When someone asks me how to take control of his finances, I don't advise that he bake his own bread.
Yet those are the sorts of tips you tend to get when Googling "how to save money." You’ll save money, but probably not as much as you'd think. And you’ll find these tactics can take time away from everything else you need or want to do.
I suggest instead that people think first about the big-ticket items. Results of a survey from Insurance.com back me up.
The car insurance comparison-shopping site asked 2,000 adults about how much time they spent on five big purchases and how much they saved, then ranked their potential bang for the buck. For example, the typical amount of time spent researching and shopping for a new car was 13.6 hours and the amount saved $1,054 – which works out to about $1.29 a minute.
- Average shopping time: 10 minutes
- Average annual savings: $540
- Savings per minute: $54
- Average shopping time: 97 minutes
- Average annual savings: $179
- Savings per minute: $1.86
Cable TV or other programming
- Average shopping time: 144 minutes
- Average annual savings: $248
- Savings per minute: $1.72
- Average shopping time: 13.6 hours
- One-time savings: $1,054
- Savings per minute: $1.29
- Average shopping, driving or wait time: 320 minutes
- Average annual savings: $119
- Savings per minute: 37 cents
Comparing car insurance quotes tops the list. Not only is the potential payoff highest at $540, the time invested is just 10 minutes. You can get a quote from just about any insurance company online or by phone in that time; Insurance.com lets you get quotes from many at once by using a single form.
Frankly, 10 minutes is less than you’d spend digging the bread machine out of the back of the cupboard. And if it turns out you’re already getting a great deal, you’ve only burned 10 minutes to discover that. Win.
'The best bang for the buck'
Your time has value. It may even have potential penalties. Suppose waiting in line for Costco gasoline makes you 10 minutes late getting to the child care center. There's probably a fine attached to late pickup, to say nothing of the frustration of watching the clock (and the traffic) while waiting to fill up.
Sure, Costco or Safeway gas can be up to 15 cents cheaper per gallon. But you could also download a free gas app and get the next-best deal. Even if you don't have to worry about day-care fines, ask yourself this: "What's the best use of my time when it comes to saving money?"
"Everyone wants the best bang for the buck. We went looking for the best payoff for your time," says Des Toups, the site's managing editor.
They also went looking to see how much time shoppers were willing to put into looking for a better price on a range of goods. The winners? Pretty much anything easily comparable online – like airfares, laptops and car insurance.
Here’s how much time, on average, 2,000 adults surveyed were willing to put into shopping for a better price on:
- Airfare: 68 minutes
- Laptop computer: 68 minutes
- Auto insurance: 63 minutes
- Hotel rooms: 53 minutes
- Rental car: 48 minutes
- Clothing: 41 minutes
- Children’s toys: 36 minutes
- Prescription drugs: 34 minutes
- Groceries: 33 minutes
- Pet food: 26 minutes
- Beer or alcohol: 17 minutes
- Cigarettes: 16 minutes
The value is even greater when you think of short- and long-term values. Sure, it's nice to save $100 on a new flat-screen or a plane ticket home for the holidays. But those are one-time savings. Saving $540 a year on car insurance or $15 a month on a cellphone plan is a gift that keeps on giving.
Even changing your coverage, your deductibles or watching your discounts -- even if you don't wind up switching insurers -- can pay off year after year. (See "7 reasons your rates drop.")
Picking your spots
Note: Wanting to save money in every area of your life isn't necessarily a bad thing. I once did this as a survival tactic and now do it as part of a balanced budget. But I'm increasingly aware that some frugal hacks can create anxiety or a scarcity mentality.
For example, according to one blogger, homemade laundry soap cost 4 cents per load vs. 12 cents per load for Tide. But Tide goes on sale and coupons are regularly available, which is how I bought detergent as a broke midlife student.
More to the point, my partner and I do only about six loads of laundry per month. Do I want to go to the trouble of shopping for the ingredients and making the detergent to save $5.76 per year? (Hint: No.)
As a reformed penny-pincher, I beg you to pick your battles. Spending 10 minutes getting a car insurance quote or even 97 minutes comparing cellphone plans will likely save you more overall than clipping a cereal coupon or stopping by the bakery outlet. Those last two are perfectly fine strategies, but they shouldn't be the first (or only) ways to save money.
Full disclosure: I still clip coupons and shop at the "used bread" store. But these days I keep an eye on not just on the value but also the emotional impact of my frugal hacks.
I suggest you do the same. If you obsess over a missed sale or a forgotten coupon, or castigate your mate for forgetting to bring home that recyclable soda can, you need to take a look at your relationship with money. Is the hypervigilance worth the small savings?
Yes, a dollar is a lot of money if you're a buck short on this month's rent. Generally, though, if you mind your big-dollar savings then the penny-ante items will take care of themselves.