Photo courtesy of elle_rigby 20 Money Hacks: Tips and Tricks to Improve Your Finances
“Money is better than poverty, if only for financial reasons.” - Woody Allen
We had the Parent Hacks earlier this week, and I was thinking it would be fun to do the same with finances — ways to trick yourself, to get around obstacles, to boost your accounts, without it hurting.
Improving your finances improves your happiness, in general, so I thought it would be important to share stuff that’s worked for me.
I’m in the best financial shape in my life, despite quitting my job and my wife recently quitting hers too. A lot of that is thanks to you guys, the readers, but it’s also thanks to frugality, to eliminating debt, to saving as much as I can. To these hacks.
Here’s what works for me — please avoid flaming me, as I’m not saying they’ll work for everybody. Share your tips and tricks in the comments!
- Use cash. Instead of charging things to credit cards or debit cards, use cash for non-bill spending such as eating out, gas, groceries. Spending cash makes the spending more real, and there’s an added advantage of knowing when you’re out of cash, instead of spending more than you
- Small weekly savings transfers. I got this idea from my friend Trent at The Simple Dollar, who automatically deducts $20 a week from his check to savings. I decided that I could live with $40/week without really feeling it — it’s a relatively small transfer that I barely notice, and I save about $2,000 a year on top of my larger bi-weekly savings transfers.
- Stay home. Going out makes you more likely to spend unnecessarily. You eat at restaurants, go to the mall, stop at the gas station for snacks. It’s hard to avoid spending when you’re on the road. Instead, stay home, and find free entertainment. It’s also a great way to bond with your family.
- Don’t get catalogs. Or emailed announcements from companies trying to sell you stuff. Their announcements of sales or cool new products make it very tempting to buy something you don’t need. Instead, stop the catalogs and emails from ever getting to you in the first place, and you’ll spend less.
- Keep a 30-day list. If you have an impulse to buy something you don’t absolutely need, put it on a 30-day list. You can’t buy anything but necessities — everything else goes on the list, with the date that it’s added to the list. When the 30 days are up, you can buy it — but most likely, the strong urge to buy it will be gone, and you can evaluate it more calmly.
- Cook at home. I know, it seems more difficult than eating out. But it doesn’t have to be hard. Throw together a quick stir-fry with frozen veggies and either boneless chicken or (my favorite) tofu with soy sauce or tamari. Make home-made pizza with a ready-made crust, some sauce, cheese and veggies. Put some spices on something and throw it in the oven while you cook some brown rice. Not only is this much cheaper than eating out, but it’s healthier.
- Exercise. Staying healthy is the best way to avoid costly medical bills later.
- Use the envelope system. It’s the same idea as using cash for spending, but in addition you use envelopes to split your spending cash into categories. My non-bills categories are groceries, gas and miscellaneous spending. Three envelopes, and when they’re empty, I’ve spent my allotment.
- Talk with your SO weekly. It’s important that you and your significant other be on the same page. You should have the same financial goals, and from there you should agree on a general spending plan and a policy for impulse buying that won’t have either of you wanting to choke the other. Make sure you both know what bills have been paid, what your balances are, etc. A weekly meeting of just 20 minutes accomplishes that. Communication is key.
- The spreadsheet tracker hack. There are expensive programs like MS Money, Quicken, and the like that will do amazing things with your financial information. There are even free ones, on your desktop or online, that can do all kinds of things. Trouble is, I don’t need all that. All I want is a way to track my money easily, with no other bells and whistles, and a way to access that online so that I can view it from anywhere. The best way I found to do that is through Google Docs and Spreadsheets. I created a simple spreadsheet to track my bank accounts, that does everything I used to do with MS Money. It has the date of each transaction, the title and amount, a little field for memos, and a running balance. What more do I need? Keep it simple. Update: View a sample I put online here.
- Pay savings and debt first. When you sit down to pay your bills (I do them all online), make the first bills you pay be your savings transfer and your debt payments. If not, if you pay them last … you’ll often end up shortchanging them. But if you pay them first, you’ll make sure you still pay your rent or mortgage, utilities, groceries and gas … so you’ll just cut back on other spending.
- Exercise at home. Some of you will disagree with me on this, which is OK — everyone should do what works for them. But I’ve saved a lot of money that I used to spend on gyms by just running at the local track or on the roads in my neighborhood, and buying some simple weights and a chin-up bar. I do a lot of body-weight exercises (pushups, Hindu squats, lunges, pullups, dips, etc.) and I don’t need a gym for those things.
- Cut out cable TV. I’m not saying I don’t watch TV — I watch DVDs, so that I’m sure that what I’m watching is something great, rather than the useless stuff you find on TV most of the time. And there’s a lot of it online for free if you look. Not a huge savings, but it adds up.
- Declutter. By getting rid of all the excess stuff in your home, you not only make your life much simpler and more peaceful, but you make it harder to buy stuff that will just clutter things up again. Once you’ve simplified your home, you won’t want to go back.
- Lend and borrow. Give books and clothes and toys you don’t need anymore to your friends and family. If you need something, send out an email asking if anyone has it. Chances are, they’ll give it to you for free if they don’t use it anymore.
- Barter. It’s a lost art, but lots of people will take your services or goods instead of money, especially if you’re friends or at least know each other. Get into the habit of offering to barter, and you’ll find yourself saving a lot of money. My website design was done through the barter system, so I saved well over $1,000 there, for example.
- Use online savings. I use Emigrant Direct, but ING Direct is also popular, as are a bunch of other online banks. Not only do you earn like twice the interest of a normal bank savings account, but if you don’t get the ATM account it’s not as easy to withdraw money … making it less likely that you’ll get money out on an impulse.
