We were talking about company money management and cash flow last week at work, and I was explaining to my colleagues that I believe the time we spent readjusting inventory levels constantly, getting frustrated with too many changes to meet customer requests probably do not justify the small amounts of inventory that we are able to reduce versus if we just stock some more units than what the system shows we need.
This got me thinking because it totally relates to personal finance. As you know, many of us spend a ton of personal time trying to save that extra dime. These include looking at websites for personal finance articles, checking our stocks every 5 minutes of the day (even though we don’t trade stocks that often), writing budget reports, graphing net worth charts etc. If we really list out everything that we do to try to save money, some people would call it “madness”.
So, is the time we spent justified? Some of us might be spending 2 hours or more a day on something like this. Say we are able save $8 more per day, which might sound great since many of us know that $8 a day is probably going to be worth tons of money with compound interest. But then why can’t we just find a part time job that pays more than $4 per hour? If you think about it this way, is it still worth it?
After asking myself this question, my response came out to be something like this.
Let me first explain that I spend more than 2 hours a day on my personal finance. I regularly read 40 or more websites per day of articles from other personal finance blogs. I even have one of my own, MoneyNing.com. I keep track of my net worth monthly, track my spending with a spreadsheet daily, and check my stocks valuation way too many times each day to name a few. I spent much of my day thinking about how I can save more money, and had been pretty successful in cutting some costs through ideas learnt from the articles I have read (thank you 40+ blogs I have been reading).
For me, it is not so much about maximizing earnings, but rather knowing that I can be better, that I can be more efficient with my money. For sure I want to earn more money, and based on the analysis, it definitely sounds more rewarding having a part time job. If I were to be a part time, I would work at Starbucks, since I would get free coffee which in turn helps me with more money to spend on other things!
However, I know that financial freedom measures us not by how much we earn but how much we can keep! There are many people I know that earn $100,000 dollars a year but are not able to save a dime, while one of my friend earn $50,000 dollars and was able to afford early retirement. Back at the time, I asked my “$50,000 salary” friends how he was able to retire early. His answer was remarkably simple. He told me that the key was discipline, the discipline to live below your means, and to save as much as you can. This stuck with me, helped interest me in personal finance, and motivated me in spending time in looking for ways to save growing up.
I believe I am on my way to financial freedom. For those like me who spend much time thinking of money, I think you are too.
Promote or Save This Article
If you like this article, please consider bookmarking or helping us promote it!
Print Post | Email Post | Del.icio.us | Stumble it! | Reddit |
Related Posts
- What’s Wrong With Not Spending Much
- A Dollar Saved is Two Dollars Earned but Two Dollars Earned is Twenty Dollars Saved
- Feeling Guilty to Spend Money on Anything
- Personal Finance Readers Saving Poll Results
- Focus on Being Satisfied and Save More Money
Subscribe! (and Get a Mini-Course with Free Registration)
Follow me on twitter! In addition, subscribe to grab free amazing content or take advantage of the newsletter to have content delivered to you. For starters, a 7-part mini course to help you spend less and be happy will be delivered to you when you subscribe!(Don't worry about spam, because we hate it as much as you do!)
Twitter
Facebook
Subscribe
{ 12 comments… read them below or add one }
I know I spend a lot of time thinking about trying to save money. I think about it every day at least twice. I think about it each time I use the microwave and then unplug it so that I will not have it functioning as a clock all day while it is not cooking food. I must say that thinking about saving money has really taken up a huge slice of my life…..because I am broke!
Lulu: I’ve been to your site, and I must say that you are trying hard to be debt free. I congratulate you because thinking about it is the first step to actually being able to fix it!
Since you are still a student, you might wnat to think more about how to get a decent job that earns a living, since you need to have some income first before you can choose to save it.
Also, of all the expenses that you have now, try to cut down on your low priority expenses first (like shopping if you do).
Another thing that helps is look at your expense report, and try to shave off the biggest bills first. For example, it is much easier to cut off $10 dollars from a $200 bill than $10 dollars from a $35 dollar bill.
Good luck! I’m sure the whole personal finance blog community is here to help if you need advice.
I have been through your site, you have some great stuff on Personal Finance. I was surprised to note that you don’t have a google page rank, probably only google can answer that. I run a Personal Finance blog too. I will be back here for sure.
Take care and cheers.
