In past years, I gave a series of personal finance talks for local organizations. As my kids got older, I stepped back from doing this, but I still keep my deck of slides fresh with content that lines up with everything I've learned about personal finances.
Most of my slides are just pictures of my family or of friends or of my home. They feature one, two, or three bolded words on them. I want people to listen to what I'm saying, not reading the words off of a slide and drowning me out. The only slide I use that has more than three words on it is an early slide that says "SPEND LESS THAN YOU EARN" on it, and the title slide that's on the screen at the start.
One of my favorite segments in the talk is when I start talking about spending less, a segment that's centered around "10 simple but life-changing personal finance strategies." Again, these are all slides of something from my life with just a few big bolded words on them, usually along the bottom or top.
As I was updating my slides for a potential talk at a library in the near future, it occurred to me that those 10 slides would make for a pretty strong article for The Simple Dollar. So, here they are - my 10 simple but life changing personal finance strategies, along with the one or two or three bold words that appear on those slides.
Simply minimize the amount of time you spend in places with cash registers or online shopping carts. That's it. If you don't have to be at such a place for a planned purchase, don't go there. If you do need something and have a reason to go, make a list first and know what you're getting before you go so you can minimize your time spent there.
The more time you spend in stores or restaurants or on e-commerce sites, the more likely it is that you're going to spend money without intention. It's easy to solve this problem: Just don't go to such places without specific intention. If you don't have a specific purchase in mind, don't head to a place where you buy stuff.
Why is this true? Stores are designed to talk us into spending money. That's what they're there for. They don't exist if people don't go in there and exchange their money for goods and services. If you're in there, that's what the business wants you to do. So, if you want to minimize the amount of money that exits your pocket, spend as little time as possible in places that are designed to make money exit your pocket.
Live in the smallest home that's still comfortable for you. Any space beyond that minimum essentially equates to paying for space to store more and more and more stuff. That stuff costs money, as does the housing expense for storing it, and the more stuff you have, the less time you actually have to use the stuff.
A smaller living area solves all of this at once. A small home is less expensive in terms of rent or mortgage. It has much lower utility bills because there's a lot fewer cubic feet to heat and cool and a lot less space that needs lighting. It also saves on home insurance.
Perhaps just as importantly, a smaller home puts an upper limit on how much stuff you can actually possess. There's an upper limit on how much stuff that you can actually use with any sort of regularity and most large homes allow people to far exceed that limit, storing stuff away that they don't touch for years and usually forget about. This means you're less prone to buying stuff that will just fill your closet. This also means it's a lot less expensive and a lot easier to move.
The savings for this one are enormous over a period of years, often measuring in the tens of thousands and even adding up to hundreds of thousands of dollars in many cases. Get the smallest living quarters you think you can handle and stick with it. Your financial future will be thrilled with the choice.
- Read more: How to Cut Costs With Tiny Living
Once every few years, it's a great idea to go through every single one of your recurring bills, re-evaluate whether you need them at all, and shop around for better deals and/or renegotiate the ones you decide to keep.
A great place to start is with your entertainment subscriptions. Netflix. Hulu. Amazon Prime. Spotify. Daily Burn. Your cable or satellite subscription. Your magazine subscriptions. Blue Apron (yeah, I think of this as entertainment). Hello Fresh. You get the idea.
For each of those things, ask yourself if you really need it. Are you getting enough value out of the service? Are you drowning in so many options that you're missing out on a lot of the stuff? If so, it's probably time to chop out a few services for a while, focus on what's available on a smaller set of services, and then maybe change things around in the future.
You can do the same thing, more or less, with your other bills. Utilities. Insurance. Internet. Cellular service. Garbage collection. Your rent or mortgage. You get the idea.
Go through each and every one of those bills. See if there are charges on them that you don't understand and ask to have them removed. If you have other options for that particular service, shop around a little and get some quotes, then use those fresh quotes to negotiate a better deal with your current provider (if you're happy with them otherwise) or jump ship to a new provider.
This doesn't have to be done all at once, nor does it need to be done on a regular basis. Just plow through everything once every few years and you'll almost always end up chopping a lot of money out of your regular bills.
