"Discipline is over-rated and undependable." -Tim Ferriss
There are better opportunities for people who have extra. In my experience, extra money and time is a result of not spending money and time on the unimportant.
You and I lose and make money with automatic responses and habits.
The ideal strategy for me is to create habits and follow rules that cause you to make, keep and use money well.
Here are some money strategies that I applied in my life:
- Automated money allocation. I have a main bank account and on a regular basis, a specific amount of money is being pulled from it and allocated into different accounts. Some of them include savings, investments, capital, projects and charity. I initially started with the smallest amount that I can and eventually added more accounts and/or money as time went by.
- Tithing. I believe God owns everything including my money. According to the instructions, He covers my every need, He keeps 10% of the income and I'm free to decide where the rest of the money goes. I believe that's a good deal already. It seemed that ever since I started giving to God His share, I lost reason to dip into my savings because of emergencies. Since then, I was able to pay of my debt, begun my savings fund, opened other funds because I already had the budget to do so. It's interesting that since I started, I realized in how I live and not just in my head that I don't need to spend as much as I thought and that can live comfortably on less.
- Loose bills. Whenever I get paid, I go to the bank and have my money changed to 20, 50 and 100 peso bills. It delays me from paying in times of impulse buys. If I need to pay for something worth say Php 1,000 I need to count ten 100 peso bills or twenty 50 peso bills before handing it over. This gives me a bit of time to think about the purchase and feel the weight of the money I'm handing over to the other person.
- Daily allowance. I give myself a daily allowance for a specific day. It has a little extra for times that I would need extra but not big enough to splurge. I try to spend as little as possible so that I can have extra money to buy something that I want. Exactly like how I saved up for the fun stuff from when I was younger.
- Delayed purchases. I learned this from Leo Babauta of Zen Habits where he recommended writing a list of things he wanted to buy then wait for 30 days before purchasing it.
- Converting money to time. How long did you have to work to make that amount of money? If you had to spend for example a days worth of pay, ask yourself. Am I willing to do my job for an extra day to buy this? Judge the price by how many months, weeks, days, hours you have to work for something.
- List my expenses. I write down my expenses on an app called Nexus Money for the iPhone or on a calendar in the wall where I list down how much I spent and tally them at the end of the week that way I'm smarter about my making decisions with my money. As a result I will be able to spend on things I love and cut cost on things that don't.
- Have a do not buy list. There are tempting things that can easily eat up all your money. Instead of denying they exist the principle is to admit it and set up a list of things you are deciding to refrain from beforehand. Here's an example of a not to buy list.
- Apply attack animation from my favorite game. I'm easily bored so numbers don't often mean anything and sadly sometimes even with money. Here's how I was able to work around through that. I applied a concept of attack animation from my favorite games. I played a lot of RPG and fighting games. Even if we don't want to admit it, it's a math game. If your life reaches zero you're dead. You have limited resources (mana, chakra, ki, energy spell points depending on which game.) and that the use of these resources drain you of your resources eventually. Resources allows you to cast spells, use skills or attacks. When you run out of resources, you can't do anything. The goal is to control the flow of resources. Each expenditure is a skill that drains you of your resources. I'll write more about this later on. The bottom line is to have powerful skills (budget to do awesome things) you need to build up a large amount of resources. To do so, I control the use of abilities (expenditures) to the minimum effective dose and at the same time train myself to spot and stop things that drain me of my resources
It’s not perfect. After all, the reason I setup these rules is because I have discipline issues.
I set it up in a way that all my next actions had already been decided beforehand. I don’t get to do this all the time but I have enough set up to keep me in line. I don’t get to execute this perfectly but this is what I aspire to.
The last advice I got from my mom’s ex-boss, a guy who started from nothing and became wealthy, before he passed away was “Don’t throw away your money.”
How do you handle your money?