Stop wasting money due to poor strategy!

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Wasting Money in Your Business? Here’s How to Stop

No matter how much your company makes, you can’t grow if you fritter away your revenue. Small businesses, especially startups running lean, must make the most of every dollar. –>

Businesses don’t waste money the same way consumers do. While irresponsible consumers might eat out every night or drain their savings accounts, companies lose cash in a less obvious way — namely, by spending money on services they don’t realize they don’t need.

When investments don’t contribute to growth, business owners may as well set their money on fire. By analyzing your finances and adjusting your priorities, you can eliminate small wastes in your budget and use that money to boost your growth.

Optimize Your Small Business Budget

–> You can’t plug financial leaks if you don’t know where your money goes. Research from Clutch discovered a staggering 61% of small businesses did not create official budgets in 2020.

If you don’t have a formal plan to track your spending, go create a budget for your small business now.

Keep in mind that your company cannot grow unless you learn to manage your cash and spend it wisely. Failing to earn enough counts as a cash flow problem, but so does spending too much. Richard Branson, a billionaire entrepreneur, sees staying on top of finances as crucial for success, admitting, “It ultimately became the reason why we had to sell Virgin Records — to free up cash to make Virgin Atlantic a success.”

Some headstrong entrepreneurs ignore their budgets because they believe everything will work out once they reach that next revenue threshold. In most cases, though, that threshold never arrives. Bad spending habits catch up, forcing the company to set new, higher revenue goals. If those business owners took the time to address their waste before they pursued aggressive growth, they could enjoy their successes instead of worrying about the bills.

How to Stop Wasting Money

Enough is enough. Follow these three tips to get more from your money and position your company for long-term growth: –>

1. Know when to Negotiate

You don’t have to pay list price for everything. As a business, you provide valuable income for your vendors, who will likely cut you deals or offer alternative service packages to keep your account — but first, you have to ask them.

Look for opportunities to negotiate on some of your biggest expenses. Credit card processing fees, for example, are not ironclad rules. While you can’t negotiate every portion of your fees, you can shop around for vendors with lower markups. Don’t let simplicity fool you — credit card processors want you to take the first offer so you pay more without realizing you have options.

–> Insurance companies, benefits providers, loan issuers, and leasing agencies all want your business, and if you push back, they may help you lower your payments. When it comes to negotiating, “preparation is essential, as many people do not plan what they are going to say,” notes Tara Swart, a neuroscientist and leadership coach. “Once planned, you must embody it completely.” Do your homework and have information about competitive rates and service offerings at hand when you call vendors to negotiate better deals.

2. Test Expenses to See How they Affect your Budget

If you only analyze your income and expenses at tax time, you’ll miss opportunities to adjust your budget on the fly. Use bookkeeping programs (or spreadsheets, if you don’t mind a little manual number work) to play with your budget and test potential changes.

What would happen if you negotiated your next lease term down 5% and increased spending in your best marketing channel using the savings? Does the money you saved leave you enough cash to test some new ideas? Or are there looming expenses you’re not taking into account? Instead of investing real money and hoping for the best, test out concepts on screen — getting a 360-degree view of your financial situation — before opening your wallet.

When evaluating where to reallocate spending, separate expenses into essentials, nonessentials, and luxuries. Negotiate essentials if you can, but recognize that you can’t quit paying them. Evaluate nonessentials and luxury spending on an individual basis.

3. Audit your Bundled Services

Most companies pay extra for services that they can already access through other vendor offerings they use. If you already got HBO through Hulu, for example, you wouldn’t go paying an extra $15 per month for a separate subscription. The same concept applies in your business.

Check your bundled services to see whether there are redundancies that can be cut. Robin Hau, CEO of cloud services company SimplyClouds says, “Cloud-based suites of products often have some interconnectivity or dependency that justifies selling them together for a higher price — even though users might not want or need everything that’s included.” There’s no need to pay twice for common services like email, group chat, file storage, etc. Consider whether breaking up your bundled services could save you money by giving you only what you really want.

By following these tips, you will have more money to spend on growing your business. Don’t throw that new cash away — take your time to research your options and invest wisely. Do it right, and you will spend less, save more, and create a better future for your business.

How to Stop Spending Money

No matter where or how we shop, the temptation to overspend on random stuff follows us everywhere we go. Yup, we’re talking about the aisles right next to the store’s checkout lane. Mini hand sanitizers, gum and that magazine with the latest news on the royal family?! It seems they’ve thought of everything—or that’s what they want you to think.

With so many ways to shop (online, on our phones and in-store), how can we avoid making mistakes that bust the budget? Don’t worry, we’ve got the scoop on how to stop spending money so you can start actually winning with money.