- Try frugal gift-giving. Giving people gifts is one of the most wonderful traditions, as it shows generosity and caring. Until it becomes commercialized. Then it’s just really really expensive. Instead, try giving the gift of spending time with someone. Try giving them something you baked or made yourself. Try giving them services they’d appreciate. It doesn’t have to cost a lot to be generous.
- Teach your kids about advertising, saving, earning, and gift-giving. If you have kids, educating them about money will save you a lot of money in the long run. If they know about how advertising influences them in tricky ways, they’ll be less likely to demand (OK, beg and plead for) the latest fad toys. If they know about saving and earning money, they’ll respect the money that you earn, and that you are trying to save. If they know that gift-giving doesn’t have to be about spending a lot of money (see above), they won’t necessarily want expensive stuff.
- Find happiness in life, not spending. Many times people buy stuff because they think (subconsciously perhaps) that it will bring them happiness. They just HAVE to have the latest gadget or shoes or cars. It’s so fun! And yet, you buy that stuff, and you’re only happy for a day or two at most. Then you just need to buy more. It’s a never-ending cycle. Instead, learn to love life. Find joy in nature! In the people around you! In doing something you love! In exercise and meditation! There’s so much in life to make us happy, there’s no need to find it in spending.
“I’d like to live as a poor man with lots of money.” - Pablo Picasso
If you liked this article, please share it on del.icio.us or on Digg. I’d appreciate it. :)
- Posted on 28 February 2008 in Finance & Family |
- Digg |
- Del.icio.us |
- Stumble |
Comments (142)
Ryan McRae Says:
February 28th, 2008, 21:50 pm
There is nothing I’ve ever done as important as hack my money. ING Direct is awesome. The best move I made was having my savings withdrawn from my paycheck FIRST. So even if I blow my paycheck, my savings is save.
Well done.
Corey -Simple Marriage Project Says:
February 28th, 2008, 22:20 pm
Nothing harms a marriage more than the money issue. Communication is key. Developing a marital vision or plan for what you want to do and obtain as a couple helps generate teamwork rather than selfishness and deception.
Great tips again Leo. Thanks.
Thomas Herold Says:
February 28th, 2008, 22:23 pm
Definitely check out the book “The Millionaire’s Mindset” by Harv Eker. It’s an eye opener for your mindset around money.
Cheers
Thomas Herold
CEO Dream Manifesto
http://www.dreammanifesto.com
Marelisa Says:
February 28th, 2008, 22:28 pm
I’m pretty sure I read this in a book by Suze Orman: Pay for everything with bills; then take all of the change you get and put it in a jar. (That is, if something costs $1.80 you pay with two one dollar bills and the twenty cents you get as change goes into the jar.) This is “free money” and at the end of the month you can use it to get something fun.
There’s also the concept of “seed money” and the Law of Tenfold Return. If you want something that costs, say $200.00, you “plant” $20.00 by giving it to a charity, a church, or someone who really needs it. Then you claim your tenfold return and wait, fully expecting to receive $200.00 from some unexpected source. It is said that John D. Rockefeller, Andrew Carnegie, Aristotle Onassis, and many other extremely wealthy men used this method.
banji - LessonInLife.com Says:
February 28th, 2008, 22:46 pm
I like the idea of keeping a 30 days list of items to buy. But maybe we can add another rule so that every week we will review the list and cancel which ones that may not be already appealing. By keeping everything in one list until the 30th day, we might be reminded to just buy the items.
I personally was able to finally create my emergency fund by doing one thing, which is stopping impulsive buying altogether.
Hopefully it will be complementary to the articles to share how I do exactly that - 12 Unique Tricks To Combat Impulsive Buying
Clay Collins | The Growing Life Says:
February 28th, 2008, 22:50 pm
Great list! One thing I frequently do is use Microsoft Money for the pocket PC to track EVERYTHING I spend. Also, once I started a ROTH IRA that was it: I found myself motivated to save like never before. There’s nothing like compound interest when to comes to extolling the virtues of “socking away” money.
Mud Says:
February 28th, 2008, 22:50 pm
Envelopes!! I finally see someone else doing this. I learned the value of cash and envelopes while living in Japan. They are a cash based society and I was living paycheck to paycheck while there. I split out bills by envelope and fun money types.
Every housewife there would disappear upstairs and come back with whatever money would be needed to pay for the repairman (500 dollars or so) or for a bit of extra food. I finally got to thinking that they must have emergency cash stored away. It was my most efficient and frugal use of money in my life.
Since I’ve been back in the States it’s been hard. I don’t feel as safe carrying cash as I did there. Cash is the best way to manage. I would swear by it.
François Says:
February 28th, 2008, 23:03 pm
Number 20 should be #1 on the lis, once you’re on that mindset everything is whole lot easier.
Instead of cutting on tv I started cutting on dvd’s, there’s useless stuff on every medium Leo. ;)
Great List anyway
Laura Says:
February 28th, 2008, 23:05 pm
Your mention of Google Docs is the best thing in this whole article for me. I alternate between my desktop and my laptop constantly and trying to keep my Excel checkbook up-to-date was nigh impossible.
Besides the whole fact that I had to reinstall OS X on my laptop and lost Excel on that computer.
Crystal from www.jewelfaerie.com Says:
February 28th, 2008, 23:21 pm
Regarding # 14:
When you declutter, don’t just throw that old stuff away. There are many ways to make money off of the things you already have, i.e., eBay, Craig’s List, Consignment shops and more. It’s also good to know which service to use to sell which items. For example, it’s easier to sell furniture on Craig’s List than eBay because it’s not really easy to ship. But it’s easier to sell name brand clothes/shoes on eBay because people search eBay for those things.
