Nomad Money Saving: The Grouping Theory

nomad money saving

Okay, the Grouping Theory is just a name I made up for our nomad money saving strategy. Basically, it’s the logic behind buying in bulk, applied to more than just commodity purchases.

After a few weeks in Chiang Mai we noticed a funny little trend in our spending. One Saturday, we’d decided go to Huay Tung Lake. Our normal budget for the day is 1,000 baht, or about $28 dollars excluding accommodation. We figured that a trip to the lake would cost an extra 600 baht or so, which was fine. Being frugal is great but there’s no point in travel if you don’t give yourself room to explore, right?

We got back from the trip and tallied up expenses. We had indeed paid 600 baht to rent a songthaew to take us out to the lake and bring us back, but we’d also paid 250 baht on the dinner we had there, about 170 baht more than we normally spent on dinner because it was the only option. Then we’d stopped for a mango and sticky rice at the mall on the way home.

We were consistently underestimating our expenditures, but the interesting thing to me was not the underestimation itself but the agglomerating effect of our purchases. Whenever we went out and meant to spend X amount of money on something, even if it was just a quick trip to the grocery store, another purchase always came up: water because we weren’t at home to drink the water from the fridge, that pair of shorts when Spenny had an accident, etc etc. It felt unavoidable. You can always prepare better by bringing the things you need from home, but what fun is life if you never allow yourself that spur-of-the-moment sticky rice?

Instead of trying to cut out extra purchases, we got better at nomad money saving by grouping them.


nomad money saving

A man who knows a little something about grouping

The following Monday, I spent the whole day inside with Spencer until we took a walk to pick David up from work. Instead of taking him to the play place and eating at the mall, we colored and played his favorite game, an imaginary monster hunt called “Get the Boo Boo.” We spent next to nothing that day. On Tuesday and Wednesday, I took him to the play place for some exercise and baby socialization. Thursday it rained and we were ready to stay in and sing nursery rhymes.  On Saturday we wanted to go out again, so we rented another songthaew. This time, we rented it for four hours and asked the driver to take us to take us to several places we wanted to see. We paid 800 baht, but we got a whole day of entertainment and were too tired to stop at the mall or anywhere else on the way back. Whenever we grouped our activities into entire days, our overall expenditures were lower.

nomad money saving

If you’re an efficiency nut, you can take it a little further. We had this annoying laundry cycle, where we’d only be able to wear our light clothing every two weeks, the time it took to accumulate enough dirty clothes to do a full batch of lights. Now, I tend to wear my dark clothing in consecutive days so that I can do a batch of darks first, and always have plenty of clean clothes. The next time we pack for a trip, I might leave my light colored dresses at home altogether.

And of course, food. David and I both enjoy cooking, but Chiang Mai was the first city we’d lived in where it’s actually cheaper to eat out! To satisfy our cooking urges, we had one big cooking day a week. David whipped up a huge batch of curry from a curry paste, all of the veggies in the fridge, a bulk package of frozen chicken, and a ton of rice. That was the only dish that worked out to be less expensive than eating out, because of the huge batch we made. It was there for the rest of the week for lunches or any time we didn’t feel like going out.

There’s nothing revolutionary here. It’s the same thing you do when you look for other people to share a cab ride, or a vacation house, or buy the things you use a lot of at Costco. We’ve just started to mentally apply grouping to our activities, rather than thinking of the strategy as something that only applies to things.

I think there’s a corollary here in something David uses as part of his investment strategy. It’s called dollar cost averaging. When the volatility of one of your assets is high, you can spread out the risk by purchasing it in chunks, which are at different prices because of the asset’s frequently changing price. By segregating your losses into chunks you prevent one chunk from affecting the whole investment. The day when you bought high and prices closed low balances out the day when you bought low and prices closed high. Our grouping strategy is the same idea in the opposite situation. Because we can predict where the losses will be, ( whenever we put on our tourist hats), we ringfence them into one day, and prevent them from affecting other days’s budgets. In both scenarios, our overall losses are less because we’ve isolated their impact.

nomad money saving

These kinds of nomad money saving techniques just didn’t occur to us back in the states. If you have a car  you use it every day, so the agglomerating effect is masked. When you have a full wardrobe, you don’t have to worry about having a variety of clean clothing. If you don’t have to carry your groceries in a backpack, you can get whatever you want without having to think too hard about an ingredient coordinated menu. I guess the lifestyle helps us to simplify and allows us to see our spending habits more clearly. If I could coin another term, it would be the positive agglomeration of nomad money saving. And… you’re asleep. Good night!

For more general cost-saving tips, check out the amazing veteran ThriftyNomads blog.


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