If you had to save $10,000 in the next six months, how would you go about it?
Columnist Simon Constable took an inventory of average living costs, and came up with a surprising conclusion: this is actually do-able for some people, and it might actually be easy. However, for smart consumers, your total savings might not add up to much more than triple digits.
For instance, if you’re not a smoker, you won’t have a chance to cash in on the first $2,000 of savings he proposes, which comes when you stop paying $12 for a pack a day of cigarettes.
However, you might be able to get rid of your cable bill and subscribe to Netflix instead, which would save an average of $91 a month, or $546 over the next six months. Delay purchasing a new car once you’ve finished paying for your current one, and your expenses drop $300 a month, or $1,800 over the next half year.
You can also save $900 by getting out of the habit of stopping by Starbucks on your way to work each morning, and another $900 if you pack a lunch to work instead of buying a sandwich at the deli downstairs.
Are you paying for a gym membership that you seldom use? Cancelling it could save another $348 over the next six months.
At this point, the advice becomes questionable. The advice assumes you aren’t contributing to your 401(k), and therefore missing out on a hypothetical company match of 50%. That would add $2,500 to the total of some people, but probably not an astute consumer.
Total savings from all these options: $10,400, depending on which ones apply to you. Our guess is your mileage on this advice will vary, perhaps as low as $4,500.
About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years. Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.
Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association.