Money Management

[Graham Chong]

I will be finally leaving college in July (I have just confirmed my job today actually).

I will not be earning a lot for the next two years hence it is even more important for me to manage my money well, so that I will get enough savings for my complete switch to the Fastlane by then.

I am not sure if it has been asked before in the forum but what books or other resources which suit Fastlaners on the Personal Finance/Money Management matter would you recommend ?

 

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[CEBenz]

Personally, my view is: read David Bach, Suze Orman, Ramsey, and any others that pop up. One book from each should suffice. The reasons I say this are that there are tidbits that will be useful but I think it's also a good exercise in recognizing slow lane thinking. There are some of the suggestions that may be necessary while you're cash strapped.

That said...... If you pay attention here and act, you might be on your fastlane path with far less monetary outlay than you thought.

 

[FionaS]

Something which has been valuable to me in learning how to manage my money on a tight budget is You Need a Budget and their free e-book. I now look at money in a whole different way, and find that I am able to be a lot more relaxed about money while still being able to save and meet all my obligations.

 

[Astute]

You don't need a book to tell you how to save more money. Just monitor your spending for a month (and spend as you normally would) then figure out where you're over spending. Stop spending money on self indulgence (if you are) and avoid monthly commitments such as gym memberships, phone bills etc like the plague.

There are plenty of free resources online. Buying a book to tell you what you could easily find in a few Google searches would be a complete waste of money.

 

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[DeletedUser394]

spend less than you earn. Do that and you're ahead of 80% of people right there.

right now I'm living off of 45% of my income. Easy to get ahead even if you're making dog sh*t money. Don't need any books, just some willpower and discipline.

 

[G-man422]

I suggest "The Richest Man In Babylon".

 

[Talisman]

It's easier to buy back your life if you're not selling it for a lot.

By that I mean - don't incur stupid parasitic debt (expensive car, mortgage, credit card debt from that Carribean cruise you just had to have to celebrate finishing college.. etc).

That will put you in an optimum position to replace your job income with passive/business/entrepreneur income (whatever you want to call it).

 

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[Graham Chong]

Thanks guys for the replies!!

Personally, my view is: read David Bach, Suze Orman, Ramsey, and any others that pop up. One book from each should suffice. The reasons I say this are that there are tidbits that will be useful but I think it's also a good exercise in recognizing slow lane thinking. There are some of the suggestions that may be necessary while you're cash strapped.

That said...... If you pay attention here and act, you might be on your fastlane path with far less monetary outlay than you thought.

Thanks for the suggestion. Will have a look at some summaries of their books

Something which has been valuable to me in learning how to manage my money on a tight budget is You Need a Budget and their free e-book. I now look at money in a whole different way, and find that I am able to be a lot more relaxed about money while still being able to save and meet all my obligations.

Have never heard of this but it looks promising so far. Will have a trial of the demo after my finals.

You don't need a book to tell you how to save more money. Just monitor your spending for a month (and spend as you normally would) then figure out where you're over spending. Stop spending money on self indulgence (if you are) and avoid monthly commitments such as gym memberships, phone bills etc like the plague.

There are plenty of free resources online. Buying a book to tell you what you could easily find in a few Google searches would be a complete waste of money.

I do consider a low cost gym membership (below 20 pounds) and audible.co.uk (audiobook) subscription good investment for my health/fitness and ongoing education. However yes I am sticking to my old phone and will not be renewing my phone contract. New monthly commitments will be avoided like the plague as you said.

Do you have any specific free online resources you have personally found useful so far?

spend less than you earn. Do that and you're ahead of 80% of people right there.

right now I'm living off of 45% of my income. Easy to get ahead even if you're making dog sh*t money. Don't need any books, just some willpower and discipline.

I did do quite a bit of travelling around Europe in the past 2 years but I am stopping that upon graduation. Other than that I'm not actually a big spender (apart from books).

I have a target as well, I've done some calculation and my goal is to reserve 40% of my income for savings/investment/business capital.

I suggest "The Richest Man In Babylon".

Thanks. Read it few months ago. It's quite a good intro to money matter.

By that I mean - don't incur stupid parasitic debt (expensive car, mortgage, credit card debt from that Carribean cruise you just had to have to celebrate finishing college.. etc).

