Money hacks: Painless ways to spend less

Adjusting your spending and shopping habits in these ways may help you tuck away a significant amount of money.

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Sobering up

With the holiday buzz over, Jenny Jervis suggests a good dose of sobriety to make you smarter about your purchases.

"When you are thinking of buying something, no matter what it is (it could be the DVD for the latest film, a new sofa, or a car) instead of looking at the price as a value, look at it as an amount of hours you have to work to achieve that amount of money,” she wrote. "Let's say you want to buy a new phone that costs £100 ($155.50) and you earn £10 ($15.55) an hour, ask yourself if you would be happy with being given a phone after 10 hours work, or would you rather be given £100? Comparing your potential purchases with how much real-time work it would take to buy it often makes you take a second look at your purchases and may make you ask yourself if you really need it."

Controlling your impulse to shop is key, according to Divya Bhargavi, a self-professed "cured" shopaholic. It's easy to think you "absolutely positively need that thing for your life to function normally," she wrote. "The next thing you know, you're shopping online — click, click — or you are at the mall buying that and a few other useless things."

The solution, she wrote: "Next time you want something so badly, write it down. ... Look at it after a week or 10 days. I am 100% sure that you will not have the same feeling towards it. You will find out that you don't really need it so much."

Pretending to earn less money than you actually do also has its benefits, according to Thaís Freitas, another respondent. "Live a little under your possibilities (for example, buying cheaper clothes than the ones you could actually afford),” she wrote. "That way you will always save money by not spending all that you make."

Automate your savings

Cash may be king, and only spending what you have may be a good rule to live by. But cash in your wallet can also be cash out the window. Instead, track your spending and set up your accounting electronically.

"Track your expenses to the point where you have a general idea of what percent of your income goes to housing/food/transportation/medical/bills,” wrote Alexander Yuan. "If you see big changes month to month or year to year, ask yourself why. If you don't like keeping track of money, try to automate it as much of it as possible using automatic transfers."

Setting up a standing order with your bank to transfer a small amount each day — roughly £2 - £5 ($3.15-$7.75) into your savings adds up, Jervis recommends. "It's not much to miss each day, and you may not even notice it, but at the end of the month you could potentially have between £60 and £150 ($93 and $233) saved,” Jervis said.

Avoid the tempting fruit

A sale sounds like a good deal but do you really need all that's on offer? Carlos Torres cites economics and its law of diminishing marginal utility as a guide.

To illustrate how this works, Torres uses fruit. "Let's say you find a super sale on oranges — 5lbs for a $1," he wrote. "You spend $10 to buy 50lbs."

Here’s how his scenario unfolds:

  1. You're eating oranges like crazy
  2. You're spending hours making orange juice
  3. You’re taking them to work and trying to give them away
  4. You spend gas to drive 15 miles to give them to family
  5. You never want to see another orange again.

"The point is if you only eat three to four oranges a week, just spend 20 cents on 1lb. That is the savings point — what you regularly use," he continued. "The fifth orange is starting to overdo it and the 10th orange has no value at all."

Developing good habits

According to Yuan, a lot of hacks for saving money won't work if you don't develop good habits. "For anything on the list, try to think of a creative way to achieve the same goal in a sustainable way that fits with your personality."

Among Yuan’s own 10 saving hacks are:

  • Avoid taxis and use public transportation as often as possible; for trips to the airport with lots of luggage, try to use shared-ride services.
  • Bring your lunch to work instead of eating out
  • Always check for discounts before going through an online purchase; a simple Google search can usually turn up some kind of coupon.

Don't sweat the small stuff

Don't waste your valuable time trying to scrimp and save every penny as there are more productive things to do than analysing the contents of your waste bin, according to Johnathan Law, who says savings need to be put into perspective, like whether you're paying too much on your mortgage or rent and should downsize to a more affordable property.

"It's true that wastefulness is a sin," he wrote. "But sometimes, and many people don't realise this, it is cheaper to waste than to save. Rather than spending an hour sorting through recyclables and selling [them] at the center for maybe 1-2 bucks, you could be doing something more productive with your time, like either learning or working."

"Long story short," he continued, "it's the big ticket items that save you money. Don't pinch pennies when you could cut dollars. … People sweat the small stuff because it's easier to do that than to make the big changes."

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This article was written by Maria Atanasov from BBC Capital and was licensed as an article reprint. Article copyright January 2, 2015 by BBC Capital
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
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