The free-haircut plan for savings, sustainability

In a world of instant gratification, the ‘latte factor’ remains a powerful measure

Sometimes, when I need a lift, I like to think about haircuts. I’ve been cutting my husband’s hair for 21 years now. If I average the cost of his haircuts at $20 over those 21 years, I’ve saved us $2,520. That’s pretty good, but I’ve also done the math on my kids’ haircuts. Still using the $20 estimate, haircuts for each of them (starting at age two, minus the years when two have left their hair long) would have cost me $3,240. That’s $5,760 in total haircut savings so far. And at no point have I ever used a bowl to get the job done. Nor used gas to get to a salon, so it’s also zero emissions.

It gets better: every year, rather than pay to park at my school, I park off-campus and walk 15 minutes to class. This saves me $641 per year. Now, a savings of $53 per month might not seem like much, but what if I work there until I retire? THAT’S $22,435 BIG ONES! Now we’re cooking!

There’s more! My husband has ridden his bike to work (zero emissions again!) for 13 years, and we share a car with my mum. A second car would cost us about $100 per month in gas and insurance, so we’ve saved $15,600. Minus the cost of fancy bike-riding clothes he says he “needs.” We also share our cable bundle with Mum. Savings to date: $12,000. Blammo!

Talking about the “latte factor” — money spent on inconsequential things like takeaway coffees — seems to have fallen out of fashion. This is a mistake; it’s such a powerful measure of our spending and its real worth. I remember a Christmas dinner when my brother, in his early 20s, wondered idly how much he had spent on his daily breakfast muffin and coffee at Tim Hortons. My ears perked up: “How much was it? And you’ve been spending this every day for how many years? Seven? Wait a sec … that’s $7,000! And almost 2,500 disposable cups, you idiot.” The colour drained from his face. Perhaps not his favourite Christmas memory.

My students lament that they don’t get education in personal finance. They do, however, get easy access to credit and a lifetime of exposure to sophisticated, relentless, takeno-prisoners marketing campaigns predicated on the pleasures of instant gratification. And it works: Our consumer debt has never been higher in Canada. A friend who works in banking told me that, as real estate values rise, people’s equity increases and they qualify for bigger and bigger lines of credit every year.

Where will it end? It’s no wonder the feds are trying to beef up the Canada Pension Plan — we generally don’t save for retirement, especially when we’re maxed out by debt repayments.

In the world of instant gratification, many young people will spend thousands more than necessary on things like trucks and weddings; will anyone point out how much money they would save (and make) over the course of a decade or two if they put that money into a mortgage down payment instead? It’s the “decade or two” that’s the tricky part. It’s all so far away, especially when people are young and don’t fully appreciate how quickly time flies. Or how quickly debt can grow and keep you up at night.

Here’s an idea: long-term personal financial sustainability should be promoted in connection with the Ontario Liberals’ proposed Climate Change Action Plan for longterm environmental sustainability. Let’s advertise two birds with one stone! In Ontario, buying a new electric car — the Nissan Leaf SV, for example — costs $32,000 including tax. Maybe that’s a bit more than a comparable gas vehicle, but in our family, we’d save almost $3,000 per year in gas. Over the course of its eight-year warrantee, by using the free charging stations at our local rink and getting a break from hydro for nighttime charging (one of the goals in the plan), that car would save us more than $23,000.

And if the feds agree to eliminate the HST on electric vehicles (another part of the plan), the net cost of that vehicle would only be $3,000 after eight years of ownership. Our current vehicle — out of necessity, a minivan — is old, but we’re hanging onto it until the first electric minivan comes on the market. I suppose there will be some instant gratification when we get it, but when it’s no longer shiny and new, and the kids have had their way with it, it will still be gratifying. God, it will be so gratifying to charge our electric vehicle for a pittance, year after year, and never again have to stand at the gas pumps, staring at all the other people doing the same thing, wondering, “What the hell are we still doing here?”