I have a list of these different services and what sells best on which here:
Jewelfaerie.com/6ways
(And if that link doesn’t work, forgive me, just click my name above…thanks!)
Take care!
Avrum Nadigel Says:
February 28th, 2008, 23:25 pm
Such an important post. And a nod to two of my favourite Jews:
a) Freud
“subconsciously perhaps”
b) Woody Allen
“Money is better than poverty, if only for financial reasons”
Leo, so many of your posts fall into the: “I know I should I do this… I know I should do this” category. Thank God my wife doesn’t read blogs.
Mike OD - IF Life Says:
February 28th, 2008, 23:45 pm
I’d add:
- Buy Used - as there are plenty of places to get used furniture, books, cars, CDs, DVDs, computers, clothing (well except underwear that is!)…and more. Whether garage sale or otherwise.
- Haggle all Prices - goes along with buying used, but there is no such thing as a set price, people will give you discounts (what have you got to lose?)…but you will never know until you ask for it!
Maura Says:
February 28th, 2008, 23:50 pm
I’ve been through the financial ups and downs a couple of times now… you’d think I would learn the lesson after having to scrape and figure my way out of the holes I’ve dug for myself.
But there are emotional drivers for my recurring bad behavior rooted in how I first learned about money saving, spending and borrowing. I am currently on a mission to examine the reasons behind my bad financial habits and improve my emotional relationship with money, so it doesn’t happen again!
Teresa Says:
February 29th, 2008, 0:37 am
As usual Leo, another great post, with lots of stuff I think about all the time.
Here’s a few other tricks that have helped me:
- I do my grocery shopping online. I set a budget for each “trip”. By buying online, I know exactly how much I’ve spent as I add things to my cart. I never overspend on groceries, even if I’m starving when I order. :-)
- I withdraw cash for work lunches at the beginning of the month. when I run out of cash, I have to bring food from home for the rest of the month.
Iris M. Gross Says:
February 29th, 2008, 1:28 am
Direct Deposit is your friend. You never handle your paycheck, and so you simply go to the ATM and draw out what you’ll need for the week.So as far as #1 goes, use cash, but hide it away with direct deposit, because if you don’t touch it, you don’t spend it!
About tip #3, staying home is a good idea if you already have a spouse. If not, #3 is lousy advice if you want to meet somebody!
There used to be a saying, “neither a borrower nor a lender be,” so #15 is in trouble from the getgo. I say borrow in moderation, and loan in moderation, as well. A small sum to allow a lesser-paid co-worker a meal from the cafeteria is money well spent. Someone did that for me, more than once, and I’ve since paid it forward.
I’ve bought things that have made me happy for several years - my car, for instance, which is attractive and has never left me stranded. Also my dinnerware. It’s a beautiful French blue plates that turns chicken and rice or even macaroni and cheese into a work of art. I enjoy eating on them every day, and I’m very glad I bought them. So, I guess to rebut #20, I’d say there’s nothing wrong with having a few things that you really get enjoyment out of, but I do believe it’s wrong to just buy just for buying’s sake. You end up with, well, crap you don’t use. THAT’S not happiness.
Mindstyle Says:
February 29th, 2008, 2:49 am
Leo,
Have been a regular reader of your blog and I have noticed that you don’t fancy plastic money. I would like to differ from you on this point of using cash and no cards. The reason is, the small interest that you get on your money.
I am not an american resident so I don’t use ING direct but my bank gives me interest for every cent that I have in the account everyday. As soon as my salary arrives on 26th of every month, flat 30% goes into the savings account, no questions asked. By end of the month, I have all bills paid from my salary account by automated system. On the evening of the last day of the month, I leave only what is regularly required to spend a month, rest again goes in savings account.
Now, I will use my credit card for whole month. Track my expenses every weekend (to make sure that I am within the limit and that saves your efforts of keeping extra excel sheets) and pay off that bill 10 days before the due date. ** By this way, I have earned the enough interest (3.5% APR) to pay my three monthly travel cards last year.***
** = Most of our banks do decent business, practices like cashing money late is not a preferred practice in this part of the world. I doubt if I will do this in the US, like paying when the due date is close.
*** = We are fans of our efficient public transport systems and bikes during the summer so that saves our USD 2+/ liter fuel.
Leo Says:
February 29th, 2008, 4:03 am
@Mindstyle … you’re right, I don’t favor plastic money. :) But that’s just been my experience — I think that credit cards make impulse spending too easy. That’s the reason they offer incentives to use them — because they want you to use them. That makes it so tempting to buy on impulse, even if you don’t have the money right now, and even if you don’t need it.
However, as I said at the beginning of the article, this stuff is just what works for me. Everyone has to find what works for them, and some people are able to use credit cards very well without overspending.
Thanks for your perspective!
Frank Dougan Says:
February 29th, 2008, 4:50 am
I think savings accounts are useless. The percent return barely keeps up with inflation which averages about three percent a year. Everyone should invest in index funds by selecting a fund that is appropriate for their level of risk tolerance and investment goals. In the long, and probably short run as well, this will cream a bank account’s return…
Jeff Says:
February 29th, 2008, 4:54 am
Leo! Great tips, thanks a ton. As a guy just graduating from college, I’ve looked to a lot of your suggestions to help build a nest egg before I’m unceremoniously dunked into the real world.
The online savings look like a boon; thanks a ton. Could you tell us what you know about the safety/insurance of these online savings groups? Thanks!
