Managing Money – Why so hard? What can do?

Cashflow: Where does it all go?

People can’t seem to grasp the whole money management thing. How do we know? Ever heard of personal finance?

There’s a plethora of books, YouTube videos, TED Talks, etc. telling you how it’s done. Not to mention (actually wouldn’t it be “To mention…”) blog posts like this.

I have a vast knowledge on Economics, Finance, Stock trends, you know the works. I’m kidding! I’m kidding! Take it easy!

No, but I’ve done a good amount of research (videos, books and stuff) on how to simplify and really just be smart about how to use (note I didn’t say spend) your money.

Financial Independence from Frugality

I listened to Meet the Frugalwoods: Achieving Financial Independence Through Simple Living by Elizabeth Willard Thames. Here is what I learned.

Get out of debt. The single most important thing you can do.

Save up 3 to 6 months of living. So that if something comes up, you lose your job, whatever it is you have something to fall back on while you drum something up.

Start investing after you complete the previous two steps. Through low-cost index funds, real estate or whatever works for you.

Now, to the frugality part, she removed any expense that wasn’t necessary. Yet she didn’t remove all the things that brought her joy, rather found ways to reduce the expense. Here’s an example:

Elizabeth and her husband loved sparkling water which they got from a soda stream. Over the course of a year they ended up spending a few hundred dollars on the CO2 cartridges. So they found a way to hook up a non-proprietary larger CO2 tank. Each drink then only ended up costing them about half of one penny!

Lastly, in order to save money, invest, etc. you need money to start with, that may mean working two jobs or working a side hustle. If you want to help me with my side hustle, buy a cool t-shirt.

Trick Your Mind Into Spending Less Money

This video proves that the way you think about your income affects how you spend it. (e.g. thinking of your income as a weekly rather than monthly.)

Something practical I learned is to think about my spending habits and fix those habits. She mentions her addiction to ride share services and how she corrected her expensive habit. Personally, the Starbucks app tricked me into adding $10 to my account far to many times, far to often. Solution: remove the Starbucks app; bring coffee in a thermos.

In essence, get your small regular purchases under control.

Question

  • Do you have any tips on money management?

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