Archive for the 'Money' Category
November 26 2008: Frugalista
Filed under Money with 4 Comments
I discovered a new word that describes me perfectly: frugalista.
A person who lives a frugal lifestyle but stays fashionable and healthy by swapping clothes, buying secondhand, growing own produce, etc.
What I think a lot of people don’t understand is that being frugal doesn’t mean denying yourself any of life’s pleasures. I have a lifestyle abundant with frivolities. I travel frequently, I see my friends often, I go out to dine often, I have a constant stream of screen and text media to keep me entertained, I have a closet three times bigger than anyone I know, I’m educated, I drive a nice car, I live in a nice house, etc. etc., and yet I still manage to squirrel more savings away than others in my age group.
The only difference is that I take the time and make the effort to achieve such things on a budget. I buy plane tickets on sale, and stay at youth hostels when I travel. I buy discount movie tickets on eBay so that I can spend time with friends and loved ones without paying full price for such privileges. I use vouchers and clip coupons to save money when I go out and dine. I borrow books and DVDs for free from my library rather than buying them. I buy my clothes (and things like that) on sale. I pay for my school fees up front (rather than going into debt) because that way, I get a 20% discount. I pay rent at home so that I get nice home-cooked meals and don’t have to worry about things like utility bills and rental agreements.
So when I write about frugal matters here on this blog, keep in mind that I’m not trying to be superior, I’m not trying to flaunt my lifestyle in your face, and I’m not telling you to give up all the things you hold dear. I’m not telling you to start living on bread and butter and to hide all your money in a hole in your backyard. I’m simply trying to share ways of saving money on the daily essentials and on little frivolities, while not compromising your lifestyle in any way. If you can save a few dollars here and there, why not embrace that opportunity and make the most of it?
November 23 2008: Serious Saver
Filed under Money with 7 Comments
I’ve taken all my money out of my term deposit account, and opened up a new “Serious Saver” account at my banking institution. Before you think that I’m going entirely against everything I said in my earlier post, rest assured that this decision was made after much contemplation, mental arithmetic, and drawing up of spreadsheets to assess the pros and cons. The terms are reasonable:
- No account fees
- No minimum account balance
- Higher interest rate calculated monthly (provided you don’t make any withdrawals in that month, in which case you’ll get zero interest)
It’s the last point that convinced me to switch accounts, but it’s probably also the point that will put most people off (e.g. not being able to withdraw the money). My term deposit was only offering me about 4% annual interest, so an extra 1% per annum will allow me about an extra $200AUD each year.
Not being able to withdraw the money isn’t a problem for me as I never touched the money in my term deposit anyway (there’s a reason they’re called savings, not spendings). In fact, it’s now easier for me to deposit savings into the account (I don’t have to wait for one day every three months like I did with my term deposit), so there was essentially nothing in the terms and conditions that weren’t in my favour, and nothing that could discourage me from saving even more than I currently do.
The point of this entry however, wasn’t to boast about my sudden burst in income, but rather to impart a piece of advice about banking: Don’t stay with your bank simply because you’re too lazy to change. Shop around a bit. Compare rates at other banks, compare their different terms and conditions, and even consider different banking options within the one bank. Don’t fall into the trap of simply thinking “hey, that bank will give me an extra 1% each year!” without researching the T&C - if they charge you an annual account fee that gobbles up that extra 1%, what’s the point?
A bit of research will take you far. Don’t become complacent with your 5% interest when you can get 8% interest somewhere else! Who knows, maybe you’ll find yourself $200AUD richer at the end of the year as well.
November 18 2008: Pay Rise: What To Do?
Filed under Money with 12 Comments
I recently received a pay rise at my babysitting job on Sundays, from $20AUD an hour to $25AUD an hour. This brings me an extra $70AUD each week, or in other words, combined with my part-time retail position (two to three days a week), brings me on par with a full-time salary of $35,000AUD a year. I is rich yo.
BUT - does this mean I can now change my frugal ways? Does that extra $4000AUD a year mean that I can now afford to shell out for a flat screen TV, to drive further and more often for no particular reason, to start cracking open bottles of Moet rather than my preferred cheap and nasty $10AUD strawberry-flavoured bubbly? Absolutely not.
This is the problem that I think a lot of people have - they spend on par with whatever pay rises they receive. Just because you’re receiving an extra XYZ dollars a year doesn’t mean that you can spend that money without a second thought. No matter how much you’re earning, you should always endeavour to save at least a fifth of your income, or at least a quarter of your income if you’re only providing for yourself and have no dependents. Ideally, you’d be continuing to live the way you did on your lesser income, and so the extra dollars can go directly into a savings account or into investments.
As for me? That extra $70AUD a week will probably mean that I’ll start drinking a $20AUD bottle of sauvignon blanc rather than a $10AUD generic white wine when I go out to dinner with friends. I might start paying $25AUD for a haircut at a proper salon, rather than $14AUD at an Asian garage salon. But I honestly doubt that it’s going to go much further than that.