Money

Lifestyle Trade-offs That Will Boost Your Savings

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iStock_000071026955_MediumThere are surefire ways to save more if you are willing to make small adjustments to your lifestyle—these trade-offs can and will boost your savings over time—but they require an acknowledgement of your power to choose and a commitment to your life over your lifestyle.

Your interests, opinions, and behaviors are the basis of what makes up your lifestyle. You display your lifestyle through tangible and intangible factors, including what you value, choices you make, your personal preferences, and your outlook toward the future. Your lifestyle is articulated and can affect where you live, what career you choose, and how much money you make. There is also a direct correlation between your lifestyle choices and your spending habits.

The Journal of Artificial Societies and Social Simulation published an article stating that we as individuals often overvalue the impact things we spend on will have on our lives. Our overall happiness doesn’t increase as we purchase more, in fact, it decreases, because our lifestyle expectations continue to rise with our income.

Consider the trade-offs associated with reducing the cost of your current lifestyle. In economics, we call trade-offs opportunity costs. Simply described, an opportunity cost is the unpursued choice between two options. It’s the option you lose out on when you can only make one choice.

The power of choice is not always explicitly acknowledged. Remember you created your current lifestyle so you have the power to mitigate, control, or reduce the cost associated with it. You don’t have to continue supporting a lifestyle that hurts you financially over the long term.

Daily Coffee Fix:  $15 in savings per week

If you must have luxury coffee at $5 per cup, commit to reducing the frequency from five days a week to a max of two times per week. You’ll still have the occasional pleasure of a latte, and the savings of $780 over the course of a year.

Buying Breakfast & Lunch: $50+ in savings per week

The average meal prepared at home has a cost per serving of $.50–$2. Compare that to the cost of purchasing breakfast $5.08, lunch $10, and dinner $12.75 outside and you are easily paying markups of 1,000% or more. Reducing this expense to twice a week will still cost you more than $2,000 annually, so consider going further, only eating out twice a month to increase your savings by more than $1,000 per year.

What are some other small trade-offs you are willing to make to boost your savings? Is it your weekly mani? Your monthly shoe treat? Tell us more in the comments below.