- Related: Find a Better Deal on Car Insurance
FIND YOUR FRIENDS
This one's easy: find friends that care about doing things you're interested in doing without spending money. You should never have to spend money just to impress your friends, nor should you have to spend money just to hang out with them if it's not something you specifically want to do. If you find that keeping up with your social circle requires such expenses on any sort of frequent basis, then it's time to think seriously about rebooting your social circle.
Start with the things you're actually interested in without the influence of your current friends. What do you like to do when you're alone? What hobbies do you have that you often shove on the back burner because they're not approved of by your social circle? Let those things grow and blossom in your life, and then seek out people who share those interests.
Maybe you really like to hike but your social circle doesn't really enjoy the outdoors. Seek out an outdoor club in your area, maybe by checking Meetup, and get involved with them. You don't have to completely switch friends; just give yourself a social outlet for something you like to do with people who happen to also like the same thing.
Maybe you like to play long strategic board games but many of the people in your life aren't into that so much (not that I'm speaking from experience or anything). Rather than abandoning what you're interested in and then spending time and money on things you're not interested in just to maintain a social circle, find people who like those long strategic board games and make room in your life to spend time with those people.
I find that when I'm in situations where I'm most accepted for who I am and what I'm interested in, I'm far less prone to spend money just to keep up with others. I feel far less self-conscious and much happier just doing things I enjoy, not buying things.
Automate as much of your savings and financial progress as you can so that you're not you're not faced with constant choices between your short term desires and your long term goals. By automating such things, you essentially make the choice in advance - you're choosing your long-term life, not your short term pleasure.
The first and easiest step for many people is to just sign up for your workplace retirement plan. Many employers offer a 401(k), 403(b), TSP, or similar plan; just sign up and start contributing. Don't worry about making a "perfect" investment choice when signing up - the perfect is the enemy of the good. Just choose one that's recommended or that makes sense to you.
Another great step, one I strongly recommend for people, is to start automatically transferring a small amount from your checking to your savings each week. That money in your savings serves as an emergency fund, the money you tap when your car breaks down or something else goes haywire in your life. You are far better off turning to cash in hand in those situations than turning to a credit card - not only is the cash more reliable, it doesn't come with finance charges that will further bring down your financial state.
You can actually automate many things. You can automate an extra debt payment each month either through online bill pay with your bank or with the lender themselves - that extra payment is just slurped out of your checking account. You can automate saving for a down payment using much the same method as the emergency fund strategy above, just bumping up the amount a lot.
The overall goal here is to make it so that you're not tempted to spend your retirement savings or your down payment savings or your kid's college savings in an impulsive moment. That money's automatically stripped away and used for responsible things.
- Read more: The Magic Math of Paying Yourself First
Make as many meals as you possibly can for yourself. The more meals you prepare for yourself at home, the better.
This isn't just because preparing meals at home is vastly cheaper than eating out - that's true, of course - but because the more you prepare meals at home, the more skilled you become at meal preparation, the easier it seems, and the more compelling it seems compared to eating out constantly.
Just cook at home. Start with simple stuff like scrambled eggs or a grilled cheese sandwich. Make a really simple salad - lettuce with some dressing you like and a few toppings on top. Make a soup - it's mostly just adding ingredients to water and letting it cook for a while. Make spaghetti.
Along the way, learn how to pack a lunch for yourself and make that a routine. Start taking lunch to work each day, whether it's leftovers or a sandwich or a thermos with soup in it.
Learn how to use a slow cooker so you have a warm meal ready when you walk in the door after a long day. Learn how to do meal prep so that you always have meals ready to go in the freezer that you made yourself.
This is all about learning and getting more comfortable with the kitchen. It's going to be hard at first and it'll feel like individual meals aren't worth it - all of this work to save $5? The thing is, with each meal you make, every bit of it gets easier. The preparation. The actual cooking. The cleanup. It all gets easier and easier and more and more routine until you start to wonder why you would eat out most of the time.
There's nothing wrong with eating out when it's a special occasion - friends are in town or you're celebrating a real achievement or something. However, your default strategy should be to eat relatively low-cost meals prepared at home. They should be the backbone of your diet, both for short term cost and long term health reasons. The way to get there, to make it all efficient and not seem like a troublesome task, is to practice, and you practice by making lots of meals, even when it seems like more work than you want.
