Liam Croke: Plug into the money-saving mentality of the rich

I was reading an excellent book last week, called The Thin Green Line, written by Paul Sullivan who is a financial columnist with The New York Times.

I was reading an excellent book last week, called The Thin Green Line, written by Paul Sullivan who is a financial columnist with The New York Times.

The reason Sullivan wrote the book was to find out what the money secrets of the super wealthy are. And there were many reasons why and how people became wealthy but it was interesting to discover that when they achieve wealth they don’t become complacent about their wealth and they continue to work at protecting and managing their money.

Sullivan’s imaginary green line looks like a stock chart where if you are financially secure you are above it and below it if you are not,

Some of the people Sullivan interviewed for the book don’t have millions, they have hundreds of millions, and interestingly they continue to be insecure about money despite their enormous wealth.

I guess this is because the majority came from poor and disadvantaged backgrounds, so they understand, and never have forgotten, what it is like to have very little.

They know and appreciate the value of money and that has never left them even though they probably would be unable, even if they tried, to spend what money they have earned and accumulated.

What I found very interesting was while researching the book, Sullivan looked at the topic of income inequality which was the gap between what the top 1% of earners’ income is, versus everyone else’s.

One of the measures of identifying what this gap was called the Consumption Expenditure Survey and this is a measurement of what households spend. This survey tracked amongst other things, how much people used and ran kitchen appliances but here’s the interesting thing: in recession times, the wealthy used their appliances less to save money, but people who were poorer, much poorer and needed to spend less, continued to run their washing machines with absolute abandon. Incredible stuff.

Even though the very wealthy could run household appliances all day long, 24/7, and even if they did, the additional cost would have zero impact on their wealth, they chose not to because they have that mind-set of not wanting to throw money away needlessly. And because the wealthy know exactly how much appliances, running or not, are costing them each year.

I make deliberate reference to how much appliances are costing us each year, when they are plugged in, but not in use and on standby mode. We are throwing money away each year whether we know it or not, by leaving things around our house plugged in all the time.

We don’t see this additional cost when we get our bills every quarter so we don’t know how much they are costing us each year, and some people reading this will probably be surprised to learn that appliances plugged in, but not in use, are still costing them money. But of course they are, and maybe if our bills showed us this cost, it would make it a reality and we would start to make some changes and start saving money.

How difficult can it be to make these changes? Well not very difficult at all, unless you find it hard to take a plug out of a socket.

I looked around my own house, and noticed our microwave is always plugged in, the TV in our side room is always on, we have three plugs at the side of our bed with cables for phones and iPads always turned on even after they are charged and we have an old audio system where you can play CDs from in our living room which is always plugged in.

We have a DVD player always turned on (we haven’t watched a DVD in 12 months) and we have a Wii player constantly plugged in which again is very rarely used.

So, I worked out if I was to plug all of these items out every day and night and plugged them in only when they were actually going to be in use, I would save myself €97.80 annually.

Not a bad return for taking eight plugs out of their sockets.

Take the time to have a look around your h For households with kids, watch out for game consoles because apparently the latest ones consume three times more energy than the old ones. Make sure you ask your child to plug them out when they are not being used because they, along with your cable box, are the two big ticket appliances in a household that are costing you more than they need to. Circa 26% of all our electricity use goes on entertainment equipment.

I personally am going to save nearly €100 every year by mimicking what they do, it isn’t going to change my financial life in any great way, but that is not the point, the point is I can make those savings and I want to make those savings and that €100 will fund a nice meal out with Roseann and my kids at some stage in the year. And we will laugh at the table about how this meal is being paid for by simply taking plugs out of their sockets.

We have to change our mind-set and behaviour because if we do, we will eventually be above that thin green line.