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More tips to help you save money

Three perspectives about saving more money

Saving money is one of those things that sound so simple to do but yet one of the hardest things to do because it requires discipline, effort, and awareness. Here are three perspectives to help you on the path to save more money.

Small things add up to big differences

David Bach, author of the Automatic Millionaire, coined and trademarked the phrase “The Latte Factor”. His theory is to focus on finding those small, day-to-day purchases that, when eliminated, can actually provide you with a significant sum of money. It really comes down to finding $5 a day that can be saved and invested instead of spent.

The point is to understand that most of us let too much money slip and not even realize it. For example, we might be the person who stops by Starbucks every morning for a $3.00 cup of coffee and a $2.00 muffin. Or, we might be the guy who eats fast food every day, instead of bringing a bag lunch to work. Maybe our guilty pleasure is eating out for dinner regularly because we get home too late to cook. We could be the gal that buys a couple of bottles of water a day when it’s free at the tap. Or maybe you are the person who is paying $10 per month in bank service fees when there are so many ‘no fee’ alternatives.

Whatever the case may be the Latte Factor brings real meaning to the saying that small things add up to big differences over time.

Don’t sweat the small stuff

At the other end of the spectrum, you might get a lot more mileage focusing on the big-ticket items instead of the little stuff. Saving $5 a day for a year will save you $1300. However, $1300 is pretty small when you start to look at the two biggest expenses for Canadians – homes and cars. Living within your means when it comes to these two expenses can make much bigger differences. For example, buying a $20,000 used car instead of leasing a $40,000 new car translates to big yearly differences. Rethinking that $25,000 renovation on your line of credit means saving a lot of money in interest costs. The key is to live within your means when it comes to big-ticket costs like vacations, big-screen TVs, appliances, furniture, etc.

The next time you are going to spend more than $2500 on something think hard about how that purchase might affect your financial situation. Think about how that money may be better used for RRSPs or paying down debt.

Be aware of your expenses, but focus also on income

The Latte Factor is all about becoming wealthy on your current income. It implies that success has less to do with income and more to do with smart lifestyle choices.

Part of financial success is to also focus on generating more income. I’m not talking about getting rich quick schemes. Rather, I prefer to talk about the good old-fashioned approach to making more money – hard work and education. Maybe this means figuring out what it takes to get promoted or getting a part-time job or starting a home-based business or getting more education. There is no question that there is a correlation between wealth and income. The more money you make, the easier it may be to save.

My two cents

Getting ahead financially requires more than simple cuts (big or small). It involves changing your attitude about money, changing your lifestyle, and living within your means. It’s about living life in balance and knowing where you are spending your hard-earned dollars. Every financial decision you make today affects your financial future so spend wisely and save wisely.


  1. Cheapskate Jake @ My Personal Finance Journey

    I think the concept of changing your life and your attitudes of money is probably the most powerful way to save. In the past few years of practicing frugal living, I’ve been able to get to the point to where I no longer get “spending spree” urges because I realize what the negative consequences will be that are incurred on my finances.

    • Jim Yih

      Thanks for sharing CJ. I think it’s all about developing good habits (as opposed to the bad ones). It sounds like you have done just that! Well done.

      • Cheapskate Jake @ My Personal Finance Journey

        Thanks Jim! Keep up the great work on the blog!

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