Frugality Increases Earning Power (And Saving Power!)

25 02 2008

I want to share a story about how being frugal can help you make more money, and not just help you save it. 

Ever since Mary and I decided to build our new house we have been living frugally for the first time, and I feel that it has opened my eyes.  I’ve always hated inefficiency with a passion, and I pride myself on trying to find the most efficient way to do things, but lately with frugality on the mind I’ve been seeing waste everywhere.  For example, this waste has forced Mary and I to become active instead of passive about recycling.  But it isn’t just at home I’m seeing waste and inefficiency, I see it on an everyday basis at work. 

The company Mary and I work for is not exactly known for being a leader in employee benefits, and it’s no secret around the company that the employees aren’t thrilled with the 401k.  But by being in the unique situation of working at the same company as my wife, and by talking with some friends, I was able to uncover something that could save the company upwards of two million dollars a year… 

From my Human Resource classes in college I know that an employees health benefits can cost the company around $4,500 a year if they are enrolled.  Because Mary started her job before I started mine, I have been under Mary’s benefits.  Each additional person on an employees benefits costs the company a fraction of that amount more, so assuming that it costs the company $2,000 a year extra to insure me under Mary’s plan, I’m effectively saving the company $2,500 a year by not being enrolled for my own benefits.  Unfortunately for Mary and I, it is more expensive for us to be on the same plan ($480/year more) so it isn’t cost effective for us, even though it’s cost effective for the company. 

In speaking with a friend who works at the same company as his wife, he mentioned that  his company offers a $500 incentive to not be enrolled in their benefits.  An incentive like that would make being on one plan cost effective for us!  So I ran some complicated numbers and realized that if a small percentage of our workforce decided to accept an incentive to not be enrolled in the company’s healthcare system and instead be enrolled in their spouses, the company could save millions of dollars! 

I took this idea, and I approached my boss, I showed him the math, and he loved it.  The next thing I know, I’m in the Treasurer’s office pitching it to him.  He also loved the idea, and even came up with the idea of re-allocating the saved money to improve the 401k (which would double the matching they do now).  After his office, I got an appointment to meet with the Senior V.P. of Human Resources, who also loved the idea!  

They will be passing it through the ranks and may be implementing the idea for the next enrollment period. By looking at things like this with a frugal eye, I have potentially saved the company money and/or doubled the retirement plan our company offers!  And while it’s nice to think that I’ve done this for the company, I’ve really done it for myself.  I got great visibility out of it, and now the executives know who I am and say hi to me in the halls, which is pretty cool for being in my first job out of school.  Hopefully I’ll be able to leverage this later on when it comes to my evaluation! 

I’ve also found that our company doesn’t recycle, and I probably throw two reams of paper away a month as part of my job.  My next task is going to be saving my paper instead of throwing it away, so I can approach my boss with a large stack of paper from only a weeks worth of saving, plop it on his desk, and ask why we don’t recycle!

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One response

7 03 2008
craig

Nice work! I am sure this helps your evaluation and any discretionary bonuses! Probably promotions too.

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