Thanks for the advice. Yes I have been and will be avoiding such parasitic debt for the next few years. And yes I'll be going to Italy for my graduation trip but I never pay my travelling by credit card, it's always cash

 

[CEBenz]

For books, I typically find them used. Amazon is usually a good start. Another thought. Learn to hustle. Don't rule out selling some stuff here and there. It could get you moving in the right direction.

 

[Graham Chong]

For books, I typically find them used. Amazon is usually a good start. Another thought. Learn to hustle. Don't rule out selling some stuff here and there. It could get you moving in the right direction.

Oh yea thanks for the tips! I have about 2 months to sell some of my stuff before I move up north in July, thought of giving them away but guess I should make some money for my relocation

 

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[nitrousflame]

Lot's of good suggestions here about how to do it, but here's what I use to set financial goals and track my progress:

https://www.mint.com/

 

[JAJT]

David Bach

I bought one of Bach's books - The Automatic Millionaire (2005). This was a while ago, before I started thinking clearly.

One of the worst books I've ever read - even for what it was. I actually threw the book out (the only book I've ever thrown out, in fact).

Ramit Sethi has better blog posts about money management than the entirety of that book. Go read Ramit's opinions - they are some of the best slowlane wisdom I've seen.

I can tell you what worked for me though, and save you 200+ pages:

1. Calculate all your ACTUAL expenses. DVD's and the bar are NOT expenses. Rent, groceries, gas, etc... are expenses. So figure out that number. You now have "$X".

2. Figure out what you logically consider reasonable for a bullshit budget - movies, games, cocaine, etc... that's $Y.

3. Your paycheck minus ($Y + $X) should have a remainder, $Z, or else you are going into debt, quickly.

4. When you get paid, take out $Y in cash and put it in your wallet. Take $Z and put it into a saving or investing account. Leave $Y alone in your bank account for expenses only.

5. Spend $Y without guilt, never touch $Y unless it is for rent (et al) and never touch $z, ever.

You now have a worry-free, easy to understand slowlane budget.

Here it is with real numbers:

Get paid $2000 per month, expenses are $1000 per month, and you feel $400 per month is a reasonable cocaine habit. So you take out $400 and spend it on guilt-free cocaine. You drop $600 into a savings account and leave $1000 alone for living expenses. Ta-da.

 

[santa]

It's easier to buy back your life if you're not selling it for a lot.

Beautiful Quote

 

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[Graham Chong]

I can tell you what worked for me though, and save you 200+ pages:

1. Calculate all your ACTUAL expenses. DVD's and the bar are NOT expenses. Rent, groceries, gas, etc... are expenses. So figure out that number. You now have "$X".

2. Figure out what you logically consider reasonable for a bullshit budget - movies, games, cocaine, etc... that's $Y.

3. Your paycheck minus ($Y + $X) should have a remainder, $Z, or else you are going into debt, quickly.

4. When you get paid, take out $Y in cash and put it in your wallet. Take $Z and put it into a saving or investing account. Leave $Y alone in your bank account for expenses only.

5. Spend $Y without guilt, never touch $Y unless it is for rent (et al) and never touch $z, ever.

You now have a worry-free, easy to understand slowlane budget.

Here it is with real numbers:

Get paid $2000 per month, expenses are $1000 per month, and you feel $400 per month is a reasonable cocaine habit. So you take out $400 and spend it on guilt-free cocaine. You drop $600 into a savings account and leave $1000 alone for living expenses. Ta-da.

Thanks so much. That's pretty similar to my budget, minus Cocaine
Need to give some of the Cocaine money to my parents (Chinese children are expected to support their parents' living cost)

But anyhow it's a simple easy-to-understand budget

 

[CEBenz]

I bought one of Bach's books - The Automatic Millionaire (2005). This was a while ago, before I started thinking clearly.

One of the worst books I've ever read - even for what it was. I actually threw the book out (the only book I've ever thrown out, in fact).

I put that out there as a "Know thy enemy". This is stuff people will spew at him at some point. Helps to be able to recognize it.

Get paid $2000 per month, expenses are $1000 per month, and you feel $400 per month is a reasonable cocaine habit. So you take out $400 and spend it on guilt-free cocaine. You drop $600 into a savings account and leave $1000 alone for living expenses. Ta-da.

