Finding and Replacing the Bottom 20%

Consider, for a moment, all of your waking hours that you spend in a given week. If you’re an average person, you probably spend about 110 hours awake and the rest asleep, so let’s just focus on those waking hours.

How do you spend that time? What things do you do? Maybe you have a job that eats about 45 of them. Perhaps you commute, which eats up another 30 minutes each way five times a week, so that’s another 10 hours. You probably spend 10 doing household tasks, and maybe another 10 on personal care (eating, hygiene, and so on). What fills up the rest of those hours?

It’s actually fairly tricky to figure this out (unless you do time tracking as a hobby or something). The reason is that you forget about the least important uses of your time, the things you did that really didn’t matter too much. You might remember that you watched a great television show, but you don’t remember the mediocre ones. You don’t remember the time you spent flipping through Instagram or Twitter or Facebook on your phone. You don’t remember the time invested in fixing an ordinary forgettable meal.

The same exact thing is true for your money. Consider, for a moment, all of the money you spent in the last month. You probably remember the big bills you paid — the energy bill, rent, mortgage, cell phone bill, grocery bills, car payment, student loan payment and so on — and you probably remember the smaller expenses that were really important to you.

What you don’t remember are the small expenses and the ones that weren’t important to you. Do you remember spending $10 on a Kindle book that seemed interesting at the moment? Do you remember that little ongoing subscription to a service you rarely think about? There are likely many little expenses like this that you’d discover if you sat down with your credit card and bank statements and went through them, line by line.

In both cases, it’s easy to recall where 80% (or so) of your resources went, because they went to things that were important to you or singularly ate up a lot of resources. What you don’t remember are all of the little things, things that were unimportant that didn’t individually devour a lot of money or time.

The challenge in both financial and time management success is finding that bottom 20% and effectively replacing it with something more worthwhile.

People often react instinctively to this suggestion, so let’s touch on a few of those common reactions.

“You want me to cut out fun stuff?” Not at all. In fact, that’s actually the opposite of the suggestion here. Rather than cutting out that fun, memorable stuff that immediately comes to mind when you think of cutting back, I want you to cut out the unremarkable and unimportant stuff. You should be aiming for the 20% of things you spend time on or spend money on that don’t have a lasting impact on you, and those are likely the things you’re not thinking about at all!

“We all need downtime in our lives!” I completely agree! The thing is, when I’m talking about the “bottom 20%” of your time, I’m not talking about actual refreshing self-care, the kind that makes you feel genuinely fulfilled. I’m actually pointing at time that’s essentially lost, that doesn’t lift you up at all. That lost time isn’t refreshing or relaxing in any significant way. It just slips away from you.

“We all need some pocket money to indulge!” Again, I completely agree! However, that lost 20% doesn’t represent splurges that bring any actual lasting value into your life or else you’d remember them. If you remember a splurge and it fills you with a warm feeling, then that’s not the kind of thing you should cut. Rather, it’s the kind of thing you should aim to keep. The thing you should cut is the money spent on completely forgettable or completely forgotten stuff.

Let’s dig into how to find the bottom 20% of both your money and your time, and then how to replace it effectively.

How to find the bottom 20% of your money.

How do you find the “bottom 20%” when it comes to your money?

1. Pull out your recent credit card and bank statements.

Start going through those statements line by line. If you notice an expense that you don’t remember at all or barely remember, highlight that line, because it’s likely a part of that bottom 20%.

For example, when I do this exercise, I often highlight small purchases from Amazon, usually on-sale Kindle books if I’m being completely honest. I’ll sometimes highlight purchases from online and brick-and-mortar stores related to my hobbies, usually small ones. I’ll also highlight things like stops at convenience stores, and occasionally I’ll spot renewal fees for subscription services.

2. Start looking for patterns.

Where do you frequently spend money that you forget about? Are there certain websites that are big money wasters for you? Are there particular stores or other businesses?

What you’re assembling is a list of websites and other places to avoid going forward. If there are stores where you often spend money without really thinking about it, then find another store to visit. If there are subscription services that you get little value out of, cancel them. If there are websites that gobble up drips and dribbles of your money, stop visiting them. If there are smartphone games that constantly slurp up your money with small purchases, delete those games and find something similar that doesn’t constantly empty your wallet.

Another thing that’s really worthwhile to look at are grocery and department store receipts. Seeing an expense like “Target ($150)” on your credit card bill might strike you as a completely purposeful expense, but if you delve into that actual receipt, you may just find that half of that $150 was spent on completely meaningless stuff that you don’t remember.

If you have any grocery store or department store receipts, start going through them. Highlight purchases that you don’t remember or that seem a lot less important through the lens of hindsight.

Another good thing to do here is to highlight name-brand purchases, perhaps in a different highlighter color. Often, you can get the same exact value from an item by buying the store brand version, so those highlighted name brand items can often give you the same value by spending 25% (or more) less to buy the store brand version, or perhaps the bulk version.

What to do with the money you save

So, what do you do once you’ve identified the “bottom 20%” of your spending and you’ve taken steps to cut that spending?

1. You’ll notice is that you have more money in your checking account.

It’ll just kind of magically appear there, provided you don’t immediately find other things to spend it on (an issue we’ll touch on again in a minute). Whenever I spend the time to cut out my bottom 20% of spending, I always find that my checking account balance starts building up.

