Ask yourself, how well are you doing with managing your money? I notice folks who are well-off and ask, what are they doing “right?” The point is NOT to compare (because that leads to negative emotions that really shouldn’t concern us), but rather factual awareness in what we are doing. Are we maximizing our time and money.
Below we will dive into the tools and philosophy that has helped me become… well, just above average!
1. Track Everything
First things first, do you know where your money is going? Do you have a rough idea of how much your net worth is?
I’ve been using this free online service and app for years and never had a problem. Simple and clear cut. (And I’m not getting a cut, so you can trust my recommendation!)
Mint is a free budgeting app that syncs users’ bank accounts, credit cards, PayPal, and other accounts to help track incoming and outgoing money. The app is part of Intuit (the creator of TurboTax and QuickBooks) and has over 20 million users. Mint features include setting up customized budgets, savings goals, and shows you spending trends.
2. The New Meaning Behind “Quality over Quantity”
You’ve heard it before, “quality over quantity.” But what does it mean?
Today, it means much more than, “they don’t make things like they used to.” Today we have more insight into how products are made, and conscious of how we impact our planet.
For me, “quality over quantity” means prioritizing long term over short term desire.
If you’re thinking of buying something, ask yourself:
- Does it fill a void or need? Psst, if it doesn’t then it’s just excess.
- Is it made in a sustainable and ethical way? Make a statement with your money.
- Does it bring you (long term) joy? That’s right, you gotta Marie Kondo it! Strive for happiness and minimalism.
- Is there a long term cost benefit? Buy the product that last longer and save “future time” by not having to think about this again for a long time.
“The new generation of consumers are increasingly adopting a “buy less but better” philosophy, reports Elizabeth Holmes at The Wall Street Journal in this article.” — This Consumer Trend Could Be Terrible For Fast Fashion Brands
3. Financial Traps We Set For Ourselves
- Once I get fixated on buying something, it’s hard for me to not end up buying it eventually. Sometimes I regret it later. Why does this happen?
- I observe the spending habits of others and wonder, why do they spend so much on things that get barely used?
Let’s dig deeper…
A recent article discusses Here’s the №1 reason why Americans are struggling to save money — and it’s not debt. So what’s the real culprit? Rising cost of living while salaries remain stagnant. That eats into our ability to save money.
Shankar Vedantam, host of Hidden Brain podcast, has a great episode interviewing Sendhil Mullaianathan, an economics professor at Harvard University, on the concept of a “scarcity trap.”
“It leads you to take certain behaviors that in the short term help you to manage scarcity, but in the long term only make matters worse.”
The solution? Think about long-term needs, and then ask yourself how this purchase helps that long-term need.
4. Crazy Simple Budgeting Advice
Here are some of my go-to practices when managing my money.
- Use only one credit card (no cash) for all spending, makes it easy to track.
- Automate savings — Setup a reoccurring deduction and put it somewhere else (i.e. savings account, investment account). Out of sight, out of mind.
- Create large categories of spending — like bills, food & restaurants, shopping, etc. Force yourself to see how much you spend and then have a come to Jesus moment.
The 50/30/20 Rule of Thumb for Budgeting
- Harvard bankruptcy expert Elizabeth Warren — U.S. Senator from Massachusetts and named by Time magazine as one of the 100 Most Influential People in the World — coined the “50/30/20 rule” for spending and saving with her daughter, Amelia Warren Tyagi. They co-authored a book in 2005: “All Your Worth: The Ultimate Lifetime Money Plan.”
Forget about trying to trim your food budget by $25. Look at big places you can save, like:
- Getting a roommate
- Refinancing your mortgage
- Earning more money
5. “Play Money” Investment Advice from a Novice
Full disclaimer, I’m the guy who invested in MoviePass, which ended up crashing into a glorious fireball.
Having said that, I’ll dispense my totally unremarkable and unsubstantiated advice for a good laugh. Keep in mind, this is ‘play’ money. This is money AFTER you’ve done all your proper long term and short term savings, and have built up a strong, stable foundation. You should categorize this advice under, “might be a nugget of information here, but let me assess how it fits into my investment philosophy.”
- Be a owner, not just a consumer — What I mean is, if it’s a product that you really love, consider investing in the company itself. For example, people are fanatics for companies like Apple, Tesla, and Starbucks. So why not invest in their stock and have “skin int eh game?”
- Warren Buffet investing advice — One thing that Buffet does is, “analyze the business, not the market, the economy, or investor sentiment.” To me, this means do you understand how that business is run and do you believe in it? I invested in MoviePass believe I used the product and was a believer in the business model, but the management was atrocious. The way they treated customers and then later on the blatant unethical practices are deal-breakers.
- Consider the Robinhood app — It doesn’t charge transaction fees like other investment firms do. For example, Vanguard charges $7 per stock transaction while Robinhood is $0. This begs the question, how can they make a profit when they charge $0? According to this article, seems like it’s a short term deal and the company will have to figure out a long-term sustainable business model. Until then, you can enjoy the free trades.
- Is Mint Safe? What to Know About the Budgeting App in 2019
- How Mint Can Revolutionize Your Budget
- Mint.com Review 2019 — The Budgeting and Tracking App
- Mint Review — NerdWallet’s Rating: 4 / 5
- This Consumer Trend Could Be Terrible For Fast Fashion Brands
- Quality Is More Than Making a Good Product
- Quality Over Quantity | Why Being A Minimalist Makes You Happier
- The Scarcity Trap: Why We Keep Digging When We’re Stuck In A Hole
- Scarcity: The New Science of Having Less and How It Defines Our Lives
- Here’s the №1 reason why Americans are struggling to save money — and it’s not debt
- The 50/30/20 Rule of Thumb for Budgeting
- These 4 Easy Steps Will Teach You How To Budget (Finally)
- How to Make a Monthly Budget That Works
- How Does Robinhood Make Money?
- A Review of Warren Buffett’s Investing Strategy
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