Tuesday, December 27, 2011

To save more think about yearly costs of habits

When it comes to saving money, there are many items we spend or waste money without even knowing the true cost especially when their daily or monthly cost is small enough to ignore. For this reason, it is always wiser to look at the yearly cost of items. This may sometime surprise how expensive some small habits even if they do not look that expensive to you at the first glance.

Take an executive who is enjoying a take-away drink from Starbucks every workday morning. Assume that he pays $5 for the drink. By just replacing this single habit with preparing his own coffee in company's coffee machine, he can save $1,000 in a year. If free coffee is not available, he can well switch to kopi tiam, which will save him $900 to him.

Or think about one of the most harmful and wasteful inventions of human kind: cigarette. If you are smoking a package of international brand in a day, you will pay $12 per day for this harmful habit. It may look affordable for you but it adds up to $4380 a year. Even if you are smoking a package for 2 days, it is still a very high $2190. It is very common for a smoker to spend a month or two month salary to finance this single habit alone!

Many simple and easily replaceable habits eat up some bite from your budget and they may add up to thousands if you do not fight with them.

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