That's freaking hilarious....though you might need to budget an attorney retainer in case you get busted.

 

[tamo42]

I always found it helpful to remember that everything really costs 20x the sticker price in terms of investment capital.

That's assuming a 5% yield.

So if you want a $6 hamburger, you need $120 invested at 5% to buy it. And then you can buy one a year.

 

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[OzGrinder]

Pretty much covered in the posts above, but if you want an extreme example here's one from personal experience.

I was in roughly the same position as you after graduating, I wanted to save as much as possible in a year from my first job paying only 45k, that was about 35k after tax. Out of that I managed to save 30k from memory.

I did this by living with my parents (a fortunate option for me), drinking almost nothing but water for the entire year (even when going out to bars etc.), packed lunch, buying $100 worth of mobile phone credit which I made last the entire year by getting ppl to call me instead, sacrificed most of my social life.

I would go to work, come home and work on side projects for pocket money and grind poker tables online. I would borrow my parents car if I went out.

My only big purchases that year were a laptop (so I could work during the commute), business clothes and my biggest expense was my train tickets to get to work... So all work related expenses essentially.

I stuck it out because I knew it was only for a year, but that year felt like I was living in a prison, but it was a great head start for me financially.

 

[JAJT]

Here's a nice money-saving tip that I personally do right now: eat 3 eggs for breakfast and a can of sardines for lunch.

Let's say 21 eggs are $5 and the sardines are $1 each. You're weekly cost for 2/3 of your daily meals is now $12. Monthly cost for 2/3 of ALL MEALS is $50.

If you ordered out and "only" spent $5 for breakfast and $5 on lunch at various places (grocery store pre-made meals, fast food, campus, whatever) you will have spent $280 instead.

Could you learn to like eggs and sardines (which are delicious, by the way) for an increase of $230 per month in cashflow?

Want dinner? Go buy a an entire pork shoulder for $15 - 30 and cook that for almost a month's supply of shredded pork. You can do a hell of a lot with shredded pork.

Go buy a pantry full of spices (from a bulk store to save 50% of the cost) and make friends with onions, garlic and canned tomatoes and you can make pretty spectacular meals with very, very little money.

 

[nitrousflame]

Want dinner? Go buy a an entire pork shoulder for $15 - 30 and cook that for almost a month's supply of shredded pork. You can do a hell of a lot with shredded pork.

That reminds me, I should grab a pork shoulder this week for one of my favorite recipes:
Spicy Dr. Pepper Shredded Pork | The Pioneer Woman Cooks | Ree Drummond

Easily the best pulled pork I have ever had, and it works great in all sorts of dishes. Chili, burrito bowls, salad, eggs, sandwich, etc etc. Seriously, next time you pick up a pork shoulder, give this recipe a shot.

 

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[JAJT]

Easily the best pulled pork I have ever had,

Let me know if you ever make it up to Ottawa - you can taste my Apple/Cheery wood smoked pork shoulder with home made rub and sweet-and-spicy cider sauce.

I love cooking in general and smoking specifically

 

[The-J]

Lot's of good suggestions here about how to do it, but here's what I use to set financial goals and track my progress:

https://www.mint.com/

I just started using this. I'll tell y'all what it does, for the lazy:

It's a free tool that can be accessed via the Web or an iOS/Android app. It connects directly to your online banking and tracks your spending according to budgets that you set.

When you go over, you get sent e-mail alerts telling you. That way, you can either (1) adjust your budget or (2) immediately stop spending in that area. Let's say your fast food budget is $40. You're allowed to only spend $40/mo on fast food (great for those who use cheat days). When you go over, you know that it's time to stop spending.

Transactions are automatically categorized in certain ways and I believe you can also set certain transactions to be categorized in certain ways as well.

It's a wonderful tool for really anyone.

 

[vtlambo]

I just started using this. I'll tell y'all what it does, for the lazy:

It's a free tool that can be accessed via the Web or an iOS/Android app. It connects directly to your online banking and tracks your spending according to budgets that you set.

When you go over, you get sent e-mail alerts telling you. That way, you can either (1) adjust your budget or (2) immediately stop spending in that area. Let's say your fast food budget is $40. You're allowed to only spend $40/mo on fast food (great for those who use cheat days). When you go over, you know that it's time to stop spending.

