library

Sarah and I are voracious readers, finishing several books a month between us. Our family also has a family movie night where we all gather together and enjoy a family-friendly film.

In the past, I used to buy a lot of books and a lot of movies. These days, I don’t buy nearly as many, and the biggest reason is that I started “shopping” for movies and books at the library.

Instead of going to the store (or to a website) to buy books or movies, I just stop in at one of two different local libraries about once every other week. I browse through their new releases in the book section, trawl through some of the book areas where I often find things I like to read, and also dig through the movies.

This doesn’t eliminate my movie and book purchases, but it does reduce it a little bit.

Let’s say that because of this browsing, I buy one fewer $10 book per month. Let’s also say that I rent one fewer film a month from Redbox, saving me $1.50, and I also buy one fewer movie a year, saving me another $10. I still buy books and I still occasionally buy movies – the only change is that some of my movie and book consumption is now supported by free borrowing at the local library.

That simple change saves me $148 per year. Honestly, it probably saves me more than that, but we’ll use this as a really conservative estimate. Over the course of the last eight years since I became an active library patron, the library has saved me at least $1,100.

I don’t skip out on buying books in any way, but it’s easier to skip out on buying one if I have it in my hands from my local library. I still buy some books – especially ones I plan on rereading – but library browsing does nothing but save me money without denting my reading habits in any way.

It’s Not Really So Little

Here’s the thing: these big savings are actually disguised cleverly in your budget. Each month, each technique will save you a relatively small amount of cash. Together, all of these techniques save us only a few hundred dollars per month.

The value in these little techniques is that they’re so easily repeatable. They aren’t usually just a one-time thing. Instead, they’re simply a better way of doing something in your life. These new routines easily replace old ones, and those new routines cause your expenses to drop.

At first, you won’t notice a huge change. After a month or two, you might notice that you’re not stopping for gas quite as often or that your grocery bills and energy bills are smaller. You might find that there are a few more dollars left in your checking account at the end of the month, and that makes it possible to make an extra payment on one of your debts or start building up an emergency fund.

However, this change keeps going. And going. And going. It can provide the resources you need to slowly step away from paycheck to paycheck living. It can provide what you need to save up for a house down payment. It can provide a car payment, as long as you’re riding a late model used car and aren’t demanding a brand new expensive vehicle. It can help you save for travel or for education or for almost anything else you could imagine.

It doesn’t create a miserable, deprived life, either. I can’t imagine any of these changes bringing about any sort of real unhappiness in a person’s life.

Although many people look at these savings as “little,” I don’t see them as little at all. For the minimal life impact that they have, they can turn into a tremendous positive life impact. Almost every one of these changes has saved me at least $1,000 since I started The Simple Dollar; the only change that doesn’t qualify has saved me $73 per hour of time invested in it.

It’s a little lifestyle change, but over time, the impact can be really big!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.