This is Part 4 of my post series to help you lower your expenses.
Check out Part 1, Part 2 and Part 3 as well.
Today I would like to give you some tips on how you can save money by doing things yourself.
One point in advance: I’m not saying at all that you should resist any luxury, only to save even more. And if you do not want to have to clean your home during the week-end on top of a stressful job, that’s totally fine, of course.
We also had household and childcare help for years. But in our areas such as our finances or taxes, we have not outsourced services, but have taken care of things ourselves. On top of the money saved this had the additional benefit of building valuable in-house knowledge.
The same goes for renovating various apartments we lived in and our current house. The extra skills we acquired are great. But we also saved money with it.
Basically, I believe that anything you can do yourself enriches you. Whether you do actually do everything yourself is a different question. But maybe when you try, you realize that it’s a lot more fun than you thought before. And if you can save money at the same time, it’s a double win.
Since everyone doesn’t have the same interests and abilities, I want to inspire you with different examples, not just the things that we ‘insource’ ourselves.
Around the house
As I said, we have renovated various apartments . Not only the ones we lived in but also some to rent out. There are two interesting areas where we have saved costs: the work, and the materials.
Opinions differ on whether you actually save on work costs if you do it yourself. It is often argued that you should outsource jobs for which you pay lower wages than your personal hourly wage. The idea behind it is that the difference results in a profit.
I think in reality this is rarely really the case. Our working hours were compensated with the salary, including overtime. We would then have had to work freeelance to actually be paid for more hours at our personal hourly rate. Taxes on this would have been high, plus acquisition and administrative costs would have been incurred. This would have reduced our own hourly rate significantly.
On the other hand skilled labour costs are not particularly favorable in Germany, and 19% VAT has to be added to their hourly net rate. For rented property you can claim these costs for tax purposes, for owner-occupied property this is only applicable to an extremely limited extent. So this needs to be weighed against each other. And if your like my husband, you might actually LOVE to work on those kind of ‘down-to-earth’ projects as a counterbalance to your day job.
Due to the transparency on the Internet, it is now also very possible to increase savings potential by doing your own research on material and equipment prices. I assume that tradesmen get even better purchasing conditions. But there is no guarantee they will be given to you as the end customer. Even if you decide not to do the work yourself, it will help you to save money if you know price ranges beforehand.
What applies to renovation project applies to building projects to a certain extent as well, of course. We have never completely built a house ourselves, and I do not think we will do it anymore. But we have equipped our current house from shell construction and also implemented a complex garden design ourselves.
But maybe you are part of a circle of friends who build their own homes and in turn help each other. If as a group you have the expertise needed, I think that’s a great way to cut costs.
Cleaning, gardening etc.
Once the house is finished, it must be maintained, of course. A classic for people who work a lot is according to my impression to look for a household help/cleaner. We did that, too. However, I find the approach of Mr. Mustache interesting who looks upon the outsourcing of home and garden work with a critical eye.
And he’s not only about the cost. If we do less and less ourselves, especially where physical activities are involved, that’s not really a healthy lifestyle. In this context, I think it’s quite ironic that many of us really admire how fit old people are in the ‘blue zones’ (several areas in the world where people live the longest). But then don’t necessarily realize that they are still so fit, largely because they move about a lot each day and still (have to) do physical labour.
Hairdresser, manicure etc.
Do-it-yourself of course also works in the personal area, e.g. for cutting your hair or getting manicures, pedicures etc .. In fact, my husband used to cut our son’s hair, and actually quite well. But that was not because we wanted to save money. Having to make upfront appointments for him just got on our nerves.
Cutting each other’s hair would not be for us, though. But that’s an individual choice obviously. As you can see from Mrs Frugalwood’s post on this topic, it works perfectly for her husband and herself.
I really appreciate homemade gifts. Especially if there are things that you can consume. Think jams, pickled antipasti, biscuits etc .., mmmh!
Last Christmas, we made an attempt to exchange only homemade consumables within the family: With moderate success, as I have to confess: We kept to the agreement and had a lot of fun during the preparations. But we still ended up with several bought gifts that we don’t need under our Christmas tree.
As far as investing is concerned, my impression is that those who have gained experience here come to the conclusion that it is very important to build up your own knowledge and to make sure you don’t rely too much on other people whose interests don’t necessarily align with yours. I fully agree with this point of view. Sure, you’ll make mistakes and some will cost you. But if this happens in the early days of investing, you’ll learn from it and your decisions will become better along the way.
You also save on transparent or hidden fees, if you take care of investing yourself or invest in investment vehicles with very low fees. I know that for a lot of people finances in general and decisions about what to invest are rather uncomfortable topics. But since you’re reading this blog, I assume that you know how important it is to deal responsibly with your personal finances. And that’s a great start already!
And that takes me to the next rarely loved topic, tax returns. If you do your own tax returns, you will save the money for a tax accountant. Your individual situation may require you to work with a tax accountant, of course. Or it may be necessary to consult a tax adviser once in a while on a specific topic.
But even if you have to work on your taxes with a professional, I strongly advise to familiarize yourself with the matter as well. I’ve been doing our taxes for a good number of years by now. And my experience is that even with a very good accountant something can slip. For example, our tax accountant forgot to ask us for the year of construction after we bought an apartment to rent out. So they automatically worked with the standard depreciation of 2% per year, rather than the correct 2.5%. Given our tax situation, this mistake would have lost us quite a bit of money. Fortunately we were aware of the different rates applicable and noticed the mistake. So it is worthwhile to at least double check things yourself even if you want to rely on a professional in this are.
I hope I’ve provided you with some inspiration – just give it a try!
Financial Independence Rocks!