Jelle - soChicken Lifestyle Design Says:
February 29th, 2008, 6:15 am
Plastic really works in my favor. Here in Holland we have the PIN system for paying (Personal Identification Number). I have an account at the Dutch version of ING Direct (Postbank) and here I receive all my money.
With the PIN card you can pay almost everywhere in Holland (and the rest of the EU as a matter of fact), and as soon as you press ‘OK’ the transaction is written off my account. So when I come home and login I get an up-to-the-second overview of my expenses, a automatic digital cash tracker. No expected bills at the end of the month, and the convenience of not having to walk around with cash (I really hate cash, it’s so ten years ago).
All my bills are set to automatic, my savings are set to automatic the day my money comes in. I use my credit card occasionally for international online purchases. For the Dutch web shops there is a online variant of PIN called iDEAL. Same principle, as soon as you click ‘OK’ (after first authenticating yourself, of course) the money is written off your online account. Very easy and direct. I don’t know if you’ve something like the PIN system in the states to pay direct, but I would recommend it. Credit cards are dangerous. ;-)
I have a variation on #2 that I use for some months now. On my ‘ING Direct’ I have made about 20 automatic payments into a separate savings account. These payments are set on different days of the month and vary from 0,80 Euro-cents to 7 Euro.
The idea behind this is this: I will never not buy a sandwich if I’m hungry and am at school. Second, I never feel guilty that I spent the 3 Euro’s on that sandwich. Third, I don’t ‘feel’ this few Euro’s in my bank account. I know 15 sandwiches a month add up, but it goes so slowly that I don’t notice it.
Now everyday I save a few Euro’s. I don’t notice it at all, but is quite some money each month. Sometimes I even forget I was saving that money, and after a few months it has become quite a lot.
So, instead of saving a set amount each week, I recommend saving multiple ambiguous little sums of money so you can’t easily calculate with it in your head. It’s kind of a surprise how much you’ve saved after some time. :-)
I’ve written an article about this on my website some time ago. It’s in Dutch: http://www.sochicken.nl/leven/spaar_onbewust_1000_euro.html
You can read it via Google Translate in (some form of) English: http://tinyurl.com/3xxxlf
Great article! Money is so important, and yet so unimportant. :-)
Jules ikeahacker Says:
February 29th, 2008, 6:34 am
Leo,
Would like to do the same - upload a simple spreadsheet to track my bank accounts on Google docs. As I am an debit-credit dud, do you think you can provide us a sample? That would be mighty helpful.
Kelly Rigby Says:
February 29th, 2008, 6:44 am
Lots of great ideas here, and I’m not sure I have anything new to add other than it can be helpful to keep an spending chart for 6-12months so you can see where your money goes.
This allows you to get together with your SO, evaluate your habits and decide what your finance goals are. Your budgets are then set on facts and your own values, and you’ll have a much better chance at achieving whatever your goals are.
Oh, I thought of another one too. Decide what your money values are. What does money mean to you? FREEDOM. PROSPERITY (buying stuff) or SECURITY.
This primary value needs to be responsibly honoured no matter what your circumstance. For example, if you need to feel free, you need to allocate small amounts to doing things that will make you feel happy and like you have choices.
If you like “nice things” then you need to allocate money to save up for splurges, and security conscious types will probably just be happy to see their financial circumstances improving.
Have a good weekend, everyone.
Kelly
Damien Guard Says:
February 29th, 2008, 7:26 am
The problem with tip 1 is that when you come to look at your spending in Money at the end of the month you have no idea where all those ATM withdrawals went.
Spending too much on groceries, snacks, fuel? No idea.
Putting it on a debit card is a good idea if you want to actually track and review your spending without having to scribble everything down in a book.
Great list though.
[)amien
Leo Says:
February 29th, 2008, 7:31 am
@Jules: To help you out, I’ve put a sample spreadsheet viewable to the public here:
http://spreadsheets.google.com/pub?key=pFPhq_YrpiaJV_KkddJ4COg
It’s not real numbers! Hope it helps!
Andrew Lim Says:
February 29th, 2008, 7:54 am
Wow, and I thought I was the only one who used Google Docs/spreadsheet to record down daily expenses.
It’s really convenient as long as you have internet access. Previously I used to store my expenses on a single computer, but it became more and more inconvenient as I use different PCs and operating systems often.
emma leigh Says:
February 29th, 2008, 8:46 am
my parents split when i was a senior in high school due to monetary reasons– so yes, communication w/your partner is the key!
i have to say, this site has helped me focus my energies financially and otherwise. i suffer from a lot of compulsion and have lately been hemmoraging money when i should be saving it. i’m definitely going to try to the 30-Day List today! thanks! =)
Edwin Says:
February 29th, 2008, 8:51 am
Remember to pay yourself every month and save it in a bank. Treat yourself as an employee.
Exercising at home is normal if you have the necessary equipments. Some people say they exercise at home with only a 5kg dumbbell. That is so wrong!
Stephen Martile Says:
February 29th, 2008, 9:25 am
You brought up a lot of good points.
Trish and I use the JARS Money Management System. Five JARS to Financial Freedom,
Play
Education
Financial Freedom
Give
Long Term Savings & Spending
Necessity
Stephen Martile
Personal Development Made Simple
http://www.stephenmartile.com
dokidok Says:
February 29th, 2008, 9:35 am
When we eat out, my wife and I always share the meal. Benefits you can get if you share the food in a restaurant:
1. You pay only half of the bill.
2. You don’t eat more than you need–>don’t gain wait–> decreased risk of CVD–>less money for expensive meds in future
3. Less time spend in the gym to burn the extra calories–>more time for other things (reading, watching dvds, Internet, making money, being happy)
Charles Says:
February 29th, 2008, 9:47 am
You forgot!! Read ZenHabits! ;)
Stephanie Says:
February 29th, 2008, 9:57 am
Yoga is a great exercise you can do at home. You don’t need any fancy equipment, other than a mat. It’s a way of using body weight to stretch, find balance, AND build muscle.
