Editor’s note: This article was first published in July 2010. All prices and amounts are Spanish figures from 2010, such as 3.50 euros per pack of cigarettes, 150 euros a month on bars and 70 euros a year on bank fees.
Saving isn’t as complicated as many people think, and making money by saving is much easier than you might believe. You just need to know how to do it and how, without any effort on our part, real business opportunities slip through our fingers in our everyday personal finances. Here we explain how to save and how to make money by saving.
When someone plans a business, they draw up a business plan, yet for ordinary people the idea of drawing up a financial plan to improve their finances and boost their savings doesn’t seem to be on the agenda. Many people who want to get into investing don’t have the capital to do so, so we have put together some measures to help you save a lot of money month after month instead of falling deeper and deeper into debt.
We’ll start our list of savings strategies with something that will improve not only your financial health but also your personal health.
1. Ways to save
Tobacco: If you smoke, quitting clearly isn’t easy; it’s one of the habits that carries the most costs, including hidden ones. With tobacco you don’t just burn your money on the price of a pack, but also on medicines, since smoking makes you fall ill more often than a non-smoker. Let’s take an average price of €3.50 per pack (and few brands are that cheap anymore).
If you smoke a pack a day, over the month you’ll have spent an average of €105, which multiplied by 12 months brings your annual tobacco spending to €1,260. That amount would be very useful in a savings plan.
Alcohol: Who doesn’t fancy a drink at the weekend or a few beers on a terrace at midday? We don’t have to stop; we just need to slow down. The ideal would be not to drink alcohol at all, but there you go. A middle-class family spends an average of 150 euros a month in bars or on weekend outings. If you manage to cut that figure in half, you’ll save an average of €900 a year while still spending €75 a month.
Healthy diet and exercise: A lot of spending comes from boredom. I won’t go into the benefits and savings of a healthy diet, which you should combine with a regular exercise habit. One of the cheapest and healthiest ways to exercise is running. Running costs nothing and encourages saving, not to mention that a healthy body keeps the mind clearer and more open to coming up with new ways to make money.
Negotiate terms with service providers: Banks and insurance are two sectors we never stop to analyze, and today we can come out ahead with both. In their eagerness to attract new customers, insurance companies are offering better terms to customers of other companies. Nowadays, by shopping around and comparing insurance offers, whether for your home or your car, you can save an average of €100 a year in total. It’s not much, but it’s yours.
The same goes for banks. By switching banks, you can get rid of maintenance fees and even get back up to 2% of the amount of your main bills, such as electricity, water, gas and phone.
In short, by carefully comparing bank terms, you can save more than €70 a year.
Likewise, compare the prices of your electricity company, phone operator, internet provider and so on.
2. Ways to make money by saving
In a previous article we explained how to make money from the gold mine you have at home without realizing it, starting with your basement: an old bike, an old computer, clothes and so on.
Printer cartridges: You probably don’t know how much you could be paid for the printer cartridge you throw in the trash. An empty cartridge can fetch €6–25, depending on the model. You just have to sell it to a printer cartridge manufacturer.
Mobile phones: Why throw away your old phone when nowadays people will pay you for it? When you sign a mobile contract, they usually give you a state-of-the-art phone, or you buy a prepaid one. The point is that today you can go to zonzoo.es, where they can give you up to €200 for your old phone.
Jewelry and valuables: One obvious way to make money right away is to sell luxuries such as jewelry, gold, silver and watches, and even antiques such as lamps, trousseaus, coins and banknotes. They may have sentimental value and you may not be paid what they’re really worth, but sentiment doesn’t make money, and those objects can give you capital that, turned into cash and invested well, will generate higher returns.
Get to know eBay: eBay is an online buying and selling site where the things you’d least expect anyone to want will sell within days, as long as the price is reasonable: old films, comic collections, original DVDs, vinyl records (especially Michael Jackson’s). eBay is a very attractive source of income. I mention eBay because it’s the best known, but many other sites of the same kind have appeared.
Rentals: Some companies and clothing shops rent out wedding dresses and tuxedos for €200 a day. Would you rent out your wedding dress for €100? Setting sentiment aside, I think it’s a good way to make some money while helping a bride save. What we’ve said about the wedding dress also applies to a computer, your own car if you have one you don’t use, and anything you can afford to rent out to cover someone’s temporary need.
There are a thousand ways to save and a thousand deals you can do without any investment, because the product is right in front of you. By following a few simple steps, opening your mind and designing a family financial plan, you can end the year with more than €3,500, more than 50% of which used to be expenses, so your finances would improve by about €5,000. That’s no small sum.
That said, part of your financial intelligence should go into getting a return on your savings, which you can invest to multiply them even further. You can invest in fixed-term deposits, savings funds, investment funds and a wide range of risk-free financial products, earning a return of between 4% and 8% on your savings. When you’re ready to take on other kinds of risk, there are other investments such as equity funds, shares, mutual funds and so on.
Further reading
Featured image: stevepb, CC0 1.0, via Wikimedia Commons.