Reasons Why You’re Overspending

People spend money for so many reasons, and if we’re just a little honest with ourselves, most of those reasons can be chalked up to emotions. Many times, we can blame our overspending on five things:

1. Social Media

Need we say more? Picture it: It’s Saturday morning, and before you realize it, you’re scrolling through your social media feed to catch up on what your friends are up to. And before your feet even hit the floor, you’ve spent $30 on that new, life-changing thing you thought you needed.

If you’re honest, you didn’t have to work too hard to picture it (because you lived it last weekend). Let’s face it: We all want what we don’t have. And we want it because we think it will make life that much better.

But social media makes the comparison game even stronger these days. With Pinterest, your friend’s post about their brand-new couch with those perfect pillows and that popular blogger’s sponsored posts about that incredible, all-inclusive resort . . . where does it end?

Newsflash: It won’t. All of these things just drain your budget, steal from those future financial goals you have . . . and steal your joy.

2. Not Tracking Your Spending

It doesn’t matter how large (or small) your income is—if you’re not tracking your spending, you’ll never be in control of your money. In fact, you’ll always feel like your money owns you.

Listen: Living paycheck to paycheck is the pits. If you’re wondering where all your hard-earned money went each month, it’s time to start tracking it! Stick with us, and we’ll show you how.

3. Shopping to Feel Better

Some people like to joke about being a shopaholic, but compulsive spending, otherwise known as retail therapy, is a thing. For most of us, spending on impulse just because we want it now is the problem. We see something and buy it before we think about what’s in the checking account (or about our financial goals, for that matter).

4. Paying With Plastic

If you haven’t noticed, you spend more when paying with plastic. Whether that’s a credit card (everyone loves shopping with someone else’s money) or a debit card, the research is the same. 1 When you spend with cash, you feel it. You feel those crisp (or wadded up) green bills leave your hand, and it hurts. Something inside of you cringes. Just moments before, you had money, and now, you don’t.

Think about it, when you’re shopping with plastic, it’s easy to spend more, because you don’t physically see the money right in front of you. So, the next time you make a purchase, pay in cash, and you’ll see exactly what we mean. Plus, there’s no overspending—you can only spend what you have with you.

Here’s the good news: You can overcome these overspending habits with a little planning, self-discipline and long-term thinking. Here’s how we suggest you stop spending money.

8 Ways to Stop Spending Money

1. Know What You’re Spending Money On

Making and sticking to a budget every single month is what is going to help you get out of debt and stay out of debt.

If this is your first time budgeting, you might be surprised by how much money you’re spending each week or even each month on little things, like coffee, lunches or that snack shop at work that your spouse doesn’t know about.

When you make your first budget, you need to make sure your basic needs (or your Four Walls) are covered. These are:

While these are the necessities, they can also offer an opportunity to cut back on the extras. You really don’t need to go out to dinner every night or buy new clothes every week. And if you are, it’s time to invite Marie Kondo into your life.

2. Make Your Budget Work for You

Now, you’re ready to create a monthly spending plan for everything from gas to going out to eat. This is also called a zero-based budget. This means your income minus your expenses needs to equal zero and you’ve told every single hard-earned dollar where to go. Just remember, it’s a working budget. You have to keep coming back to it in order to stay on track.

If this is your first budget, you’ll want to give yourself grace. It takes a few months to make your budget work for you. But if you’re an expert, take another look through your monthly expenses for other ways to trim your spending.

Do you really need to spend money on clothes every single week? Probably not. What about that gym membership you haven’t used in eight months? It’s time to get really honest with yourself and start trimming the fat out of your budget. Answering these questions can help put you on the path to spending your money with intentionality.

Use a free budgeting app, like EveryDollar, to create your first budget in 10 minutes. You’ll be able to plan your budget, track your spending, and monitor your debt and savings progress each month.

3. Shop With a Goal in Mind

We’ve all been there. You’re out of shampoo and toothpaste. So, with those two items in mind, you make a quick run to Target. But as soon as you walk through the door, you feel the gravitational pull toward the dollar spot and fill your basket with a bunch of those colorful cell phone chargers and water toys for the kids that you swear will get used all the time.

After a few impulse buys, a quick trip to the store for a few essentials just got . . . expensive, thanks to a few seemingly harmless purchases.

But does anyone really plan on getting sidetracked while they’re out shopping for essentials? Probably not. But if you often get caught in this scenario, you might want to make a point to avoid the stores that trigger overspending.

4. Stop Spending Money at Restaurants

Changing how you spend money on food is one of the easiest ways to save money. And we all know that going out to eat gets expensive fast. If you’re spending $15 on lunch four times a week, that’s $60 a week—and $240 a month! Imagine how quickly you could pay off debt with that kind of money!

