Get your start by changing your habits

The world of personal finance seems to be divided into two almost equal groups:

1. Those who are well on their way to financial independence and are looking for one more lever, and
2. Those who are struggling to get to the starting line.

This post is for those in the second category. If you just can't seem to get ahead enough to scrape together a few dollars to make a start toward financial independence, you need to look at the little habits that keep your spending above your income.

For this post, let's talk about saving money on your utilities. Many of you know that I also publish the Energy Guru blog (see link at right). There you'll find energy advice and investments which can easily earn triple digit returns from perfectly safe outlays funded by your pocket change. But, even more compelling are returns which require no investment beyond minor changes to the way you do things around the house. Here is a good starting list.

• Put an extra blanket (or two) on the bed in winter, and cut them to a minimum in the summer. Few actions save money on your utilities like turning down your thermostat in winter and up in summer. And I've found each extra blanket means I sleep very cozily at a thermostat setting approximately 3 degrees lower.
• In winter, get used to wearing a sweater, sweatshirt or vest around the house, with warm socks and houseshoes. In summer, it's shorts, t-shirt and no shoes or socks. Again, these habits will automatically move your thermostat in the right direction.
• When you leave the house, turn off the a/c or heat. For today's families that are out of the house most of the time, this significantly lowers the average utiity bill and most systems are designed to recover quickly, so when you return they will quickly return the house to your comfort range in all but the most extreme weather. And, when you return, don't set the thermostat above the comfort range. This will not get the system to return to the comfort range sooner, but it will eat up your savings from turning the system off while you were gone.
• While we are talking about thermostats, make sure the thermostat on your water heater is at the lowest setting that provides an adequate supply of hot water. Doing so not only decreases your utility cost, it is safer. Having a higher setting is doing nothing but forcing many of your hard earned dollars through the insulation of your hot water heater and plumbing.
• Pay attention to your window coverings. Assuming your house is reasonably designed and efficient, most of your utility dollar is escaping through your windows. But, make a habit of closing them when the sun is shining in during the summer and opening them when it is shining in during the winter. And, make a habit of closing them at night. With attention to these small habits you can change your windows, potentially a big dollar waster, into an asset.
• Make sure your electronics (TV, VCR, DVD, Stereo, Computer, Printer, Battery chargers, Cable boxes, etc.) are really off when you are not using them. These devices are using an increasing share or your utilities and most of them use power even when they are turned off. Studies have shown that 15-30 of energy usage of these devices is when the units are turned off. Make a habit of unplugging them when not in use, or plug them into power strips with a switch you can shut off.
• When cooking and you notice something is almost done, go ahead and turn the oven/stove off. This will have little effect on the cooking, but will save energy. This also helps assure you will not forget and leave them on for hours after the meal is done.
• Get in the habit of regularly cleaning your filters and coils on your heating and A/C system and refrigerator/freezers. The build up of gunk on the filters and coils, both inside and outside, can substantially reduce the efficiency of this equipment.

I could go on and on, and you probably could as well, but these are the biggies. The exact savings are hard to quantify and depend on each situation, but I think I am safe in saying these habits will save the average household hundreds of dollars per year. This is the seed money you need to get on the starting line to financial independence.