Freezers are a great invention don’t get me wrong, but they are rather expensive to run. There is the obvious cost of purchasing a freezer along with possibly having somebody come around and fit it.
But that’s only the start of the costs as the electricity to keep my freezer running costs approximately £85 per year (assuming it uses 2 units per day at current rates) and then there is the hidden cost of maintaining your food inventory.
Most of us have kitchens stocked with food whether it be stored in your cupboards, fridge or freezer. I call this ‘food inventory’ as it is effectively the same as inventory that a company would hold to carry out its daily business. Clearly having this food in the house has it’s advantages as you don’t have to pop out to the shops every time you fancy something to eat.
I estimate that there is normally £100 of food inside my freezer waiting for my partner and myself to eat. This means that we always have £100 of our money invested in this food inventory, businesses would call this working capital. Now if we could reduce the amount of food in our freezer we would be able to increase our cashflow.
In non-accounting terms this basically means that for every £1’s worth of food we wouldn’t have stored in the house we can have an extra £1 in the bank. So if we could completely eliminate keeping any frozen food in the house opting instead to purchase it as and when we needed it we would always have an extra £100 in the bank, which could easily earn us an extra £5 per year in interest.
In addition many of us have freezer contents included in our insurance policies so we are paying for that too! Whilst it may not be shown as an additional premium it’s an extra risk that you insurer is including in their calculations of your overall premium.
However sometimes you can take advantage of special offers or bulk buying discounts. So the question is how much of a discount do you need to justify the cost of working capital?
Source: www.millionaireadventure.co.uk where I blog on all things related to money saving and making along as I attempt to become a millionaire!