Consider this: Instead of heading into the grocery store and wandering up and down the aisles, create your meal plan for the week, make a list before you go, and then stick to it. If you need to leave the kids (or your spouse) at home to save even more, don’t think twice about it. Planning your meals in advance means lowering your overall food costs.

Speaking of lunch, bring your lunch to work every day. We promise—it doesn’t have to be complicated! Set aside some time on Sunday afternoons to meal prep, or take 15 minutes each night to make a sandwich or pack up some leftovers for the next day.

We’re not saying you shouldn’t ever treat yourself to a nice dinner on a special occasion or Sunday morning brunch—just make sure it’s in the budget.

5. Resist Sales

Who doesn’t love a good deal? Retailers know their customers, and they also know the irresistible pull of a flashy (and perfectly placed) sales rack. But how much is all this saving really costing you?

If you buy a sweater you never intended to buy just because it’s 25% off, you’re paying 75% more than you would have. Sorry, shoppers, that’s still called spending, not saving.

Avoid these shopping traps by making a list before you go! Then, practice some self-discipline once you’re there. If you see an item on sale that isn’t on your list, it wasn’t meant to be.

6. Swear Off Debt

If you’re serious about getting your overspending under control, you have to swear off debt—for good. After all, debt steals from your income. Not only that, you’re stuck paying on the loan or credit card (plus interest) until it’s gone for good. It’s true: Your debt owns you until you pay it off once and for all.

We live in a world where just about anything can be financed or borrowed, which can give you a sense of financial security. But that financial security isn’t real. It makes you think if you can afford the payment, you can afford the new car, house, or big purchase. But in reality, if you don’t have the cash to pay for something right now, you can’t really afford it.

So, go ahead. Make the decision to cancel your credit cards, and commit to living debt-free from this moment forward. And just as a refresher: Credit is an enabler. It enables you to overspend. But without it, overspending isn’t an option.

7. Delay Gratification

If you’re having trouble sticking to your new budget and shopping list, imagine how you’ll be using that must-have item a month from now.

Will that sweater still look good after a few washes? Will your kids still be playing with that overpriced toy set? Will those cheap shoes last through the season?

The majority of the time, the answer is: Put it back. But what if you still want it? Then, you wait. Work it into next month’s budget and revisit your feelings in 30 days. If you still love it, you’ll be able to buy it without the guilt, because it’s already in the budget.

8. Challenge Yourself to Reach Your New Goals

Put your willpower to the test by buying just the bare necessities for one month. You’ll be amazed by how little you actually need.

You’ll also be able to identify the things you don’t necessarily need, but simply like to have. Do you like using your gym membership because it helps you stay active? Keep it. Does your weekly visit to the chiropractor keep your back in tip-top shape? Keep going. If it fits into your budget (and doesn’t cause you to go into debt), you can spend money on it.

The key to stop your overspending is creating better money habits and being intentional with what you spend your money on. Don’t step into a store again without a budget and a plan! That plan can be right at your fingertips with EveryDollar. This free app makes it easy to create (and stick to) your budget.

Stop wasting money due to poor strategy!

Most of you have surely seen this. Browsing across the internet you find a strategy (a trading pattern) generating various arrows, circles or shapes like this. Based on a few simple rules, you open a trade. Nothing difficult.

At the beginning, everything works OK. At the end (I assume) your results are far below your expectations. Am I right? Sure, all people who have experienced this situation know that I am.

The trick is in the fact that the vast majority of such systems can never work in the long run. If it was possible to trade based on a few simple calculations and indicators someone would have invented such an application a long time ago to do it for you.

How is it possible to trade with profit?

A crucial aspect in all trading models is what is called “human factor”. What is important is to FILTER all signals based on ever-changing support lines, resistance lines, trend lines etc. This will not do any software for you. Therefore, when developing a strategy, you cannot use all signals that appear. You must filter. This is why a strategy user manual (PDF format) was developed.

Remember to test all trading models first!

No matter what type of strategy or trading model you use, first of all, you have to do a rough test. This is why some brokers offer a demo account. In case the strategy doesn’t work you will not lose a single cent. If it does work, you can start trading with real money right now.

You should conduct the test at least a week, ideally a month or more (if you are a conservative trader) before going live.

What is a demo account?

Demo account is a type of trading account which does not contain any real money; you are not allowed to deposit or withdraw money from the account. All money set on the account is de facto virtual money.

Thanks to this account you can perform trades to test how your strategy works. If it doesn’t you will not regret any losses. A click on a button and your money is back. Next, you can re-open your testing.

How to set up a demo account?

There are several ways to set up a demo account. One is to ask the broker or alternatively use an independent provider. More detailed explanation below:

Broker demo account

Some brokers offer a demo account right on their platform. It includes one major advantage: you can test all features and functions offered by the given platform. You can touch all the possibilities and test. Later on, when you go live, making trades with real money, nothing will surprise you.

