Have you ever done something because you've been doing it for so long – it just feels right? You don't even know when you started doing it – you just do it. Maybe it was your mother who told you to do it this way – so you listened and you've been doing it ever since. Maybe it was a teacher.. or a friend? Whatever it may be – we've all done things out of habit – thinking they were right at the time – only to find out later – it really wasn't right (or necessary!). Plus, it's not saving us any money like we had thought!
Here's a few from my own experience that aren't necessary to save you money.
- Driving with your windows down to save on fuel efficiency when it's hot out (instead of turning on the AC). This is false WHEN you are driving at speeds over 45 miles per hour. According to a study done by the Society of Automotive Engineers (SAE), results showed there was a decrease in fuel efficiency of 20% when windows were down – vs. only 10% when windows up and the AC was on (via HowStuffWorks.com).
- Investing in actively managed funds over passively managed funds because they are – actively managed. This is one that has been blowing my brain a bit over the past few months as I've been reading Millionaire Teacher by Andrew Hallam (I hope to do a review on it soon for you). Actively managed funds are what you typically find in your company's 401k plan. While some of you might get a company match of any amount you put in – these funds have not shown to do any better than passively managed funds over a long period of time (like index funds). From About.com: According to Vanguard, for the 10 years leading up to 2007, the majority of actively-managed U.S. stock funds underperformed the index they were seeking to outperform. For instance, 84% of actively-managed U.S. large blend funds underperformed their index, and 68% of actively-managed U.S. small value funds underperformed, as well. The case is even worse for actively-managed bond funds. In that case, almost 95% of actively-managed bond funds underperformed their indexes for the 10 years leading up to 2007. Worse yet, actively managed funds charge participants almost 1.5% more than index funds.
- The higher you set your thermostat, the faster it will warm up (thus saving you money). Someone in my immediate family seems to think this works (no, I won't mention names). And, while it may be easy to think in terms of an accelerator (like in your car) – this is not the case according to an “energy myth” study done by Western Kentucky University. Plus, if you do set it higher than you want – you'll likely forget it later and waste even more energy.
- To save energy, use hot water to boil your water for cooking because it will get to a boil quicker. False. Either way – you will be using energy. WKU found that it takes more energy to heat the water in your water heater (and send it through the pipes) than to boil water from cold to hot on the stove (I failed this one).
- Keeping your computer on all the time is more energy-efficient than turning it on and off every day. Okay – I'm guilty of this one too. And, this “myth” is an example of one that was once true – but it is not anymore due to the increase in energy-efficient computers. IBM (a big player in the computer industry) tells their employees that turning off computers for one hour each day can save the company $1 million per year in energy costs (WKU study). Tell that to the operations manager at your work – and you may get a raise. :)
Okay – are there any other myths out there you've found to be false and not necessary for saving money?
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I think most people do #5 because of laziness. ;-)
I’m sure plenty of drivers who get wind of tips from others as to which gas station currently has the cheapest fuel have spent more by driving all the way across town to save money on the cheaper fuel! Crazy behaviour.
Oh yeah – that is kinda foolish. Best to use an app to get you pointed to the best locale :)
Hey Justin – that is a great one! So true.
Ha, I love this list. I always used to leave my computer on to save on energy. One to add is buying in bulk without actually calculating the unit price. Sometimes we just assume it’s a better deal when it’s really not.