Frugal Tip - Having hair cuts at home saves quite a tidy sum annually

[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]

While we were living in the Bay Area [California], we noticed that one of our friends trimmed his hair at home. We asked him about the secrets behind the act. He said that he had gone to Costco and purchased a semi-professional hair trimming kit for $20 (approximate figure). Henceforth, he used to give himself a haircut at home once a month which saved him a tidy sum of $20 each month. This is a neat way of saving money and over the year it adds up to $20*12 = $240 per person in the household.

So we followed suit. If we do the math we will be amazed at the results. For the last five years we have been saving around $240 per person in saloon fees. There are two persons in our household, so we usually save around $480 per year. That amounts to $2400 for five years of saving. Now we went ahead and invested that money in index funds.

Say we earn a modest return of 8% p.a. compounded monthly for the next thirty years. From now onwards, even if do not add any more dollars to our 'haircut at home' nest egg, it will be worth a whopping $26,245 in thirty years!

But if we continue to save $480 every year and keep adding it to our current 'haircut at home' nest egg, in thirty years it will grow to a huge $85860! Wow, that is huge. The power of compounding is really mind boggling!

Figure 1: Our "Haircut At Home" Nest Egg

Not only that, the best part is that there is lot of fun in the family while having hair cuts. We spend quality time with each other which strengthens the bond between us and helps us to laugh together. We hope this tip helps you save money for investing in your nest egg.

Note: We used Bankrate's saving calculator for our calculations.

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