This type of demo accounts is offered (for example) by a quality broker IQ Option and an Australia-based broker High Low. How to create a demo account with IQ Option? Guide here.

Read more about the brokers ✔️

Broker Bonus Min Deposit Payout Review Open Account
Only for Australia $ 50 Up to 100%* Review Trade Now! FREE DEMO ACCOUNT $ 10 Up to 100 % !* Review Trade Now! FREE DEMO AND LOW MIN DEPOSIT $ 10 Up to 90 %!* Review Trade Now! *in case of correct prediction
RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK

On the other hand, demo account is also offered by an untrustworthy broker, binatex. I personally don’t trust this demo account. The demo account may manipulate with the price to make you feel that given the growing profit you are good enough to start trading with real money. Using a regulated broker, you don’t have to fear such practices.

Third party demo account

Along with the brokers, demo account is also offered by independent providers. There is also one advantage there. These brokers don’t care whether you are a winner or loser. Therefore, you don’t have to be afraid of any manipulation in your favour or disfavour, so the demo account as such is trustworthy.

The above mentioned account is offered at our website, too: Binary options demo account. Another pro is that you don’t have to enter your contact details which prevents you from being annoyed by spam e-mails or calls.

On the other hand, you will “put your hand” on a platform of a broker with whom you are going to make real trades in the future. This could be to your detriment.

️ What do you think of it? Do you use demo accounts, too? Send me your comments and opinions (COMMENTS section)!

Author

More about the author Step

I’ve wanted to build a business of some kind and earn money since I was in middle school. I wasn’t very successful though until my senior year in highschool, when I finally started to think about doing online business. Nowadays I profitably trade binary options full-time and thus gladly share my experiences with you. More posts by this author

3 Responses to “Stop wasting money due to poor strategy!”

After i lost so much to scammers am always happy to say it that i have made my first $500k within six months of trading with my researched and amazing strategy, I was able to recoup all my lost investment.

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How to Stop Spending

The MoneySavingExpert Demotivator

Sometimes waving a magic MoneySaving wand and changing all your providers isn’t enough to really improve your finances. Two further simple words are needed. STOP SPENDING.

Whether you need scaring into it, or tips on cutting back, this guide and the frightening Demotivator tool will help tackle those spending demons.

In this guide

Cut Your Bills Checklist

Need scaring into this?

Martin met a good middle-class family for a media money makeover. First, they admitted shame at £60,000 credit-card debt, a sum that mathematically would take them two years of after-tax income to repay even if they’d no bills to pay or food to buy.

Yet what they initially hid from Martin, and themselves, was that a further jaw-dropping £120,000 of their mortgage had originally been splurged on plastic then shifted onto the home loan.

That’s £180,000 overspending in less than a decade, yet these weren’t obviously profligate folk. Like many, they’d simply stumbled into the trap of wrongly believing they were wealthy and tried to give their family the best. Inevitably, solving such gargantuan financial indiscipline just takes two simple words.

That’s easy to say and a nightmare to do. Yet in their case an abrupt spending defibrillation was the only way. To get them back on track, they needed to simply vow not to lay out for anything barring food, heat and essential bills. For most people, that’s unnecessary, but get it wrong and things can get that bad.

Surely it’s only a little debt?

Putting a little debt on cards may not seem too bad, yet if it’s unplanned and not budgeted for, it’s simply willy-nilly overspending, and you’re setting yourself up for a disaster, and not just financially. Too many times I’ve seen the impact debt crisis has on homes, family, mental health and relationships.

You may feel this is over-dramatising. Yet when there’s no money left, you can’t borrow more, and the creditors are asking for money back which you’ve no ability to repay, it touches every element of your life.

The danger is what’s called a ‘debt spiral’. It works like this:

Do you spend more than you earn?

There’s no need to stop spending for the sake of it. If you enjoy a cappuccino, can afford it, aren’t in debt and aren’t overpaying, sup away. Yet as Dickens’ Micawber principle states:

Annual income twenty pounds, annual expenditure nineteen ninety six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

There are two ways to check if you’re spending more than you earn.

The BIG danger signal. Are you in debt?
If you are, and can’t answer the question ‘what are your debts from?’ there’s a problem. If you didn’t buy, for example, a car or a conservatory, but you’ve used cards or loans to fill gaps, an ear-piercing alarm should ring.

Debt is fine if it is planned, rational, budgeted for and as cheap as possible. But if you consistently need to use the credit cards to supplement your monthly spend, you have a problem. Do that, and as I’ll explain in a moment, it can have life-destroying consequences.

Do a budget to work out where you’re WASTING cash
If you are spending more than you earn, there’s a simple way to accurately check. The specially designed Budget Planner calculates your genuine annual income and then tells you exactly how much more you spend than you earn.

