Passive Family Income » saving money

How to Start Saving Money on Food Expenses

John S. — Thu, 19 Aug 2010 11:55:14 +0000

Purchasing foods that are natural and unprocessed are not only cheaper, they are usually much healthier. There seems to be a rising number of people who have started growing their own fruits and vegetables and purchasing only natural, unprocessed foods. Whether you want to save money on food, eat healthier, or just simplify your life – preparing your own food may be the answer.

As I look over our monthly budget trying to find places we can cut costs, there is one variable expense that I want to focus on. My family currently has budgeted $500 per month on groceries and entertainment expenses. Since we don’t really spend too much on entertainment, the majority of our costs are spent on food (95% on groceries and 5% on dining out).

I believe that adopting a new philosophy about grocery purchases can help us begin saving money on food. My plan is to start buying less prepared foods, which should help us save more of our income.

The first step that I plan to make is to cut down on soft drink expenses.

Addiction to Soft Drinks

I have always enjoyed the taste of diet coke and have bordered on becoming addicted to it. Over the past couple of years I have slowly tried to wean myself from this addiction for health benefits as well as the cost savings. While I have had my ups and downs, I am finally ready to give it up once and for all.

Over the past year, I estimate that I spent an average of $10 – $15 per month purchasing 12-packs of diet coke on sale. As a smart shopper, I would never pay full price for this item and would wait until a good sale to stock up.

Spending an average of $12.50 per month on diet coke is not breaking our family budget. However, when I calculate that we spend about $150 per year just on this soft drink, I start to cringe. As a small step towards saving 10% of our income, I now plan to give up buying diet coke once and for all.

Starting next month, I will begin keeping $12.50 each month that will be put towards our larger goal of saving $400 each month, or 10% of our income.

Estimated Monthly Savings – $12.50.

The Importance of Avoiding Prepackaged Foods

The example above is just one opportunity that I am taking to stop purchasing prepackaged items which will help us start saving money on food. Switching from soft drinks to other types of beverages like tap water and instant ice tea will help our family save more of our monthly income.

Over time I hope to continue to reduce our grocery expenses by making the switch to more natural or whole foods that my wife and I prepare. Instead of paying extra for these manufactured products, we will be spending more of our time in food preparation that should reduce our monthly spending and improve the nutritional value of what we consume.

If you are looking for a quick and easy way to start saving money on food expenses, I suggest cooking the old fashioned way!

What types of processed foods have you stopped buying to help save money?

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Create Easy Passive Income by Saving Money

John S. — Mon, 04 May 2009 11:30:16 +0000

Many times when we think about creating new forms of passive income, the focus is put on generating new opportunities through things like investing in dividend stocks, writing online content, or investing in high yielding accounts. One of the simplest ways to create easy passive income that is often not discussed is actually directly in front of you. Saving money and cutting expenses can be a great way to build multiple streams of income.

In order to create a solid passive income portfolio, you must not only focus on building and maintaining income streams – but must also consider ways to save money. Saving money is a way to create easy passive income month after month. Once you eliminate or reduce an expense from your budget, that savings or passive income stream can be invested into another income producing asset. Here are a few ways that you can cut expenses from your budget to create new income producing opportunities.

Mortgage – Consider taking advantage of historic low mortgage rates and refinance your home. Make sure that refinancing is worth the closing costs and you will recoup these expenses within a year or two. Once you refinance, simply take the monthly savings and funnel it into a income producing asset instead of spending it on a new television or toy. Depending on your current mortgage and real estate market, you can probably create a hundred dollars or more of passive income each month just from refinancing your home.
Save on Groceries – Saving money on your grocery bill is another great way to create easy passive income. Whether you use coupons to get discounted grocery items or start a new vegetable garden, the monthly savings can really add up.
Cut your Utility Expenses – Look to cut back on your utility expenses as a way to save money. Changing up a few simple practices in and around your home can reduce your monthly utility bills and increase your income earning potential.
Cars – Think of ways to eliminate or reduce vehicle expenses from your budget. Look into refinancing an existing car loan as a way to cut down on your expenses. You could also consider taking advantage of public transportation to cut down on vehicle related expenses such as gas and insurance. The important thing to remember is to be creative when looking for ways to reduce your spending.
Cell, Cable, Phone – Look to cut or reduce one of these expenses from your monthly budget. Expenses from cable and phone packages can really add up and limit your passive income earning potential. Try sacrificing one or all of these items to build a easy passive income stream

Some critics may argue that saving money is not a form of passive income. While I agree that it is out of the norm when you think of a traditional income streams, the fact is that you are bringing back income that would have been paid as an expense. If you can cut expenses from your monthly bills, then this is a form of income generation that is recurring and will pay you back each month. That savings or income that you have created can then be reinvested back into creating new passive income opportunities.

What can you cut from your expenses to create easy passive income?

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Saving Money – An important lesson for children

John S. — Thu, 18 Dec 2008 15:38:03 +0000

Do you have children? Do you ever teach them the lessons of saving money? Having two young boys, the oldest five and the youngest one, I think about this topic on a daily basis. My wife and I have started teaching our oldest son some lessons about saving money and the importance of being financially independent. While each of these lessons are minor and may seem insignificant, I believe that overall they will help to shape his values as he grows older. I am a firm believer that our schools in this country don’t do enough to teach our children about money. We may force mathematics and science on them, but we miss out on providing them real-life lessons in personal money management. It is not until they get into college that they start to realize the real world can be very tough.

