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The Money Saving Rules

There must be a million and one ‘how to save more dosh’ articles on the internet. In this article I’ll be sharing some of the techniques and approached I use to maximize our savings.

Hopefully you’ll learn a bit more than the usual ‘take your lunch to work with you’ or ‘pay off your debt first’ advice churned out in other articles.

Rule #1: More is Less

When furnishing our new house a few years ago we made a conscious effort to avoid the deadly duo of house furnishings: Ikea and DFS. The goods that these kinds of shops sell are like new cars, but worse. As soon as you get them home you’ve already suffered a huge chunk of value depreciation. A quick search on ebay reveals just how worthless secondhand flat pack furniture is.

Instead we bought nearly all of our furniture from auction houses, antique shops, flea markets and ebay. Most purchases were ‘antiques’ or reconditioned items1. The result is we have more individual furniture that should last a lifetime. In addition if desired, we most likely sell it all tomorrow and get back at least what we paid for it. While you may pay a little more for it in the first place, if you’re canny you’ll likely save money in the long run.

The lesson here is to buy quality things that last. Make sure your choices are well considered and will not go out of fashion or quickly become obsolete. While impossible to do with electronic goods, when it comes to things like furniture, cars, bicycles and jewelry if you shop carefully you can buy things that will even increase in value over time rather than decrease.

Ermine summed it up rather neatly with the phrase ‘Often the best and dearest is the cheapest’.


Rule #2: Buy From Renowned Retailers

The internet is an amazing tool to have at your disposal when making purchases. Without leaving your home you can check reviews of products from other consumers, compare alternatives and most importantly scour the world for the best price. However what you don’t always get online is customer service.

I’m a big advocate that for certain things it is better to pay a bit more for something and buy it on the high street, from a renowned retailer. For certain goods quality customer service can save you serious money in the long run.

Recently the mattress we bought 7 years ago began to sag. We called the retailer for advice as we couldn’t remember what the guarantee was and were unable to even find the receipt. They asked us to email a few photos and confirm our address at the time when we purchased it so they good find the original order/invoice. A few days ago I received an email saying that they will send us a new one  and told us to go in and choose one from their store up to a certain budget. By spending a few more quid 7  years ago we have saved ourselves the expense of buying a new one now. I’m not sure Amazon would have been so generous.

 Rule #3: Avoid Tat

I’m constantly amazed by how much money is spent by some people on what I term ‘tat’. Our neighbors are a prime example of what i’m talking about. Lovely people that they are, they invited us round for dinner over the Christmas period. The table was laid out compete with Christmas plates and Santa salt and pepper shakers. I remember sitting down at the table thinking to myself ‘why on earth do you buy this rubbish’. Maybe I am a scrooge,  but is it really necessary to serve panna cotta out of a reindeer shaped mold when you proceed to declare you can’t afford to fill your heating oil tank up?

The problem with this consumerist society we live in is that it encourages our accumulation of tat. Even if you don’t buy it, you accumulate it from other people. Without seeming ungrateful I just have to look through the Christmas presents we receive each year to see more tat. People buying us things we both know we won’t like or use, just for the sake of it. This waste drives me mad!

While I save money by not buying tat, I am also facing a constant battle to declutter this tat that other people give us. The tat battle is a never ending one. A quick glance at my ebay selling history tells me that I earned a four figure amount last year from selling nothing but unwanted tat – that’s a decent chunk of ISA right there!

Rule #4: Pay Cash

The title is deceptive. I buy nearly everything on our British Airways Amex card in order to benefit from the air miles. Of course I pay off the balance each month to avoid paying any interest. What I mean is never buy anything on credit.

There are two reasons. Firstly there is the obvious interest payments if you don’t pay off the balance in full each month. If you’re spending your hard earned/saved cash (as opposed to just whacking it on the credit card and forgetting about it) you’re much more likely to  question each purchase and avoid frivolous spending.