Some types of yoga are more challenging (i.e. more of a workout) than others. Ashtanga is a good one if you’re looking for some solid exercise. I would suggest starting out with a class to learn the basics. Or go to a class once a week and practice at home on the other days. It DOES help to have a teacher at first, but once you get used to the practice, it’s easy to practice at home. All you need is a little space, a little time and patience, and a mat.
Debby Banning Says:
February 29th, 2008, 9:59 am
I agree whole heartedly that spending cash makes you spend less. It hurts to hand over a $100 bill. It doesn’t hurt as bad to hand over your debit or credit card.
stephanie Says:
February 29th, 2008, 10:18 am
new one i’m trying this year is using my credit cards.
i know it sounds anti-saving, but i went last year with no balances and not using them; cash only.
this year, i’ve picked a card that earns cash back and at the end of the day i tally my receipts, round up (to dollar, ten dollar, whatever i can swallow for the day) and transfer that money from my checking to an interest bearing savings account that i don’t touch until the credit card bill comes in and the bill is paid in full. i’m earning cash back on my purchases. i’m earning interest on the money i ’spent’ for the month. because of the transfer i’m still very conscious of my spending and budget. and i’m slowly building a cushion of savings in the saving account by the round up.
now i wouldn’t have tried this until i spent the year disciplining myself to not rely on credit …
-s
Stacy Says:
February 29th, 2008, 10:21 am
The last one is the most important - finding your happiness. Once you have that, everything else (including money) falls into place.
Tosin Matti Says:
February 29th, 2008, 10:31 am
excellent post like usual I will definitely try the 30 days list.
JEMi @ InMyHeels - Tips for Life, Love, You. Says:
February 29th, 2008, 10:50 am
practical, simple, and oh so very true. I don’t know about this cancelling my cable talk :-P but I can attest to cooking at home and paying savings and debt first (excellent tip)
I am not much of an impulse shopper (I have my moments but far and few in between) but I can see how a lot more of these tips can be useful for one as well as for couples. When hubby was around, it was important to us that we not allow money get between us.
great post as usual :)
Jose Says:
February 29th, 2008, 11:00 am
Trent’s site rocks for financial stuff. I check it as often as I check zen habits. I started my ING account last year with the automatic withdraw for my car. I still have $1000+ and growing, it has paid for some car trouble and I didn’t feel a thing!
Also, I have another ’savings’ account set up besides ING. It paid for some home upgrades, which went up to $1,200ish. I felt nothing and I was able to do some great upgrades and get other minor utilities. Btw, this account has grown back to $600+ since last october.
In short, transferring money from your checking to another account works. Best of all, you learn to live without that money. The more you can put away, the better. If you look at your bank account online and see that you have little money, you will be more careful on what you buy. You are tricking yourself, the money is not gone, it’s just out of site.
Most importantly, do not check the balances all the time! Otherwise temptation sinks in.
Thanks Leo. I rarely post but I’ve been a loyal reader since April 2007.
Never the Same River Twice Says:
February 29th, 2008, 11:17 am
For a couple of years now, I’ve followed the advice in Your Money or Your Life to track every $1 I spend. It helps me stay very conscious of using my money (aka Life Energy) in productive ways.
This can be a little cumbersome, but I’ve been able to streamline the process by using Xpenser in conjunction with Jott. I explain more about my system in this post, for those who are interested.
Jaxs Says:
February 29th, 2008, 11:37 am
Oh m’gosh. Your Google Docs example is hilarious!
“Paycheck- Stud Modeling Service, $5000, Memo: my day job
BailBonds USA, $720, Memo: for that drunken night out on the town
Joe Ripsmeoff, $500, Memo: mechanic”
And I see you directly state “These are just sample entries — they’re not real!” Do people really think they are?!?!
Thanks for making us laugh while we’re learning.
Dan Says:
February 29th, 2008, 11:42 am
I saved around €60 a month by switching from coffee-to-go to tea I made myself. As a bonus I feel a lot better since I cut down on all that milk and chocolate bits on my cappuccinos.
A year and a half ago I made the best money & life saving decision ever - I quit cigarettes and saved around €240 a month and saved my life too!
e Says:
February 29th, 2008, 11:48 am
Another great way to save money (and lighten the burden on the planet) is to reduce your energy, water and fuel use.
Replace your lights with CFLs, turn off lights & appliances when not in use, drive less (walking & biking is great for your health too), take public transit, keep your car maintained for fuel efficiency, reduce the size of your lawn & water it less, plant native landscaping that requires little or no irrigation, if your have old toilets add a bladder inside to reduce water use with each flush, use less heat in winter & less AC in summer, etc.
The list could go on for pages here. Just think that if you could knock $5 each off of your electricity, heating/cooling, water and fuel spending (easy!) that’s $240 a year. And you can probably do much better.
Korey Says:
February 29th, 2008, 12:58 pm
All great tips. I especially liked #5 - Keep a 30-day list. Brilliant. It really makes you consider those purchases that seem like a good idea at the time. Usually those are the ones that you regret. “I don’t really need it but I want it.” Later you think, “Why did I do that?”
I’d like to add something from my own experience. Really simple. Keep a little notebook in your pocket. Every time you make a purchase, even for five cents, write that purchase down. The more aware you are of any behavior the more inclined you are to improve it. This works for spending habits or eating habits.
