Ask Yourself Whether You Spend Too Much Time on Money Management and Saving Money

by · 23 comments

timemoney.jpgIn my old job, we always had to readjust inventory levels constantly, and it was frustrating because we had to change the same levels numerous times to meet customer requests and demand changes. They never seemed to justify the small amounts that we were able to save when we could just as well stock a few more units than what the system showed we need, saving precious human resources for the company.

Many people are the same with their finances, spending a ton of personal time trying to save that extra dime. These include looking at websites for personal finance articles, checking stock prices every 5 minutes, writing budget reports, graphing net worth charts etc. If they were to list out everything that they do to try to save money, it could be called “madness”.

Is the time spent justified? Some of us might be spending 2 hours or more a day on something like this. Say we are able save $8 each and every 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? Is the extra work still worth the effort?

I asked myself this very same question, and 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 finances. I regularly read 40 or more personal finance related websites. I even have one of my own, 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 (just to name a few of the things I do). I spent much of my day thinking about how I can save more money, and had been pretty successful in cutting costs through ideas I learned from the articles I read.

For sure I want to earn more money (check out 15 different ways of making more here), and based on the analysis, having a part time job definitely sounds more rewarding.

But I know financial freedom is about not so much how much we earn but how much we can keep. There are people I know who earn $300,000 dollars a year but live paycheck to paycheck, while one of my friend earns $50,000 dollars and was able to afford early retirement. I once asked my “$50,000 salary” friend 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 am on my way to financial freedom, and part of it is because of the time I spend thinking about my finances. I do spend quite a bit of time on the subject, but it’s been worth the effort for me and my family. Your situation might be different, but remember to ask yourself whether you spend too much time on money management and saving money.

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

{ read the comments below or add one }

  • Steve says:

    I’ve worked for about 40 yrs. A key to financial success is to not waste what you make. Spend prudently, which is basic, but most do not. Stay within your means, whether you make 30k or 500k a year. I’ve worked hard, changed jobs many times and then changed careers, ultimately working in the financial services industry, mostly in sales.
    Got lucky and found jobs with two different companies that allowed me to make good money. But even so, with a home up north and one in Florida, and with millions in assets now, I still am frugal, and shop at places like Costco and Walmart for those commodities that cost more at convenience stores, like milk and gas. It is true that a penny saved is a penny earned, and in many cases two pennies earned.
    As far as watching your stocks a lot, you’d be better off buying a diversified mix of index funds, and keep a few stocks on the side to play with. One thing I personally learned in all my years in this industry, and reading all the great investors and their books, as well as guys like Michael Kitces and Wade Pfau, who are very analytical, is that you will not beat the market consistently over time. So if you want to enjoy life and do other things, don’t waste too much time picking stocks. Spend minutes a day watching your returns if you want, but don’t act on the daily ups and downs.
    Buy a house, get a mortgage and let your assets earn money in the market, rather than pay cash. Also, you get the mortgage tax deduction, which means you are paying less interest. In most cases, your home is not a great investment and will not beat the market returns over time.
    You can retire early like your $50k a year friend, but those who do that have to live very frugally without many amenities, which is ok if that’s what you want. Most do not want to live like that.
    Keep writing and have fun, but two hours daily tracking spending, budgeting and graphing net worth sounds like too much time. It should be easier with less effort. Checking your investments value should take a minute, and the same with the other activities.
    Unless you are doing it for fun in spare time, reading 40 different blogs isn’t going to increase your investment prowess if you set up a diversified portfolio of index funds that require minimal time monthly. There’s no magic bullet that’s going to make you rich quick, other than luck.

  • J Barry says:

    Time spent thinking about your money situation is not wasted if your thinking leads you to do actions which increase your net worth.

  • lana says:

    My upcoming project is to break out the individual funds from a target date fund. The fees on target date funds are higher than doing it separately. It might add up over time.

  • Allen West says:

    What I find interesting about money management is timing and wisdom – had I known 30 years ago what I know today and Roths been around I’d be far more ahead but we cannot unwind the clock of life. But what I find interesting as I approach retirement and Love the idea of being debt free I have no interest in becoming a money counter every month for what others will inherit. I’d much rather spend that surplus monthly dining and living on a golf course with a Lake view in Naples, FL. After a quad bypass and wearing a defib in my chest and working my arse off during my career it’s time to wisely stop counting money piles and start enjoying them – wisely. Money Management YES – But it’s useless if you don’t enjoy it! Itching to be a Snowbird seeking Sunshine and Palm Tree Management!

  • Steve says:

    You can’t live in an index fund. Buying a house may or may not be better than renting. Do an analysis and see if it makes sense because each situation is different. As far as saving and investing money, it takes discipline, as does not eating too much and watching your weight. Investing the right way requires doing initial homework and investing time, then you can just keep an eye on it.
    You work to earn money to live off of, and to invest for the future. You do not want to cut out all your spending and not enjoy each day. Just do not overdo it and spend frivolously, and do not scrimp so much to save for the future at the expense of enjoying your life. You can save everything for the future, but you never know when your time is up, so have fun and enjoy the fruits of your labor.

  • Jerry says:

    I do not track my spending (other than generally in my mind) because it leads to me feeling overly anxious. I would rather focus on what I’m going to save each month and the rest takes care of itself. If I can pay my mortgage, groceries, insurance, etc. and still save money each month, I feel good. Too much time spent tracking and the like makes me crazy.

  • Financial Samurai says:

    I try and spend about 15-30 minutes a quarter on my personal finances to update line items and make sure things are on track.

    Other than that, I just write things out on Financial Samurai and work through some solutions.


  • Drew says:

    I recently have been selling items on amazon and eBay for profit.

    When it all boils down, I’m making $800-1200 a month on a good month — but I would estimate the number of hours is probably about 80 hours. Sure its $10 an hour, but its not as good as people think when they hear that I’m selling online.

    Also if I have claims against me (fraud, lost packages etc) I can lose -$200 or even -$400 on an average month, making my profit as little as $400.

    You really have to gauge your savings and your time.

  • Jonny Debt says:

    I think you make an excellent point. In business, they call this the “Opportunity Cost”. This is because whilst exploring one avenue of business you could be letting a more lucrative opportunity go! I think the same applies here, and I think that is why it is important not to try to save $2 on an item when you just spent an hour of your time trying to do it! What else could you have spent that hour on that would have been more profitable?

  • MoneyPerk says:

    People and myself included waste too much time on money management and saving money. What we all really need to do is increase our knowledge on the subject, to give us the time we can save by being more knowledgeable about it. And of course, as you stated to be more disciplined!

  • Witty Artist says:

    When thinking about money management becomes an obsession and we put aside the little joys of everyday, well then I guess that’s the worst slavery. I’d say once a week or in a fortnight is enough to think about our financial sector.

  • MoneyNing says:

    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.

  • Monica says:

    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.

  • MoneyNing says:

    > 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 🙂

  • Houyhnhnm says:

    > 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.

  • MoneyNing says:

    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 🙂

  • Houyhnhnm says:

    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.

  • MoneyNing says:

    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.

  • Random Magus says:

    Nice post.. my problem is not that I cannot save.. I save but then splurge when x amount of money has been saved…

  • MoneyNing says:

    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 🙂

  • Robin Bal says:

    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.

  • MoneyNing says:

    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.

  • Lulu says:

    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.

Leave a Comment