Most people are shocked by the result, as many of those who think they’re within budget month-by-month aren’t when it’s done over a year. This is the start point of sorting out your cash. If possible, sit down and spend the time to do the budget. The planner also then helps you prioritise your spending.

Of course, even if you’re not spending more than you earn, if your aim is to save up for something specific, the techniques below will help too.

How to Stop Wasting Money on Things that Aren’t Important

A lot of the personal finance world will tell you to never spend money. Ever.

Read a few money articles, and you may soon start believing that there’s no quicker path to complete financial destruction than buying a $4 morning coffee.

For us mere mortals, swearing off all spending forever is likely to be about as successful as the latest crash diet fad. After a week of drinking smoothies for breakfast, lunch, and dinner, is it any surprise the first thing you’re craving is a heaping mountain of food?

In the same way, taking this extremist view on spending only ensures feelings of shame and guilt, even for necessary purchases or things that may actually improve your life. This is not on anyone’s recipe for a healthy relationship with money.

Short of living off the grid, spending is at times necessary, and can even help you remain sane while living a non-hermit lifestyle.

Wait, what?? A frugal personal finance blogger who won’t execute me for spending a little bit of money??

Yes, spending money on what makes you happy is perfectly okay, but there’s an extremely important catch.

Don’t waste money on things that aren’t important to you. There is a big difference, and here is where most people get it completely wrong.

What makes you happy is not decided by your friends, your neighbors, or the commercials on TV.

Just because the car industry spends billions of dollars every year trying to convince you that parting with $30,000 of your hard earned money will make you feel good, doesn’t make it true. Just because your friends enjoy spending lavishly on clothes, doesn’t mean that’s for you. Maybe you enjoy travel more. Maybe you enjoy something else entirely.

Thankfully, I have devised a system for evaluating your spending which eliminates all waste, and ensures your discretionary income goes only to buying what is most important to you.

Step 1. Putting Your Spending into Perspective

Imagine you make $50,000 per year. You find a bottle, and inside that bottle is a genie. He proposes you a deal.

You can have that new $25,000 car you’ve always wanted, but there’s a catch. You are indebted to him for 6 months. For 6 months straight, you are under his watchful eye between 9 AM and 5 PM. You do exactly as he says, working on exactly what he wants. No arguing allowed, he sets the rules and you carry out his tasks. He’s a generous genie though. He allows you a 30 minute break for lunch, and he allows you two days of leisure each week.

At the end of those six months, the only thing you get is your new car. Would you trade a half of year of freedom for that one nice car?

Everyone, every day, is granted options from this hypothetical genie. And day after day, we fail.

The question you have to ask yourself before every purchase is:

How long would I have to work to buy that?

Money, at its core, is a unit of exchange for time.

  • When a plumber fixes a toilet, he’s selling his time to diagnose and fix a problem.
  • When a craftsman sells a table, they are selling the time and expertise that allowed him to create a desirable piece of furniture.
  • When an office worker receives her paycheck, she and the company are placing a value on the hours of her life devoted to the business’s strategic goals.

Reaching financial independence grants you unlimited freedom with your time. Burying yourself in debt imprisons you to spend time earning wages to pay off your dues.

The key lies in trading your time for those few special things in the world which are truly important to you.

And to do that, we must determine an item’s true cost.

Step 2. “How Much Does That Really Cost?”

When you buy any item, how much are you really paying? Our good friend Uncle Sam has a say in that, and he’s awfully skilled at quietly pushing prices up without us realizing.

Yes, I’m talking about taxes.

Everything in this country is purchased with after tax dollars. Assuming you’re in the 25% income tax bracket and a law abiding citizen who contributes to Social Security and Medicare, you are paying somewhere around 27% of your salary to taxes.

That’s nearly a third of your working hours before you ever see a penny.

Your $30 steak dinner? You have to earn $41 dollars to pay for it, because the tax man collected $11 before you ever got a cent.

Don’t forget about regular old sales tax either. My city has a nearly 10% meal tax (what’s yours?) which pushes the final cost of that dinner to about $45 dollars. If I drove to the restaurant, I can expect to pay taxes on the gas as well.

The restaurant told you this tiny portion cost $30. They lied.

And what about the hidden costs of employment? Is your $25 an hour salary really $25? Or do you have to:

  • Buy expensive suits and clothes for your job?
  • Drive 10 miles to work every day and have the gas bill to prove it?
  • Perhaps your groggy mornings force you to grasp every last minute of sleep, leaving no time during the frantic a.m. for packing a lunch but plenty of holes in your wallet from eating out?