Cheers.
Chaunce Says:
February 29th, 2008, 13:01 pm
This is a great article. I have struggled with being financially responsible for years, and only recently have found things to do that work for me. I found a great FREE online resource call Buxfer (http://buxfer.com). After I started, I noticed that it helped me keep track of everything and had it at my fingertips via iPhone. I would highly suggest it for anyone looking for a free-and-easy financial tool.
I have been following your blogs for about a month now and I forward them on to friends and family all the time. You are a great source of inspiration.
Thank you!!!
Bill Says:
February 29th, 2008, 13:11 pm
To add to Marelisa’s idea. Coinstar machines (in most supermarkets) will take your change and turn it into cash–for a fee. But they do something else, as well. They will convert it into gift cards/gift certificates WITHOUT CHARGING THE FEE.
So you can convert your change into credit with Amazon, Starbucks, AMC Theaters, Borders, iTunes, etc.
I like to use this for my weaknesses. So I convert my change to a Starbucks card, and then use it to treat myself to coffee. When the card is empty, no coffee until I get that change. Or to a Borders card and use it to buy books. When the card is empty, no books until I charge it again.
It’s like getting free money to treat yourself and it keeps me from spending budgeted money on those kinds of treats. My plan for 2008 is to not buy a single book unless it’s with “change.”
Proseac Says:
February 29th, 2008, 13:21 pm
Great tips, Leo!
Regarding the suggestion by Mindstyle: I too pay all my expenses during the month with a credit card, then pay the whole balance off a few days before the due date. But to prevent the impulse spending thing, I deduct each charge in my chequebook as it happens, in a different colour ink, as if I’d actually made a withdrawal. So that money is accounted for and I never over-spend.
For example: one month I will use red ink, the next month green, and so on. “Real” debits from the account are in blue or black ink to distinguish from cc transactions. Every transaction that will appear on the next cc statement is in the same colour. When I pay the bill (through online banking), I just add up all the red or green items in the chequebook and that’s what I pay. I can access my cc account online to make sure I’ve not missed any charges.
Using this method I’ve accumulated “Air Miles” on my cc and earned more interest on my bank account at the same time. I cash in the Air Miles for gift certificates at a home improvement store, which I’m using to renovate my house, thus saving me even more money! :)
Kim Says:
February 29th, 2008, 13:25 pm
I track my money very simply on paper (in my Franklin Planner). I printed out sheets that have room to track the information I need (Date, is it a tax item?, transaction type, to/from, description, amount, and balance) and I have a page (or more!) for each of my accounts. Now, when I have a few extra minutes while waiting for my kids somewhere or at lunch I can enter the information. For me, turning on the computer would put me off. Now I can do the work just a few minutes at a time and keep up with it.
Faith Says:
February 29th, 2008, 13:28 pm
Wonderful list. I’ve been reading your blog for over a year now, and I’ve gradually implemented many of your frugal ideas. I have two more to add….
- Volunteer… Last year I started doing volunteer ushering at two local music festivals. I got to see about $1000 worth of concerts for free.
- Use the library… One by one, I gradually dropped my subscriptions to cable TV, Netflix, and all magazines. Now I go to the library each week to get my fix of DVDs, CDs, magazines, plus books of course. That’s a huge savings, and it cuts down on clutter, too.
Eugene (Editor, Varsity Blah) Says:
February 29th, 2008, 13:48 pm
Nice tips, Leo! I graduated with an honors degree in finance last year and my advice to everyone is to learn as much about money and the economy as you can. Read articles, watch financial news, and find great books to get you up to speed. I highly recommend Why Smart People Make Big Money Mistakes as a great place to start.
Another great resource is Yahoo! Finance. David Bach (from the Oprah Debt Diet) has a really good column there. One thing he recommends is paying your mortgage twice a month instead of once (e.g. pay $500 twice a month instead of $1000 once a month). 26 “half-payments” a year add up to 13 full payments. That extra month paid off each year will ultimately have your loan paid off sooner and save you a fortune in interest!
(http://www.varsityblah.com/calling-all-customers)
Andrew Says:
February 29th, 2008, 14:42 pm
@Eugene
I’m not sure how you came up with 26 half-payments. Where did the extra month come from?
Steve Says:
February 29th, 2008, 14:46 pm
I love zenhabits overall. It’s a great site. To be honest though this information seems pretty low brow. I expect a higher standar from this site and this post seemed kind of easy. You can get information like this anywhere and most people interested in “financial self-help” already know these things.
Brett @ Common Cents for Everyone Says:
February 29th, 2008, 14:58 pm
Excellent post! The only “hacks” I did not see were ones that impact positive cash flow. If you don’t supplement your “job” income, it will be harder to achieve the goals of your frugality. Just a short period of time spent working extra to pay down your debt, save a little extra, or save for a specific (hopefully positive) goal can pay off HUGE in the long run.
Mike OD - IF Life Says:
February 29th, 2008, 15:11 pm
I think another good addition is just learning to say NO to people and things. We don’t have to go out to dinner all the time, go to shows, go here and there, need new shoes, need something because of an ad on tv (dont these all just end up in closet somewhere?). We just pick what brings in true happiness and find other people of similar values. We have enough to be happy, but for some reason we always think we need more (could that be mass marketing on TV, magazines, and everywhere we look?). It’s all perspective.
Jonathan Mead Says:
February 29th, 2008, 15:21 pm
I think the most powerful thing we can do is change the way we view what we need. When we realize we don’t need as much as we think we do, we can really start saving money. This increases our happiness as well, because we realize the beauty of simplicity. We learn to appreciate what we have, instead of being bought and sold by advertising.
