A billionaire many, many times over, Warren Buffett still lives in Omaha Nebraska, in a home he bought for $31,000 in 1958 and is now estimated to be worth $652,6191. Sam Walton, the Walmart founder, drove the same 1979 Ford F-150 pick-up until he died in the early 90s2.
I’m certainly not in their league, not even close, but I am successful — in both my business and as an investor. And I’m not ashamed to admit that I’m always looking for a deal, for ways to save money. Yes, I wait for items I want to go on sale. Yes, I routinely call my technology service providers to see if there are better pricing options available.
And I live this way for one, simple reason: I don’t happen to think being well off and being frugal are mutually exclusive, I never have.
No doubt my early life has had something to do with it. My dad died when my brother and I were young. My mom worked very hard to support the three of us, it wasn’t easy and it taught me a lot about the value of a dollar and the importance of saving; and it’s really informed the way I live my life — both as an Investment Advisor and personally.
But still, I was somewhat surprised when a colleague recently gave me a copy of “Cashflow Cookbook” by Gordon Stein. There’s an illustration of a chef’s hat, with a dollar sign on it, on the cover and that, combined with the book title and the subhead ($2 million of financial freedom in 60 easy recipes) seemed too simplistic and too trite to resonate or appeal to seasoned, sophisticated, successful investors.
Nonetheless, I read it. And there are insights, observations and tips we can all benefit from, no matter how much money we have. In total, Stein has come up with 60 different “recipes” or ways to save money. In his introduction to the book he explains that “each take between 10 minutes and a couple of hours to implement and can save between $25 and $900 each month.”
If you’re thinking that’s child’s play, think again. He did the math. If those savings are invested at 7% they can provide “more than $700,000 over 10 years for a single person and over $2 million for a family.” That’s not chump change.
If you’re young and just starting out the news gets even better, thanks to the power of compounding. As Stein writes, “if you’re 25 and work until you’re 65, that’s 40 years. If you could use just one of the recipes that saves, say $200 monthly, and you invested that money in the stock market and earned 7% over your 40-year career, you would have $524,800.”
And what if you save even more money, by using more of the recipes in Stein’s book?
There’s no time like the present to get started
How many of you really shop around when you’re looking for home insurance? A couple Stein writes about were going through difficult times and they began to look for savings in their household finances.
When they compared their current insurance coverage and cost to others, they found a policy that offered the same protection for $250 less annually — plus it came with burglar alarm and smoke detector discounts amounting to more savings of $73.
Regardless of how good a driver you are, chances are you’ve had your fair share of traffic tickets. Do you ever fight them? If the answer is “no,” than maybe you should switch gears. There’s another example in the book of a woman who was stopped by police for driving 71 km/h in a 40 zone. The ticket was $226. She did fight it and it was reduced by $103.75.
Read a lot of magazines? Have you looked at the price of them lately? That’s another one of the recipes in the book. Some cost as much as $10 an issue. What does that amount to, if you read three, four or more a month?
There are apps that give you unlimited reading for just $12 a month. Or you can join the library for free and download e-books, read magazines and newspapers and reserve new releases for free! And help the environment at the same time.
I can’t speak for you, but for me it’s a matter of principle. Why should I pay more than I need to? That’s the question I ask myself constantly. And while these few examples of savings I’ve cited don’t represent huge sums of money, they do add up. And before I know it, a matter of principle quickly adds to my principal.
1 Business Insider
2 Architectural Digest
Alan Friedman is an Investment Advisor with CIBC Wood Gundy in Toronto. The views of Alan Friedman do not necessarily reflect those of CIBC World Markets Inc. CIBC Wood Gundy is a division of CIBC World Markets Inc. a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.
Alan Friedman, Alan Friedman Investment Advisor Toronto, Alan Friedman CIBC Wood Gundy, Friedman Investment Group, investing, investors, Investment Advisors, value, value investing, Warren Buffett, Sam Walton, Gordon Stein, Cashflow Cookbook, frugality, deals, wealth, savings, home insurance, traffic tickets, magazines, compounding