A popular New Year’s resolution in 2012 is to “save money,” according to a recent survey. There is no excuse for letting this resolution slip because people at any income level can save big by becoming better shoppers.
Consider Christa Amyot, who spends 45 minutes a week searching for bargains and coupons. The $100 she saves works out to just over $5,000 a year.
True, there is some work involved in hunting for bargains and coupons, but the return on time allocated is unparalleled and risk free. In Ms. Amyot’s case, the $5,000 she saves requires about 40 hours of effort each year for a return on time of $125 per hour.
The return is even higher after factoring in taxes. Assume her family is like the average family and spends half its salary on various taxes (income, sales, import duties, user fees, etc.) at the margin. Then “a penny saved is two pennies earned,” as Andrew Tobias argued in The Only Investment Guide You’ll Ever Need.
They would have to earn $10,000 in salary to net the $5,000 she delivers. In effect, Ms. Amyot’s smart shopping generates a return of $250 per hour.