Reminds me of a song.. “adverising causes, therapy, therapy advertising causes therapy” hahaha.
http://jonathanmead.com - Authenticity, Clarity, Balance
racketboy Says:
February 29th, 2008, 15:35 pm
I saw never use cash if you can. I use credit cards on everything, but always pay off the balance each month. With my Discover cards, I usually make an average of $40 cash back each month because I use it on my routine stuff in addition to purchasing inventory for my business and everything in between.
Pamela Says:
February 29th, 2008, 15:37 pm
My number one tip to improve your finances is to give generously to causes you care about. You can call it karma or reaping what you sow, but when we are faithful to give, we ALWAYS have had enough money to pay our bills.
We’ve also had huge success using Dave Ramsey’s principles (most of which you’ve mentioned). We paid off $14K of debt and saved another $14K in 22 months by following his plan.
Eugene (Editor, Varsity Blah) Says:
February 29th, 2008, 16:01 pm
@Andrew. Sorry, that should have been a payment every two weeks, not twice a month.
So, let’s say your payment is $1000 dollars per month. That totals $12 000 per year if you pay it once a month.
But if you pay $500 dollars every other week, you’ll end up paying 26 times each year (52 weeks divided by 2). That will make the total $13 000 dollars per year (26 weeks multiplied by $500).
The extra $1000 each year gets “amortized” to the outstanding balance and the loan gets paid off sooner!
Kari Says:
February 29th, 2008, 16:14 pm
I found this article to be very interesting. Though changes in lifestyle are hard to do in the beginning, it gets easier. And there are ways to help with spending, saving, and budgeting. I like the UPside prepaid reloadable Visa card. Unlike a debit card from your bank (which many allow overdrafts, getting you into even more debt), you are only able to spend what you put on the card. You are able to fund the card periodically or automatically with allowance schedules, from family, friends and employers. And with multiple plans to choose from, you can find a card that fits you and/or your family’s lifestyle, as you can get the card for yourself or one for family members that are either already in need of debt-help or you would like to teach healthy financial living to, like your kids (as young as 13 years of age).
Kim Says:
February 29th, 2008, 16:28 pm
Steve and Eugene (and everyone else!) there’s a great company - Paymap - that will help you do the twice a month thing. What you can do, too, is make 13 mortgage payments a year and pay your mortgage off that much earlier. You end up paying far less interest overall because you pay the principle off that much sooner. Call them at 800-315-3218 to set it up. They’ll explain everything.
shaun Says:
February 29th, 2008, 16:50 pm
I believe everyone should take control of their finances. Too many people just spend their hard earned money on pointless stuff. What they should do is save and invest it.
Jason R Says:
February 29th, 2008, 17:39 pm
Maybe I’m just having a dumb moment, but is there a way to save the sample spreadsheet? I sure could use something like that, but I am not good with excel… which explains why I don’t have one like that already.
Thanks for the other great tips also. I just went and scheduled an auto weekly transfer like you suggested in #2. I used to do something like that at every pay, but I don’t know why I never thought about making it automatic!?!
David Parker Says:
February 29th, 2008, 17:57 pm
I’m a huge fan of the cash system and paying myself first. My wife and I do that regularly, and we need to, as she’s in grad school right now not working. So this helps just in case there is an emergency. Good post.
Rupal Says:
February 29th, 2008, 18:14 pm
Great post! I love number 12 and 20. Exercise at Home and Find Happiness in Life, Not in Spending. This is so true. So few of us realize that not spending money can bring about the same productive results. Our consumer mentality is to tell our friends/family that we are going to the gym, hence, we are active, working out and on our way to being healthy. It sounds as if we are committed because we pay gym dues. Now, tell them you are going for a walk or a run just sounds plain frugal. It works though! I have been walking for years now and have just recently committed to “learn” or train to run. It feels great. It doesn’t cost a thing which feels great and I remain green by utilizing my local park, trail, etc.
When you need a boost, shopping may make you feel good for a short time but the real happiness is in enjoying the simple things in life such as reading a good book, watching a great movie, soaking your feet in warm water with some fragrant oil and giving yourself a nice pedicure, you get the idea. There are a lot of fun things to do without spending money. I have tried them and felt great to not have spent money unnecessarily and felt in control.
Seorsa Says:
February 29th, 2008, 19:07 pm
My SO and I wlways fight about money. I ahve really been struggling the last few years ebcause we make so much money, but spend even more. We have paid off our credit careds through inheritence (twice) refinancing (once) and hard work (twice) in our 21 years of marraige.
Unfortunately she simply cannot talk about money without fighting. now I send a weekly email, and this seems to be a good way to talk without her getting pissed (and me defensive :)
I am trying to change her from saying “Why do we have so much money in the bank?” to “Why don’t we have more.
Also- learning to say no is an important step (whether to the spouse, kids etc). I ahte saying no and end up charging because I always think I can “work it out”
Stephanie Says:
February 29th, 2008, 19:26 pm
I have a question Leo about paying yourself and paying your debts first, and then paying your bills. When you say debt, are you talking about credit cards and loans? And do you mean that you pay extra towards those items? If I were to use this method, I would probably have nothing left to pay the the other bills. Sorry if I sound daft, but my bills aren’t static each month, and I need to tally and pay them before I think about putting extra money towards debt or into savings. We’re on a tight budget, so sometimes there’s nothing left to put in savings!
I also wanted to suggest that staying home is great, and eating at home is better … but inviting friends over for a potluck and game night is best! Thanks!