Transactions are automatically categorized in certain ways and I believe you can also set certain transactions to be categorized in certain ways as well.

It's a wonderful tool for really anyone.

This is hooked up to one's personal bank accounts correct? I've seen numerous cases where banks don't cover you if something happens as you've willingly let a third party into your account technically. Is this true?

 

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[nitrousflame]

Let me know if you ever make it up to Ottawa - you can taste my Apple/Cheery wood smoked pork shoulder with home made rub and sweet-and-spicy cider sauce.

I love cooking in general and smoking specifically

...annnd it's time for lunch!

I'm sure you can top the recipe I posted with a smoker. That description sounds amazing. I should look into getting a smoker some day. Also, I will for sure take you up on that if ever make it up there.

 

[The-J]

This is hooked up to one's personal bank accounts correct? I've seen numerous cases where banks don't cover you if something happens as you've willingly let a third party into your account technically. Is this true?

You can't move money with Mint. All they do is connect to your transaction history and your balance.

But if that's true, it wouldn't surprise me. Banks would give any reason not to cover their customers for anything.

I currently use a very low-balance credit card so I'm not worried at all if someone takes it, since I know I can pay the balance off no matter what.

 

[Graham Chong]

I was in roughly the same position as you after graduating, I wanted to save as much as possible in a year from my first job paying only 45k, that was about 35k after tax. Out of that I managed to save 30k from memory.

That's pretty impressive! Given how expensive things are in OZ. Which city were you in?

Here's a nice money-saving tip that I personally do right now: eat 3 eggs for breakfast and a can of sardines for lunch.

Let's say 21 eggs are $5 and the sardines are $1 each. You're weekly cost for 2/3 of your daily meals is now $12. Monthly cost for 2/3 of ALL MEALS is $50.

If you ordered out and "only" spent $5 for breakfast and $5 on lunch at various places (grocery store pre-made meals, fast food, campus, whatever) you will have spent $280 instead.

Could you learn to like eggs and sardines (which are delicious, by the way) for an increase of $230 per month in cashflow?

Want dinner? Go buy a an entire pork shoulder for $15 - 30 and cook that for almost a month's supply of shredded pork. You can do a hell of a lot with shredded pork.

Go buy a pantry full of spices (from a bulk store to save 50% of the cost) and make friends with onions, garlic and canned tomatoes and you can make pretty spectacular meals with very, very little money.

Unfortunately I'm allergic to egg!!!
But I get what you mean
I have never looked for shredded pork here in England, will check it out, sounds great!

 

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[Graham Chong]

I just started using this. I'll tell y'all what it does, for the lazy:

It's a free tool that can be accessed via the Web or an iOS/Android app. It connects directly to your online banking and tracks your spending according to budgets that you set.

When you go over, you get sent e-mail alerts telling you. That way, you can either (1) adjust your budget or (2) immediately stop spending in that area. Let's say your fast food budget is $40. You're allowed to only spend $40/mo on fast food (great for those who use cheat days). When you go over, you know that it's time to stop spending.

Transactions are automatically categorized in certain ways and I believe you can also set certain transactions to be categorized in certain ways as well.

It's a wonderful tool for really anyone.

Thanks for the recommendation.
Will definitely try it out in May after my final exam

 

[The-J]

Also, on the food thing:

If you're eating out more than once a week (one TIME a week) and you are on a budget, you are a fool. JAJT's idea is a good one, but I hate sardines.

You can make very healthy foods for very cheap. A meal is nothing but starch + protein + vegetable. Starch to fill you up, protein to keep you strong, vegetables for your vitamins and minerals. Choose two starches, two proteins and two vegetable mixes for the week. Pick flavorings that you like, get some oil and you're good to go. Then pick a breakfast that you like. JAJT likes eggs. I eat Greek yogurt, granola and almonds. Shit's expensive (my breakfast costs me $20 per 8 meals, which is $2.50 PER MEAL... ouch) but I love it.

IF you're on a budget (or on a diet; I'm on both), you gotta be cool with eating the same shit day in and day out. In order to not get tired of it, choose three meals to make randomly.

I ate beef stew today. It was F*cking delicious, and for $1.33 per meal ($4 for the day).

More info: Budget-Friendly Meal Tips - Allrecipes.com