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20 Tips And Tricks To Improve Your Finances

Leo Babauta
Leo Babauta

By Leo Babauta

"Money is better than poverty, if only for financial reasons."
Woody Allen

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.

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, you can't spend what you don't have.

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 shops, stop at the petrol 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.


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 pay 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.


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.


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

Raboplus and KiwiBank Online Call are two examples.  They pay a higher rate of interest and you don't get the can't access savings through an ATM or EFTPOS …
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.


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