Monica Ricci Says:
February 29th, 2008, 19:43 pm
Leo, congrats again on the Real Simple list! Yes, I admit I’m jealous. :)
Great post. Money stress is one of the worst kinds to have, not only for an individual, but for a couple. Which is why my husband and I have separate money, with the exception of a joint account which we pay our JOINT expenses from, such as mortgage, utility bills, groceries, etc. We each contribute a set amount to the joint account every month, and everything else we keep separate. As a result, we never argue about money.
With us each keeping separate disposable income accounts, if he wants to spend money on something I think is dumb (like a new Playstation game), I don’t worry about it because he’s spending HIS money. Vice versa, if I want to buy something for myself that he thinks I don’t really need (like a new gun) he doesn’t get annoyed because I’m spending MY money. It totally works for us.
Great post, as usual, Leo!
~Monica
Kathryn Parsons Says:
February 29th, 2008, 19:53 pm
One vote for Quicken and other for fee programs is they auto download purchases from most major banks — made with a debit card, of course :-)
Once you set up categories and memorize your regular purchases, it is a huge time saver. I now only enter 25% (tops) of my monthly purchases, track every expense and reconcile my monthly statements in 15 to 20 min a week.
Plus, if I purchase like a credit card, then I get reward points. Doesn’t total up like airline miles but is a $25 gift card or so a month.
jeremiah Says:
February 29th, 2008, 20:18 pm
Library, cutting cable bill, driving a little civic.
Those are my top three money savers. My library has tons of new dvds and books. Cable is a waste for me anyways i mainly watch movies or watch shows online now, driving a fuel efficent car is a no brainer for me.
Chris Austria Says:
February 29th, 2008, 21:34 pm
I read somewhere or heard someone say that going eating less meat will save you money.
Leo–We all want to teach our children about money and how to take care of it. But, how would you deal with a teenager whose self-esteem is shot because he/she is being made fun of at school for not having the latest fashion trend?
rainer Says:
February 29th, 2008, 21:55 pm
I would like to add, don’t get buried in the feeling to have not enough money. It may support a self-fullfilling prophecy
What is going on, blog Says:
February 29th, 2008, 22:22 pm
I agree with your tips. At the end of the year the amount of money you save is so much. http://www.whatisgoingonblog.com
Kelly Says:
February 29th, 2008, 22:40 pm
Great tips! I hadn’t known about Google Doc’s before and thanks to Chaunce for the tip about buxfer.com. That looks really simple and great for my purposes.
I am loving your site.
Thank you!
Leo Says:
February 29th, 2008, 22:40 pm
@Kathryn Parsons: Good point, but in defense of my spreadhsheet method, it only takes a couple minutes for me to log in to my bank’s online statement (which I do regularly anyway) and then copy and paste transactions into my spreadsheet. I don’t enter most of my transactions myself either. :)
@Chris Austria: Self-esteem is a quite different matter from this article, but it’s still a great question. :)
Have you considered home schooling? My wife and I are about to start doing this with our kids. It removes a lot of the negative socialization found in schools.
Another important thing is for them to build successes, starting small. Have your teen do something with you, where they learn something, and become successful at it. A project, or a simple habit change. Start with something really easy, as success is important in the beginning. Once you’ve built a few small successes, you can build up to slightly bigger ones, until your teen has built up the confidence in herself to do this on her own.
Confidence is built through successes and competence, which is only built through actually doing things and learning and practicing. It’s best done at home, where you can help.
PENIX Says:
February 29th, 2008, 22:41 pm
Not bad tips, but the title is terrible. “Money Hacks”? Come on now.
Leo Says:
February 29th, 2008, 22:46 pm
@Stephanie: Yes, I think you should put extra towards debt, otherwise it will take forever to pay them off and you’ll be paying a lot of interest. If you have a tight budget, it may be exactly because you have a lot of debt payments. Take it from me, getting out from under debt is hugely liberating!
If you pay debt and savings first (even if it’s just a little extra each payday), you won’t neglect them. You’ll still find the money to pay your bills, but you might have to cut back on other spending areas (eat out less, find ways to save on gas, save on utility costs, do less impulse buys). If you pay your bills first, you might not make it to the debt and savings payments, which means you’ll be no better off than before.
I’m not saying this is easy. I know from experience that it’s very hard. But it can be done, if you set your mind to it.
Start by saving at least a small emergency fund — at least $500 at first. This will help in case something unexpected comes up, like your car breaking down.
Then focus on finding extra money to pay your smallest debt (or alternatively, the debt with the highest interest). Pay that off as quickly as possible, then put all the money you were paying that off with to the next debt, and so on until you’ve paid off all debts. Then increase your savings with these debt payments, then invest.
PVPost Says:
February 29th, 2008, 22:59 pm
Making money is a beautiful thing. Don’t listen to those believers who espouse the virtues of saving the planet with costly goods.
Free Annual Credit Report Says:
February 29th, 2008, 23:06 pm
Gotta disagree with Tip 1: Use Cash. I charge EVERYTHING to my AMEX Blue Cash card and get back around 200-500 dollars a month just for using it. If you have the cash to pay your bills, use the credit card instead and let the credit card companies pay you for spending. This, of course, will only work if you can pay off your bills in full.
Nick
philldo Says:
February 29th, 2008, 23:16 pm
Nice list and sample spreadsheet. i am going to look into the online banking thing. i thought about it in the past but never pursued actually researching it.
Add “Dpn’t subscribe to the dealmac RSS feed” to #4. When trying to save money, its probably not a good idea to subscribe to a feed with a tag line of “going broke by saving money”