It’s easy to go through life complaining about how expensive everything has become and how there’s not enough money left over at the end of the month to save towards retirement. A great exercise to see where you can free up money is to take a look at your habits and question each step of your routine.
To begin, think about when you first wake up. You get out of bed and turn on the lights. Do you have energy-efficient CFL or LED bulbs, or incandescent or halogen bulbs? Replacing 6 60 watt incandescent bulbs that run an average of 4 hours a day with the equivalent LED bulbs would save you 19.4 cents a day.
Next you probably grab your cell phone and check your messages. How did you pay for that phone, and what is the monthly fee? There are many providers charging $50 or less a month for the equivalent plans that cost $100 or more from the big carriers. Making the switch could save you $1.67 a day.
Next up you hop in the shower. Are you using a low-flow shower head? Are you taking a 15-minute shower? Changing over to an ultra low-flow shower head can save you 34.2 cents per shower over older models.
After your shower you might reach into your medicine cabinet to take a multi-vitamin, calcium, and glucosamine for your knees. Those three pills will cost you 95 cents a day, and there’s a ton of research that shows not only may they not be doing anything positive for your health, they may be hurting it. Talk to your doctor the next time you visit and ask if you even need to be taking supplements.
When it comes time to leave work, what happens with your heat or air conditioning? You don’t save money heating and cooling an empty space. A programmable thermostat can save you 5-15% on your heating costs, or an average of 24.6 cents a day if you heat with natural gas, 36.6 cents a day if you have electric heat, and 86.0 cents a day if you burn oil to stay warm. These averages are over an entire year, not just during the heating season. If you buy a programmable thermostat, just make sure you actually program it! Add on another 20.5 cents a day if you use air conditioning during the summer.
It’s soon time to hop in the car and drive to work. What will you do for your morning cup of Joe? Starbucks ($2.10), Dunkin Donuts ($1.89), the Keurig (66 cents) on your counter? If you skip the store and make your own using a coffee maker, you’re out 15 cents. That’s a savings of $1.95, $1.74, or $.51.
Now that it’s time to head to work, how do you get there? The options available here differ for everyone. Some people can car pool, while others can take public transportation. Walking or biking might be an option for others. However, there are longer term options available too. If you can’t walk or bike to work, why can’t you? While you might not be planning on moving tomorrow, it’s worth considering how much more of your life you’ll get back, and how much less stress you’ll have from a long commute by moving closer to where you work.
Likewise, how much does your car actually match your driving style? It’s easy to think you need a big SUV for hauling people and gear around, but how often do you actually do it? Is your car usually just transporting one?
The next part of your day are meals. It’s amazing the amount of money people can spend going out to eat for lunch and dinner. It almost feels silly to put prices here, but you can easily save $5 by bringing your own lunch to work, and $14 by making dinner at home.
Once you get home, which are you more likely to do, turn on the TV, or hit the gym? If you have memberships to organizations, do you actually use them? If you turn on the TV, how many channels are you actually watching. How many of them should you be watching? Cutting back your cable subscription can easily save you $1 a day. Maybe you can get rid of it altogether and use a service like Netflix for your viewing needs, freeing up $3.07 a day.
You might roll your eyes at some of these suggestions because individually they don’t add up to a lot of money. Take a look though at some of the changes suggested here, and add up the dollar amount you can save by changing your habits. Making small changes early adds up to serious money later. By saving just $3 a day, after 30 years at 7% interest you’d have $110,674.98. That might not sound like a lot of money when you’re talking about retiring, but it’s $9,024.98 higher than the average 401(k) balance in 2013.
Want to do more? $10 a day for 30 years will leave you with $368,916.60 or $779,674.93 in 40 years. What better way to fund a Roth IRA than by investing money freed up by analyzing your habits?