When at all possible, buy used versions of items. Make secondhand stores your first stop when buying things like dishes, photo frames, clothes, small kitchen appliances, musical instruments, tools, sporting goods, and so on. Buy them used, make sure you're actually going to use the item a lot and can actually understand what a new version would give you in terms of benefits, and only upgrade if you need to. Ninety-five percent of the time, you won't use the item nearly enough to warrant an upgrade or replacement - the contents of your closet are proof positive of that.
This extends to bigger purchases, too, such as an automobile. You should always aim for buying used cars unless you happen to be in such strong financial shape that writing a check for a new car isn't causing your financial situation to skip a beat. If that doesn't sound like you, aim for late model used and plan in advance to be able to pay cash so that, again, you're avoiding having to pay interest on another debt.
Most of the time with a used purchase, you're paying 20% of the new cost (or thereabouts) and getting 80% of the value out of the item (or thereabouts). Used items are just tremendous bargains. Sure, you might get a slightly shorter lifespan, but for many items we buy, that's not going to make a significant difference, particularly when you're buying it for a fraction of the new price.
WEAR IT OUT
Once you do buy something, keep using it until it's genuinely worn out and doesn't function well. Even as it starts to reach that point, learn how to fix minor issues - a broken wheel on a lawnmower, for example, is not a reason to junk it and get a replacement.
This applies to almost all of the stuff people buy, from small things like shoes and t-shirts to more expensive things like cell phones and computers to truly pricy things like cars. It's simple: keep using things until they no longer serve the function you need from them.
Of course, part of the success of this rule comes down to maintaining your stuff. Keep up with the maintenance schedule on your car. Follow whatever's recommended for maintenance on whatever items you buy, whether it's changing the oil on your mower or washing your shirt on a delicate cycle. Taking a few seconds or a few minutes to do this will greatly extend the life of your stuff and keep money in your pocket where it belongs.
You should also make an effort to repair items that are no longer working. Don't toss a toaster just because the lever doesn't work; take a few moments to peek inside and see if it's a simple fix. If it is, you've just saved some cash. (If not, head to the secondhand store.) Many things that "break" often have really simple fixes that get them right back in working order, so check and make sure that none of those simple fixes work before tossing the item out and buying a new one.
BUY STORE BRANDS
If you're buying inexpensive items, like nonperishable foods and toiletries and the like, stick exclusively with store brand items unless there's a specific reason not to do so because the store brand item has failed you in the past.
The prices on store brand items are almost always significantly cheaper than the name brands and are often the same exact item in different packaging with a lower price. The only difference is you're not paying for the marketing and advertisements of the more expensive version.
Some people seem to worry a lot about having name brand products in their house instead of store brands. Quite honestly, almost no one cares about this, and the few that do aren't worth wasting your money on to chase their opinions because they're very likely to find some other fault in what you do.
Store brands are a bargain. Make that bargain a consistent part of your shopping experience.
BUY RELIABLE THINGS
When you're buying something more expensive - a cell phone or a computer or a car, for example - spend the time to carefully research those purchases and aim for reliability, core functionality, and bang for the buck.
You want reliable items that will keep doing the job for many, many years. You want to focus on core functionality rather than lots of features you won't use because that means there are fewer avenues for failure. Beyond that, you'll want to strongly consider bang for the buck, where you're getting most of the reliability at a much lower price.
My own default is to simply check Consumer Reports when buying a more expensive item. I tend to trust their Best Buy selections in terms of reliability and bang for the buck for most purchases and I'll often end up buying their lowest priced recommendation.
Even if you spend a little bit more to get a reliable item, it will pay for itself in that you won't have to replace it for a very long time. I'd far rather spend $20 on a pair of socks that will last ten years than $3 on a pair of socks that wear out in a year, for example.
- Read more: The 'Buy It for Life' Compendium, Vol. 2
Most of the core principles of personal finance are so simple that they can be broken down into just a few words. Beyond that, it's just details and how to implement that principle.
Even better, most of those core principles are timeless. Most of these same principles worked just as well twenty years ago as they do now, and they'll still work well in twenty years. The details and specific implementations might change, but the core idea remains the same.
The part that makes personal finance hard is that it relies on commitment and effort from you. Translating the clear principle into consistent action is the big challenge.
Are you up for that challenge?
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