Money, Freedom and the Art of Happy Living

Today, let's start to save some money.

Saving per se is a thing many people don't like to think about, because it means to surrender some consumption.

So let's look at some tricks that helped me saving and might help you as well:

1. Understand the economic concept of opportunity costs
   
   This concept basically says that you can spend each Euro only once.
   So you should not look too much on the price of something, but you should look at the utility (or happiness) it gives you compared to other products with similar price.
   
   Example:
   When you are about to buy something (let's say a dinner at a restaurant), don't say "well, that's 20 EUR, this is a good price so I buy it", but think what you could do with the 15 EUR instead. Think about something you like very much (let's say watching films) and compare (my meal in the restaurant equals buying 2 DVDs, or renting out 7 DVDs). And now decide: Buy only if the comparison seems worthwhile. If not, this good is not attractively priced for you (might be different for somebody else).


2. Calculate in yearly savings and imagine what you can do with the saved money
   
   Often people are too lazy to optimize e.g. their electricity provider, because the hassle involved seems to be big (compare offers, find a better one, cancel the old contract, set up a new one) and the reward seems to be small, e.g. a couple of Euros per month only.
   What helps is to think in (a) yearly savings, (b) the hourly pay for your effort and (c) what you could do with the savings each year:
   E.g. if changing your electricity provider saves 9 EUR per month this might not seem to much and not worth the effort if it takes let's say 3 hours work to switch.
   But in 1 year this is 108 EUR. In 5 years this is 540 EUR.
   Different picture.
   
   Continue reading in my main blog!