I believe that parents must provide their children with the knowledge of saving money, living on a budget, and the value of a dollar. It is these simple lessons in life that will prepare them for the future and allow them to become independent. I have put together a list of 3 things that we will be doing to teach our children the value of money and the importance of saving money.

Family Bank – Our oldest son is at the age where we are going to start to give him an allowance for helping out around the house. We will be setting up a family bank (as I like to call it) where we will pay him his allowance every week. He then will have the opportunity to deposit that money back to my wife and I that will earn him some interest along the way. For example, if we gave him $1.00 per week, he could have the option of keeping that dollar and buying a new match box car or some candy with it every week. We would also give him the option to give us back that dollar and each week to earn .25 cents in interest. After 4 weeks, he would have $2.00 instead of $1.00 which could buy him 2 new match box cars instead of 1! I know that is a nice interest rate, but we want to keep it simple.
Want & Need List- I actually got this idea from a co-worker of mine. Every year for Christmas, she tells her children to create 2 lists for their wishes. The first list is their WANT list. This list should only include things that they want and don’t need. For example, our oldest son wants a new trampoline for Christmas this year. He does not need one at all, but is something he thinks would be fun. The second list is their NEED list. This list should include items that the children really do need. For example, our son may need a new winter coat because his coat from last year is too small. He needs this coat to stay warm when playing outside. I think this is a very powerful teaching tool to use with your children. Once they have the two lists created, they should prioritize their wants. That way you can teach them not to expect to get everything they want in life and to make choices.
Volunteer – I plan on taking my oldest son with me to start volunteering. He may be a little young still, but I think it is very important to have him see people who are less fortunate than him. I have thought about working at a soup kitchen or helping out some children who don’t have a nice warm bed to sleep in and there biggest concern is what they will be eating that day. I hope that these types of activities will teach my son that there is much more to life than the next hottest toy or having another toy truck. I am a firm believer in learning life’s lessons from real-life examples.

These are not the only lessons or ways we plan on educating our children to learn about personal finance, but are some that we are starting to work on right now. As I mentioned earlier, I believe it is a parents responsibility to guide their children through there early years. While schools are very important and necessary, I think a child learns life’s true lessons from home. Being book smart and educated is important, but being able to apply those smarts in the real-world is the biggest lesson of all.

How do you teach your children about finances?

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If I had an Extra $1,000

John S. — Thu, 13 Nov 2008 15:14:56 +0000

photo credit: MarkyBonI often dream about having an unlimited supply of money that would never run out. Think of all the places we could visit and new things we could try. I could quit my job and spend all my time with my children and wife. I could learn how to cook and sail (2 things I have always wanted to learn) and have all the time in the world to train for marathons. The opportunities would be endless and the memories priceless. I understand that money doesn’t buy happiness, but I think it buys my time. I could spend the day doing things that I wanted to do in my life instead of working 60 hours per week for a company that could turn around tomorrow and let me go.

The chances of having an endless supply of money are extremely remote. I think each individual would have their own interpretation of endless supply of money, so I won’t put a number on it. What I think is possible is to eventually have an increase in my annual salary, or a new job that pays more than I currently get. Someday, when my passive income streams are more established, I am expecting to have a decent increase in income. So I ask myself, what would I do with that extra money? Just a few months ago, I was hours away from getting a new job offer that would have increased my monthly salary by $1,000 per month take home. That would have been a significant increase in income. I would have been sacrificing the same amount of my time as I currently do, so the time on the job would have been similar. Unfortunately (at the time), I was disappointed about losing out on this opportunity. Fortunately (present), it worked out in the end as the other company is now facing pressures from the week economy and laying people off. I guess things happen for a reason (but that is a different story).

For simplicity, let’s say tomorrow I got $1,000 extra in take home per month from my job or from an extra income stream. What would I do with that extra income? I have put together a few notes on what I would use this money for.

Update Monthly Budget – I would make changes to the monthly budget that I post every month. I would initially increase my income to the appropriate amount and adjust my savings expense category with the balance of money. This ensures that our family stays on the same budget and lifestyle. I like the idea of getting a raise or increase in income and put it directly into your savings without changing your spending habits.
Increase 401k contributions – I currently contribute 10% of my salary to my 401k along with a 6% company match. I would immediately increase my contributions to 12%, which is even more important now with the market being so low.
Donate to charities – This is one area that I need to focus on. My family really does not donate any money at this point. We always donate extra clothing, blankets, coats, etc. but we never donate money. I would like to start giving back and would look into setting up some monthly donations with this extra income.
Purchase more assets – As stated above in the monthly budget section, I would put almost all of the extra income (except for donations) into our savings. From our savings, I would look to purchase assets that could produce streams of passive income into the future. I would look at things like Tax Liens, Foreclosures, Rental Properties, Purchase High Yield Stocks, and more.

The important thing to keep in mind is that with any increases in our monthly income, we would try and maintain our current lifestyle. This would allow us to reach our long-term financial goals of financial independence.

What would you do with an extra $1,000 per month or any other large sum of money per month?

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