Comment: “Waste not, want not”: How Much Could You Be Saving?

This may prove an interesting week of parallels. Our Australian Finance Blog observed the scrutiny that fee-driven banking products have come under in Australia and the UK. Another comparison can be found in what we might call household efficiency or discipline savings. How much could we be saving by organising our food shopping more carefully to reduce wastage, or by switching off our electrical devices rather than leaving them on standby? Quite a lot, as it happens.

Food Waste

A 2009 survey by the Australia Institute showed how Australians waste over $5 billion each year on food, including $1.1 billion of fruit and vegetables. Even accounting for conservative estimates by consumers who may downplay their wastage out of guilt, the savings would average $616 per year.

As might be expected, when split by household type, it was found that single occupants struggled the most with food wastage, providing an average of $363.

So, we're asking: with interest rates still buoyant in Australia, how much could this be earning? Over a lifetime of 50 years, if this average waste figure of $616 was added every year to a savings account paying 5%, this excess would total in the region of $135,400.

With the average median house price across major districts at roughly $428,000 [RP Data-Rismark], that's 31% towards a house disappearing.

Stats from a similar period in the UK suggest that the UK's throwaways average £420 per household (or £610 with children). Were these amounts to be added to an ISA, such as Halifax's 4-Year Fixed-Rate ISA at 4.25%, they could total £1,866 or £2,710 respectively by the end of the bond period (accounting for compound interest on the new balance each year).

Electricity on Standby

Attention has also turned towards the amount wasted on electricity for devices on standby. This has not only environmental issues but considerable cost issues too.

In 2006, the Government allegedly considered banning standby buttons on devices after it was revealed that this convenience was costing the nation a whopping £247 million.

Despite the exponential growth in green technologies, the increasing number of electronic devices around the home plus rising utility bills make this a problem of disturbing proportions in 2011.

What many don't realise is that many devices left on standby continue to consume more than half of the electricity they would ordinarily use while operating normally. This applies especially to devices that are not often turned off. Broadband modems and digital top-boxes, for example, consume the same wattage regardless of whether or not they are transmitting data.

Even when the percentage of electricity consumed is much lower, it can still mount up very quickly. A television on standby - the second most likely device to be left on - consumes roughly 10% of its normal wattage, which means that every television left on standby overnight has effectively consumed one hour's normal use.

When taking into account family homes, then, the potential for wastage is huge.

British Gas, amongst others, have been trying to promote the use of Smart Meters to direct customers towards areas where savings could be made. These can only constitute a guide, however, and are only as useful as the homeowner's determination to make efficiency savings.

It is also worth noting that switching to an online tariff - foresaking paper bills and submitting meter-readings online - could quite easily result in a three-figure saving from major suppliers.

"Waste-not, want-not"

The squeeze in living standards has been well documented recently. High inflation has reduced spending power and barely any savings accounts have matched the return required to avoid real losses.

Why not assess whether there is room for efficiency savings to make your money go further. By all accounts, most of us could do more, and the savings will be worth it.  

Keith McDonald
Which4U Editor