Remember our hypothetical genie? He really was generous, because he didn’t yet calculate the effects of purchasing with after tax dollars, sales tax, or work related expenses. Had he done so, he’d have seen that the car listed as $25,000 actually costs well in excess of $36,000, and 6 months is a deal compared to the nearly 9 months of salary it will really cost you.

Rest assured, slowly but surely through the veil of hidden costs, the true sticker price of everything you see can be nearly doubled.

Step 3. Re-Thinking the No Thought Purchase

With this in mind, it’s time to bust out the seriously scrutinizing magnifying glass on where we are spending our money.

  • $8 lunches: Are those extra 10 minutes of sleep really worth the $12+ true dollars this lunch is going to cost me? Are those extra 10 minutes of sleep really worth working nearly a half hour in a cubicle? Or would it be a better use of my time to hit the hay a little earlier the night before and take one small step towards financial freedom?
  • $20 event parking: Working for nearly two hours just so I can shuffle my lazy self right into the event? No thanks. I’d rather plan ahead and park a little farther down the street. Not only does this grant the opportunity to carry out the world’s most currently underrated activity (walking) but it also allows exploring the beautiful city or neighborhood first hand.
  • Trinkets, gadgets, souvenirs: Throwing down a couple bucks on a cute, modestly priced whatever in the gift shop seems like a quick and painless process. It’s a fast transaction and you didn’t even notice the $25 dent in your wallet. Now consider the time spent at work, on calls, and dealing with difficult customers that earned you the nearly $34, which finally whittled down to the $25 in your pocket today. Is it still worth it? Lord help if you that gadget happens to be a $1,000 MacBook…

I recently went on a much needed vacation. I scored a deal on airline tickets, which was the one mammoth expense I imagined making up the bulk of the trip’s cost. Yet when I reviewed my spending from the trip, I was shocked to see my airfare cost paled in comparison to the no-thought purchases throughout the vacation.

Snacks for the car ride, a quick beer at an interesting spot, last minute sunblock, lunch at the airport… it was this sort of no-thought spending that ended up costing the most. The airfare and vacation were unquestionably worth it. The mindless spending? I can’t say the same.

This exercise can be applied for nearly every item that scrolls across your mind’s never ending conveyor belt of impulse purchase ideas. When the buying decision is framed in the quantifiable days, months, and years of life an item truly costs, the money wizard thinks twice.

Money’s Most Powerful Feature

What we’re really getting at is something much deeper, and it’s one of the most important aspects of frugality: the power to buy time.

No, not a gold plated pocket watch…

We’ve seen from the effect of taxes that saving is more powerful than spending.

Because every dollar spent is representative of an even larger number of dollars exchanged for your precious, limited time on earth, any lack of spending implies the exact opposite. Refusing to buy leaves a commodity far more precious than any piece of man-made metal or plastic. Not spending your money immediately and instantly buys you time.

By opting out of excessive consumerism, you no longer trade your hard worked time for material goods. Instead, that time and effort is retained. It’s not gifted away to a restaurateur or a car manufacturer, but it’s held by you, ready to be cashed for freedom.

To spend is to fight the current of taxes. To save is to take a bridge over that river, grab a life raft, and begin rowing with the currents of compound interest and tax advantages.

The next time you are faced the burning desire of purchase, run a quick calculation to see just how much time you are trading for the want.

If you still feel like trading your hard earned time and money for whatever-it-is you’re dying to have, then you just may have found one of the rare purchases worthy of passing through the money wizard filter.

But if you wouldn’t take the deal with the genie, then it’s not worth buying.

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Comments

I don’t believe in spending no money as well. I live your analogy to only drinking smoothies and still wanting food. That is why I don’t believe in spending fasts. If you concentrate on making sure you are spending money on things that bring joy and add something to your life, you will be fine.

The Money Wizard says

Exactly Thias, it’s all about finding what really, truly adds joy and what’s just a waste. The rest will work itself out.

Lovely lofty goals….but reality has a way of biting you in the ass when a wife , child comes along or a job offer in an inclement locale is dictating a leap from frugality into adulthood.

The Money Wizard says

Plenty of people older than me with families, who save even more than I do. Just because it’s not common doesn’t mean it’s not possible.

I see this idea that it is easier to save when you are single thrown around a lot, but I think it is a fallacy. If two people in a relationship have the same goals then it is actually easier to save. If both people work then that is more income, but cost barely go up. A couple now shares in the cost of rent and utilities etc. It’s cheaper to cook at home anyways and barely adds to the cost by adding another person or two. If only one spouse works and the other handles the homemaking then that leaves more free time for each to spend together, where as one person would have to come home from work and do chores. True, that actually having a child is expensive, diapers are expensive, but after only a couple of years they are eating the same food cooked at home(and likely healthier) that the adults are eating and barely adding to the cost. Children grow quickly and DO NOT need designer clothes. My wife and I do most of our shopping at yard sales, not that we can’t go to the mall, but it is more fun finding a sweet deal.

