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USA Real Estate Blog

Want to Save Money? Don’t Cut Down on Lattes – Ivo Nanev

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I had a friend recently ask me for some financial advice.

She felt like she was stagnating in her career and wasn’t sure what to do next. So she wanted to take a break and go travelling.

But first, she needed to save money.

I asked her to write down last month’s expenses. The list went something like this:

  • Rent — £600
  • Car (loan repayment, insurance, fuel)— £500
  • Bills — £100
  • Groceries — £200
  • Eating out — £250
  • Misc (e.g. clothes, gifts) — £50

After seeing this, she concluded that she was spending too much money eating out. She had been going out a lot more with friends recently, that was probably why.

So she decided instead of eating out 3 times a week, she would eat out only once a week.

That would save her £150 a month.

Now, she wanted to have at least £3500 saved up for her travels. For those of you who are good at maths, you’ll notice that’s 2 years of saving required.

She would have to give up something she really enjoyed for two years. All while continuing to do something she didn’t want to be doing.

She couldn’t stomach the idea.

We took another look at the list. Here it is again:

  • Rent — £600
  • Car (loan repayment, insurance, fuel) — £500
  • Bills — £100
  • Groceries — £200
  • Eating out — £250
  • Misc (e.g. clothes, gifts) — £50

“What if you moved back in with your parents and sold your car?” — I said.

She thought about it for a second. The thought hadn’t occurred to her.

She’d had her own place for a few years now. Having a car meant she could go anywhere she wanted to. These two things were a symbol of independence for her.

It was a tough choice.

But then she looked at the numbers. She realised that by doing that she would be able to save the same amount of money in 3 months when it would otherwise have taken her 2 years.

It was a no brainer.

And come to think of it, she actually wanted to spend a bit more time with her parents. Since she moved out she hadn’t seen them that often.

It wouldn’t be so bad to move back home for a bit after all.

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