Rule #5: Realize Your Savings

Get in the habit of making every penny count. Frittering money away is easy in today’s world. Without wanting to start talking about the latte factor it is important to make sure you realize the benefits from any savings you make, no matter how small. It’s no good forsaking your daily caffeine hit if you spend all of the money saved in the pub at the weekend.

Every time I make a saving I make a point of ensuring I use the money for good purposes. For example last week I fixed my bicycle after a recent crash (I’ve diagnosed myself as being ‘mechanically dyslexic’ so the repair was quite an achievement for me!). The local bike shop would have charged me at least £60 for the repair, so after sourcing the part off ebay and watching a few youtube videos to figure out what needed to be done I saved myself approximately £54. To realize the saving I made a one off over payment on our mortgage of £54.

Rule #6: The Obvious One

No savings post would be complete without suggesting you analyse your current spending. It’s a cliche but it really is the only way to see clearly where your hard earned wonga disappears to each month. For our household the vast majority of our day to day spending and bills are paid through our American Express card (mentioned above) and our joint current account. Each month I simply download the transactions from these two accounts and categorize each item into the following categories:

      • Mortgage
      • Investments/Savings/Mortgage Over payments
      • Utilities
      • Home & Garden
      • Travel
      • Petrol
      • Food
      • Eating Out
      • Cash
      • Holidays
      • Clothes
      • Presents & Charity
      • Socializing
      • Health
      • Work Related

Once you have a few months worth of data (ideally you need a years worth to capture all those once a year bills too) you can simply pivot the data in excel to track trends over time and calculate monthly averages for each category.

When I first started doing this I created much more detailed categories but ended up not being able to see the wood for the trees. If I feel one category seems too high (e.g. Utilities) I can do further analysis and identify the individual contributors to the category total. What it revealed for us was the large amounts we used to lavish on holidays…..what will it reveal for you?

Rule #7: Expenses to Income Ratio

The more you earn the more you spend. For a good few years at the start of my career I thought this was just a fact of life, unavoidable and enjoyable in equal measure! It took me about 5 years of working in London to realize that increasing your expenses inline with any salary growth is one of the most common financial mistakes made by people.

As my wife and I started to earn more our spending initially went northwards too. We started frequenting nicer restaurants, more regularly and didn’t always stick to the 2nd cheapest wine on the list. We narrowly avoided buying a nice expensive car2. While we were bad, thankfully we weren’t quite up to Nigella’s standard. However for about 5 years our spending was increasing significantly.

I think it took the financial crisis of 2007 for us to realize that our earning potential might not last forever and that financial independence was our priority over four wheel drive. By calculating and tracking your savings ratio you can immediately see how good a saver you are. If you want to save/invest more and maximise the benefits of compounding you’ll need to improve this ratio over time.

Rule #8: Share Your Goals

Being a bit of a geek, I love a good spreadsheet. Setting out my financial goals into a spreadsheet and tracking progress helps to keep me motivated and ensure I meet my goals.  Currently we aim to save 50% of our disposable income and to ensure we are hitting this target I use the same spreadsheet as mentioned under rule #6. above.

Another very effective way to keep motivation high is to share your goals and progress with others. This might be your other half, a close friend, family or you may decide to start your own blog and tell the world how you’re saving a million. No mater how (or to whom) you share your ambitions you’re much more likely to succeed as us human’s find it much harder to let other people down compared to ourselves.


1. Antiques doesn’t always equate to the mahogany furniture your Nan used to love. Most modern furniture is loosely based on antique or classic designs. Antiques don’t necessarily mean your home will look like a museum!

2. We pride ourselves on having the cheapest, most un-flash car out of roughly 600 at our commuter station each morning.

{ 1 comment… add one }
  • theFIREstarter March 20, 2014, 5:46 pm

    Solid advice UTMT!

    I feel your pain on the tat front. I can’t stand all the cheap plastic rubbish that is used once and then destined for the landfill! If people really want festive trinkets and so on they should make them themselves out of biodegradable materials

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