2. Use it for something worthwhile

It might be tempting to spend it on something fun, but you’re already spending plenty of money on the memorable, fun stuff. The amount you’re spending on memorable, fun stuff shouldn’t have changed much at all, so there’s no real need to spend more on fun stuff.

Rather, you should be aiming to use that newfound money on something more worthwhile, such as shoring up your financial state.

If you take that “bottom 20%” of your money and start using it to improve your financial situation going forward, you’ll have less money stress and even more financial flexibility very quickly.

3. Make sure all of your bills are up to date.

Make sure you’re not behind on any bills, so you can get out of any cycles of making late payments and racking up late fees. If you find yourself over drafting very often, consider using some of that money to put a “buffer” in your checking account so that you don’t accidentally overdraft, thus avoiding overdraft fees.

4. Build an emergency fund.

Transfer some of that extra money in your checking account to your savings account and leave it there. Try to slowly build up a month’s worth of essential spending in your checking account so that you have money for things like an unexpected car breakdown.

5. Start paying off your debts, starting with the highest interest debts.

Your highest interest debts are usually your credit cards and personal loans, followed by any other non-collateralized debt (meaning debt for something that can’t be repossessed), and then your car and home loans. Just look up the interest rates on all of the debts you owe and start making extra payments on whichever debt has the highest interest rate, as this will keep the most money in your pocket long term.

If you follow this plan, you’ll end up using that newfound money in very wise ways that end up revealing more and more and more “extra money” in the form of late fees you’re no longer covering, emergencies you can handle without further debt, and debts you no longer have to pay.

How to find the bottom 20% of your time.

This can be a little trickier to do, but there are lots of ways to actually figure this out.

1. Start using Screen Time on your phone or tablet (or Digital Wellbeing on Android devices).

This tool will help you figure out how much screen time you’re actually using and what kinds of apps are gobbling your screen time. The first time you see reports of this, it’s often stunning to see how much of your time is gobbled up by things like social media and web browsing. It makes you realize how much of your time is wasted on those apps, because you really don’t remember a lot of that used time.

2. consider diving into time tracking.

I wrote a guide to time tracking a while back; it’s something that I’ll do for a month or two on a recurring basis for a lot of reasons, not the least of which is identifying the worst of my time uses. You can do it simply with just a little notebook, or you can use slick tools like Timery (which is what I’ve used recently to do this).

What you’re really looking for in all of this info is examples where you have spent time and not received any real, life value for that time.

For example, when I look at Screen Time reports and notice that I’ve spent a lot of time on social media, I know right there that I’ve probably wasted a lot of time on social media. When I look at my Timery data and see that I’ve spent a lot of time watching television, I know that I’ve probably wasted a lot of time watching television.

In general, I find that if I’ve spent time doing something and I can’t recall what exactly I was doing or, if I do, that time wasn’t particularly valuable or important in my life, it’s a good target for cutting out of my life.

3. Go on seven-day or 30-day “fasts” from those activities.

For example, if I see I’ve spent a ton of time watching television lately and it’s low-value stuff, I’ll spend seven days or 30 days watching no television at all. If I see I’ve spent a ton of time browsing social media, I’ll spend seven days or 30 days not looking at social media at all. This lets me “reset” my relationship with those things, so that I can use them a little more wisely in the future.

What to do with that extra time

What about that extra time you’ve found? What can you do to make sure you get the maximum value out of that?

For me, the most valuable thing I can do with “found time” is to block it off for the areas of my life that I feel aren’t getting enough attention. For me, this is usually meaningful leisure time and time for various aspects of self-improvement. For you, it might be those things, or it might be quality time with your kids, or it might be something else entirely.

The key is to literally block off that time in your calendar. For example, if you found that you were spending 20 hours a week looking at social media and you then delete social media from your devices for a while, you will have a bunch of extra time each week. Consider blocking off a couple of evenings and a chunk of time on the weekend for a hobby or for attention to some area of your life that feels neglected.

Don’t devote all of that time to time blocks. You’ll find that other things will naturally fill in a portion of that newly found time, and that’s okay.

I’ll give you an example from my own recent social media fast. I found that I had gained about 10 hours a week from doing this, so I blocked off an hour two evenings a week just to read, and a four hour block on the weekend for hobby time (I played a game via Skype with a friend one week, for example).

Remember, the key is to block off time to shore up areas of your life that you feel haven’t received enough attention lately. Essentially, you’re swapping things like excess forgettable social media time for meaningful time with your kids or time invested in a hobby that you want to get back in touch with or time spent building a skill that you really want to build.

Replacing the bottom 20% turns meaningless time and money into meaningful time and money.

The purpose of this entire exercise is to root out time and money spent in your life in forgettable ways and turn those resources into memorable and valuable things. Even if you merely choose to use those resources to support the most important things in your life, like putting aside time to meditate so that you’re more on point with your family and with your work, it’s still a wonderfully positive tradeoff.

Remember, you’re aiming to cut the bottom 20%. You’re not aiming for the important and meaningful parts of your spending or your time use. You’re actually trying to identify the things you’ve basically forgotten because they have so little impact on you, then taking conscious steps to eliminate those forgettable time and money wasters going forward. It’s the found time and found money that comes from that process that you’ll use for this, not money or time that is already used for something meaningful and valuable to you.

Good luck!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.