Consider Economies of Scale When Evaluating Money Saving Tips and Tricks [Saving Money]

Consider Economies of Scale When Evaluating Money Saving Tips and Tricks [Saving Money]: From LifeHacker:
"Often people are quick to dismiss the benefits of frugal behavior modifications and decisions that yield only incremental savings. Factor in the economy of scale for the changes you're making to see the true savings.

Joe Shlabotnik [via ]

Over at the financial and frugality blog The Simple Dollar they took a hard look at how to judge whether a frugal change in your life actually yields a return and how you shouldn't dismiss small amounts of savings that add up over time. They examine various examples of saving money and how that stacks up over years, including simple things like making your own breakfast:

Take my homemade breakfast burritos. The procedure for making breakfast burritos takes about an hour and each burrito has about seventy cents worth of ingredients in it. In terms of one burrito, it's not a bargain at all – you can get a breakfast burrito for $2 pretty easily (although I think mine tastes better). However, the recipe makes thirty two burritos at once – you can then store them in the freezer for future use. This cuts the time commitment per burrito to less than two minutes, meaning that your hourly rate after taxes for making the burritos is somewhere on the order of $39.

You can also apply this type of thinking to projects that don't require continual renewal like the one time installation of a programmable thermostat. It might take you an hour to install it if you've never installed a thermostat before but over the first five years of ownership you can save hundreds of dollars in heating and cooling bills. The small initial cost of the thermostat combined with a small amount of your labor, multiplies over time to make the value of that single hour of labor worth significantly more than the initial investment.

Check out the full article at The Simple Dollar to see more examples of how economy of scale can turn small changes into large savings over the long term. Have examples of changes you've made in your own life that decrease your monthly expenses? Let's hear about it in the comments.

Is a Frugality Tip That Saves You a Quarter a Waste of Time? Some Notes on Economies of Scale [The Simple Dollar]

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