Robin Bal: Thank you for the word of encouragement! The reason is that I changed domain names and my new domain name is too new. I read somewhere that they are predicting a refresh from Google for these page ranking in July. I for sure will look forward to that. If you do the actual check of how many pages Google have on my site, I should have more than a page rank of N/A
Nice post.. my problem is not that I cannot save.. I save but then splurge when x amount of money has been saved…
Random Magus: Would it help if you have a savings account where you don’t look at the balance? You can save, and then just let the balance accumulate through time. You might also want to use the 401ks and IRAs since you can’t take them out. That way, you will still have the urge to save!
Obviously personal finance is a hobby or avocation with you, so calculating an hourly rate doesn’t make any sense. Instead of comparing whether saving money “pays” better than a second job, the more meaningful comparison is whether doing something else with some of your free time would make your life better.
From a quality of life point of view, you could save time and reduce stress by closing some or all of your taxable stock accounts and using the money to pay off credit-card debt. I’m sure you’ve read that suggestion a hundred times. If you do this, however, then you won’t have as much to write about in your blog and you won’t get the excitement of seeing your stocks move every hour, so maybe financial prudence isn’t really your #1 motivation. Just a thought from a stock market junkie who overtrades a lot.
Houyhnhnm: That is definitely good advice. I’m very passionate about my blog and other “money” matters at this point in my life, as people can probably tell from me having this blog and updating it constantly.
I don’t really have any credit card or any debts right now (I do plan to buy a house sooner or later so a mortgage is coming) so I will still have a chance to keep refreshing my stock screen!
I should really spend more time thinking about other stuff other than money though, since I find that I’m always in front of the computer
> I don’t really have any credit card or any debts right now (I do plan
to buy a house sooner or later so a mortgage is coming) so I will still
have a chance to keep refreshing my stock screen!
OK, maybe I read an old post about credit card debt…
Buying a house gets back to your question about how you financially survive big expenses. From a strictly financial point of view, I think an S&P500 index fund will usually outperform a primary residence. If you play the big swings in the housing market right, you might get a double in a few years, but the odds of that happening on any one house aren’t great. Houses are money pits–I know because I’ve been shoveling for 19 years. Any paper profit we have on our house has been eaten up by taxes, maintenance, interest, and capital expenditures that lose money the instant we make them. Add in the fact they’re illiquid, and I think primary residences are less attractive than the stock market and are an expense that’s best avoided.
> I should really spend more time thinking about other stuff other than
money though, since I find that I’m always in front of the computer
Finding the right balance is always a challenge. I know at times I’ve used stock speculation to distract myself from pain in other areas of my life–a big trading no-no.
> I think an S&P500 index fund will usually outperform a primary residence.
I think that’s just great advice. I actually wrote about it in one of my post comparing the returns of housing and stocks but in a chart form but without the tangible expenses you mentioned (illiquid, maintenance expenses).
> Finding the right balance is always a challenge. I know at times I’ve used stock speculation to distract myself from pain in other areas of my life–a big trading no-no.
Let’s just say that everyone sometimes lose focus a little bit but the better ones at least: 1) know and admit to it and 2) is able to snap out of it quickly
I pay attention to my finances, but I also believe in living in the moment and taking the time to enjoy life. I do not think I could be happy if I obsessed too much about finance.
Life is very uncertain. I do not know how much time I have. Maybe I will not be around to enjoy retirement. Maybe my spouse will be around, and I would regret the lost opportunities. I also do not think I can 100% assure myself of financial security in the future, no matter what I do. Who knows what could happen? Will I make what turns out to be a very stupid decision? Will I be the victim of fraud? What impact will global warming have? What impact will peak oil have? What impact will terrorism have? What kind of wars might occur? Will there be another Depression? I don’t know the answers to these questions.
So all I can do is to make a reasonable effort at doing what I can (saving money, living frugally, being responsible, etc.) but other than that… I take comfort in what Jesus said in Matthew 6.
Monica: I think we all fall victim of hanging on too hard about something in our lives. For me, this might be the “money”.
I totally agree with you that no one will know what can happen in the future, but I feel more comfortable if I have more wealth since many unexpected events that happen require money. I suspect that my way of thinking had a lot to do with my experiences (please read my About page for more) and it will be hard to change. However, maybe by interacting and being more open about my feelings in this blog, I can find a happy balance.
Thanks for listening.