Several years ago, I realized that I could save money if I stopped paying for services and equipment that wasn’t necessary. An example of this is the local service provider was charging $10.99 per month for the use of a Wi-Fi router. After doing some research, I learned that I could buy a comparable Wi-Fi router for about $99.00, which I did. Forty months and two moves later I am still using the same router. I think that was a reasonably good investment, but let’s look at the numbers.
This is a good place to look at the return on investment (ROI). Return on investment in this case is a calculation the indicates how long it takes, in months (or payments) into recover the original investment. The investment was $99.00 to purchase a Wi-Fi router. The rental price was $10.99 per month to use the service provider’s Wi-Fi router. Therefore, the ROI calculation $99/$10.99 = 9 months. That is a great ROI.
The investment also generated a monthly saving of $10.99 + taxes but let’s ignore the tax. The savings generated by purchasing and using the router are the number of months times the cost per month less the investment (40 months x $10.99 monthly rental – $99 investment). The savings to date has been $340.60. Which is not bad for a simple investment such as this.
The ROI calculation is a great tool to use when trying to decide between options. You always want to go with the option which has the best ROI. In this situation the options were to rent the router or own the router. Because there was a high probability of using the router for more than nine months, it was logical to make the investment to own the router. Had the usage duration been less than the nine months it would have been better to rent the router.
There are other money savings options in our daily lives which we should consider. Take some time and look for one or two. It might not seem like a lot of money initially, but over time, all those little numbers add up to one really big number.