The Money Wizard says

Couldn’t agree more Jeremy. My savings increased quite a bit when I moved in with the girlfriend.

I agree about the kids too, although I don’t have any yet. I take you might?

I agree with Jeremy. If I know what I know now I would probably be writing a blog on how to become a thousandnaire or billionaire too. Please let me know when you have kids and a family like Jeremy and I.

i like your intention of opening people eyes ,but,it s pretty unrealistic what your trying to say ..youre calculating everything in time ,you`re so sure you have it, nobody knows how much time has left my friend ,so saving money with the thought of gaining time it`s a utopia anyway a lot of luck with the idea !!

The thoughtless purchases are what killed me for a period of time. When I was in college, I would spend every meal eating at one of the campus eateries (at full price) and I almost didn’t have any money in my bank account. I had to stop eating out so much.

The Money Wizard says

The most painful part for me is when I add up all the mindless spending and realize how large the final number is. Then I compare the number to a large purchase I spent weeks agonizing and debating over. Maximum cringe achieved..

Nadine Taliver says

How do you save money when you are surviving paycheck to paycheck. Trying to move from a house to a apartment. What is the percentage to take and put in the bank from the paycheck. I want to put money away to let it grow and retire.

The Money Wizard says

The best percentage to put in the bank is more than you’re spending. If you’re living paycheck to paycheck, it’s time to evaluate your lifestyle and pick out areas of saving. I’ve noticed the fixed expenses are usually the biggest contributors to a paycheck to paycheck lifestyle. So… Avoid consumer debt. Don’t ever pay credit card interest. Re-evaluate your living arrangements. Make sure you’re not spending too much on vehicles. Watch out for monthly subscriptions. Cut back on thoughtless spending.

If after all this you’re still not able to save, then it’s time to make more money. Either put in more hours or start working on ways to improve your earning potential.

I love this post. It is important to experience life, but understand what is important and what is not. I recently flew to the West Coast to attend my son’s wedding. Was it in the budget? No. But it was priceless time spent with loved ones. That’s why I am dedicated to wealth through willpower and wisdom – to adventure and experience!

The Money Wizard says

Hey Cash Crone, glad you loved it! That’s even above “liked”… You’re gonna make me misty eyed now. ��

You’re right though. The mindful spending is what lets us break the bank for those important moments, completely stress free. Glad you were able to enjoy your son’s wedding, sounds like a priceless time.

Stumbled across your blog on Facebook and love what I’m reading! I’m a soon to be college graduate (3mo from now) with about $35K in student debts *cringe*. Any good tips you could give me to get those payed off immediately and start my path to financial freedom? Feel free to shoot me an e-mail or reply back here!

The Money Wizard says

Hey Riley, best advice I can give is to live below your means and attack those loans with everything you’ve got. Far and away easiest way I’ve seen is to keep your overhead low. A lot of your friends will graduate and immediately rent the most expensive, trendiest apartment they can “afford”. Same goes with a car. Avoid this trap, and you’ll have so much breathing room in your budget those loans will be gone in no time.

I plan on releasing more debt focused articles in the future, including an interview with my brother. He’s lived modestly and absolutely destroyed his loans, and picked up a lot quality insights in the process. Stay tuned!

What is being said here is so true. I love that phrase “mindful spending.”

One question I always ask myself is – “is this a want or a need?”

One of my operating methods is frugality. There’s a difference between frugal and cheap. Frugal is buying the best that you can afford THAT MAKES SENSE and not paying anymore than you have to fo it. Cheap is just that… won’t have it long and not something that will nor should it be expected to last. Those last parts are so important, especially for durable goods – things you plan to and should keep for period of years. For example, a car is used to get from point a to point b. You can spend 15k or 75k, it will get you there just the same. I will choose something that has enough room and amenities to be satisfying so that I can be happy to keep the item for the long haul, it’s quality is good, taking good care of it, and be CONTENT with it for a long time. I have two vehicles, 9 and 21 years old and still very content with each…. you take care of it and it will take care of you. Oil changes every 3000 miles no matter what the specs say.

Clothes would also fit this bill…. choosing classic well made clothing, taking proper care of it , and if I want trendy, use modestly to accomplish that. I have work shoes in two colors, black and navy…. that covers all my needs. I do not have 20 pairs of shoes in twenty styles and colors.

The Money Wizard says

Good points P rog. I agree, I too have a pretty minimalist work wardrobe. It covers my needs, and it’s one area I don’t feel my quality of life wouldn’t increase with more spending. Like you said, it’s all about mindful spending.

CORRECTION last paragraph –

If I want trendy, use modestly priced accessories to accomplish that

Again great article. I use an APP caled YNAB. You Need a Budget. I love that my mindless spending became very conscious by recording every expenditure.

