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See Top Ten Areas of Saving from 2010

METHODOLOGY OVERVIEW

In updating the “Top 10 Ways Being Online Saves You Money” report, CFP Nick Delgado looked at the top areas of consumer spending, and the discounts that are available to Internet users.  Based on the 2010 Consumer Expenditure Survey released by the U.S. Department of Labor, Delgado used online resources to find discounts on essentials like housing, apparel, gasoline and food.  He believes the power of group buying sites like LivingSocial and Groupon have changed the way that people shop online, and provide tremendous discounts on leisure activities, restaurants and sporting events.  Other online resources like couponmom.com and gasbuddy.com alert savvy consumers to deals at establishments in their city. Some areas of his analysis, like housing, gasoline and newspaper expenditures, required data specific to certain cities.  For the purposes of this report, he chose five of the top 12 U.S. cities by population (New York, Chicago, Los Angeles, Dallas and Jacksonville) also keeping geographic diversity in mind. Overall, he found that the savings in this year’s analysis ($7,695) were relatively similar to those in last year’s analysis ($7,707).  He looked at similar products across the board, and used similar websites for comparison.  The below methodology provides more detail as to the calculations used for each savings category.

ONE. HOUSING. POTENTIAL SAVINGS: $1,270/YR (9.8%)

Source: Search based study on apartments in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:
Sampled 50 online postings in the above markets to determine average cost savings relative to local apartment rent.  Applied 9.8% savings factor to the average annual expenditure on shelter ($12,963) based on the Department of Labor annual study on consumer expenditures.

Site examples: www.padmapper.com, www.apartments.com, www.craigslist.org

TWO. AUTOMOTIVE. POTENTIAL SAVINGS: $438 (A ONETIME SAVINGS OF 1.5%)

Source: Cost analysis based on average new car purchase price in 2010
Methodology: Applied 1.5% savings factor from JMR study to the average 2010 vehicle purchase cost net outlay ($29,217) based on a report by the Detroit Free Press. usatoday.com/money/autos/2010-07-12-carprices12_ST_N.htm

THREE. TRAVEL. POTENTIAL SAVINGS: $1,535/YR (20%)

Source: Amadeus Case Study amadeus.com/us/documents/aco/us/BearingPoint.pdf
Methodology: Applied 20% savings factor from Amadeus study to the average amount spent on travel ($7,677) based on the Department of Labor annual study on consumer expenditures.

FOUR. FOOD. POTENTIAL SAVINGS: $942/YR (26%)

Source: Search based study on basic basket of groceries based on top selling categories (Carbonated beverages, Milk, Fresh bread, Beer, Salty snacks, Natural cheese, Frozen dinners/entrees, Cold cereal, Wine, Cigarettes)
Methodology: Created a standard basket of monthly groceries (3 each of the above mentioned items) to establish a baseline retail cost.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the internet.  Potential savings based on cost reductions at the aggregate basket level.  Applied 26% savings factor to the average annual expenditure on food at home ($3,624) based on the Department of Labor annual study on consumer expenditures.

Site example: www.couponmom.com, www.peapod.com

FIVE. NON PRESCRIPTION DRUGS. POTENTIAL SAVINGS: $117/YR (30%)

Source: Search based study on common over the counter medicines (Pain Relievers, Antacids, Cold Remedies, Allergy Relief, Natural Remedies)
Methodology: Created a standard basket of the best selling non prescription drugs (5 each of the above mentioned items) to establish a baseline retail cost.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the internet.  Potential savings based on cost reductions at the aggregate basket level.  Applied 30% savings factor to the average annual expenditure on non prescription drugs, which was derived as 10% of the average annual expenditure on healthcare ($3,126) from the Department of Labor annual study on consumer expenditures.
Site example: www.drugstore.com, www.amazon.com

SIX. GASOLINE. POTENTIAL SAVINGS: $132/YR (6.2%)

Source: Search based study on lowest gasoline prices in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Researched average gas prices within a 10-mile radius of three zip codes for each of the above cities, and found the lowest advertised prices in each, for a savings of 6.2% off of average gasoline expenditure ($2,132) based on the Department of Labor annual study on consumer expenditures.
Site example: www.gasbuddy.com

SEVEN. ENTERTAINMENT. POTENTIAL SAVINGS: $2,444/YR (48.8%)

Source: Search based study on restaurant dining, sporting/concert tickets and leisure activities in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Applied savings factor of 48.8% on dining outside of the home ($2,444) based on the Department of Labor annual study on consumer expenditures.  Applied savings factor of 46% on 24 entertainment such as concerts, events and leisure activities to the entertainment budget ($2,693) based on the Department of Labor annual study on consumer expenditures.
Site example: www.groupon.com, www.livingsocial.com

EIGHT. APPAREL. POTENTIAL SAVINGS: $573/YR (33.7%)

Source: Search based study on basic clothing combinations for men and women
Methodology:  Created a set of standard baskets of apparel for a man (khakis, jeans and shirts) and a woman (skirts, jeans and tops) to establish a baseline retail cost in each of five price categories (under $20, $20 – $40, $40 – $60, $60 – $80 and $80 – $100).  Conducted a series of online searches against the baseline to identify cost savings exclusive to the internet.  Applied 33.7% savings factor to the average annual expenditure on apparel ($1,700) based on the Department of Labor annual study on consumer expenditures.

Site example: www.target.com, www.jcrew.com

NINE. NEWSPAPERS. POTENTIAL SAVINGS: $195/YR (89.2%)

Source: Search based study reviewing major newspapers in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Calculated the standard annual rate for a daily delivery (including Sunday) subscription for the top three papers in each of the above cities.  Potential savings factor based on average annual daily subscription rates.
Site example: www.nytimes.com, www.chicagotribune.com, www.dallasnews.com

TEN. BILL PAY. POTENTIAL SAVINGS: $47/YR (100%)

Source: Cost analysis based on average consumer’s postage for six bills per month, plus one pay-by-phone charge.
Methodology: Created a to a standard multiple of monthly bills that are traditionally paid via postage (Rent/Mortgage, Gas, Electric, Water, Cable/Phone/Internet, Mobile). Applied average cost per US postal stamp ($0.44) for each monthly bill, plus the savings of one average pay-by-phone charge ($15).
Site examples: www.mycheckfree.com, www.chase.com, www.bankofamerica.com