Calculate the real value of spending

I’ve written previously about Australian websites that help you save money, one of which is Simple Savings. This week’s savings tip from a member of Simple Savings, Lee-Anne Stevenson is excellent in it simplicity and effectiveness. Lee-Anne shares her story:

I curb my spending by calculating how long I have to work to earn enough money to pay for each purchase! My husband loves KFC but I am no longer an easy push over. I would have to work three hours for our family to enjoy one meal that is gone in just 30 minutes!

Instead of looking at the dollar value of an item, I look at the ‘work value’ of an item – this is what it will really cost me. To do this, work out your net hourly rate (after tax and minus expenses such as babysitting). When you are tempted to buy something, divide the purchase price by your hourly rate to see how long you will have to work. It can be a real turn off – especially when buying takeaway food!

If you have not done so already, check out Simple Savings and consider subscribing to their free newsletter so you get tips like this every week.

Author: Matt Hern

Certified Financial Planner professional, Matt Hern has three times been awarded as one of Australia's Top 50 Financial Planners by The Australian Financial Review Smart Investor. He is passionate about guiding you on the right financial choices to achieve what you really want. Matt Hern is an Authorised Representative of Charter Financial Planning Limited AFSL 234665. All information is general advice only.