The Money Wizard says

I’ve heard good things about YNAB, but never checked it out myself. Glad it’s working for you!

I chance upon your blog while reading Business Insider. I just want you to know that you have a reader here in the Philippines.? Great tips and very realistic!

The Money Wizard says

This internet thing never ceases to amaze me. Hello to the Philippines! So cool, and I think it’s safe to say you might be the #1 Money Wizard reader in your country!

Hi, I’m reading your Blog for two days now. Great. Keep writing, studying and sharing the ideas while reaching your goal. Good luck!
BTW I’m from Slovakia, in the middle of Europe:)

The Money Wizard says

Awesome to hear, thanks! I especially enjoy hearing from the site’s international readers!

Another reader from Slovakia! (originally from Romania). Stumbled upon your blog by sheer luck, have reading through your posts and they have been very insightful and got me thinking a bit harder on what do about my money situation. I am a 30+ home “mortgage” owner thinking how to save up and pay that as first but also invest and make a cash reserve. Keep up the good work! Looking forward to new posts.

Thank you for your posts. I have an immense amount of admiration for your retirement goal. Unfortunately, I did not think about retirement in my 20s and 30s and am now in my 40s trying to pay off the many debts I accrued over the past 20 years. Sure, I have traveled and had experiences that I treasure deeply, but I also have many material things (many of which I am selling on eBay at a fraction of what I paid) that that I thought were important and did not bring me nearly as much joy as experiences such as travel or time spent with friends and family. Once I pay off all of my credit cards, I will start diverting much of my earnings into savings and try to play “catch up” as best I can. If I could do it all over again, I would make a decision to live below my means, not succumb to the pressure to have so many material “things” and focus instead on financial freedom and keeping myself healthy (as no amount of money can buy health). Kudos to all of you in your teens, 20s and 30s that have already realized this important life lesson.

The Money Wizard says

Thank you for your wise words! Glad you are enjoying the posts.

I found that after I decided to cut spending, I was buying more CHEAP crap than I needed because I convinced myself that I was still saving money by shopping used or wholesale. i.e. not buying $40 name brand sweater and instead buying $60 in clearance or used clothes. Passing on weekly $50 dinners and instead buying double that in fast food, coffees and quick grab items.
You make a lot of good points and I hope to implement them. My husband makes pretty good money, but his job is strenuous outdoor labor and he’s no spring chicken anymore. We worry what we’re going to do when he can’t work anymore. We have $0 in savings. yup. zilch. Not because we’re broke, but because we spend. I rarely look at our account before purchasing. I just swipe.
My favorite part of your article was the “How much does that really cost?” Easily puts things in perspective. Thanks for sharing!

The Money Wizard says

Glad you enjoyed! It really is amazing how the small purchases can silently add up to so much.

Hope you succeed! Thinking through and questioning spending seems tough at first, but it will become an automatic habit before you know it, and you wallet will thank you. ��

A great article on living within the means. Good advice for mindful spending. It is important for an earner to avoid debt trap. Save when you earn!

Thank you for this article. Could you walk me through your process for computing the true price of things that you talk about in Step 2 (“How Much Does That Really Cost?”) ? I’m really intrigued by this idea in particular. Thanks.

Student Debt Cripples says

This would be an easy topic to discuss; however more than half of the current working force today has student debt. I’m lucky enough that my wife also works and pays for the house, while I pay for my school. Now granted if I did not have my student loans, I’d be able to sock away about 60-70% of my take home pay. If you truly make 80k yearly, as stated in MSN new, you obviously don’t have to pay a student loan like most of us.

Cory Sedgwick says

What a great post! Thank you for writing

I read a book once called the Automatic Millionaire that lets you put your savings on autopilot. And there’s quotes like “The rich pay themelves first while everyone else pays themselves last.”

If you make savings automatic, then it’s okay to buy some other things as long as you are increasing your net worth and make savings a priority. Of course, life gets in the way and sometimes we must dip into savings.

What has worked for me is putting money in assets that are hard to touch. It’s so easy for me to go into my checking/savings and spend. Money parked in non-cash assets is much harder to liquidate.

Money should be used to enrich your life, and those of your dependents, and also to Give to the needy, instead of forcing yourself and your dependents to lead a miserable life with all the self-imposed stupid restrictions on what you can spend for what purpose, when, how often, and so on. If one is forced to drink a Caramel Macchiato only once a month on Friday afternoons after 4pm, and only after the head of the household sends a text approving that trip to SBUX, that head of the household needs to get a psychiatric evaluation. The other extreme is doing whatever gives you joy/happiness and getting overloaded with debt and no savings in that process, is also absolutely irresponsible.

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