My New Years Resolution was to write out a systemic process for saving money. I am, by nature, a tight fisted bastard. This covers everything from avoiding going out to dinner with large groups so I don’t get stiffed on the check to leaving my cards at home when I go out to a bar. I’m also a single guy with no attachments living in a very cheap apartment, so this method will not work for everyone.
This is the mid-month check. You need to decide on a set amount you can spend each weekend on your social life, be it 25 to 100. Be reasonable here, saving money is like dieting. If you try to starve yourself you’ll just collapse and go back to spending inefficiently. Any money you don’t spend should go into a lock box or under your bed mattress. This is for special occasions or needs.
The way I pay for groceries and gas is via a credit card where I get a 2% return in the company’s monopoly money. I’ve never used the stuff, maybe I’ll get a plane ticket someday with it. I pay this debt down entirely each month. It has always bitten me in the ass when I didn’t and suddenly I’m stuck paying off debt for months. Whatever is left goes into loan payments and savings. I leave about 100 in my checking account in case some charge goes onto it that I forgot about. You can also make some life necessity purchases with this money like shoes or clothes before it goes into savings. This should be rare though.
The second check is similar to the first, although there is usually less put into savings if anything at all. It’s very important you keep setting aside this play money though. These are the funds that are susceptible to your vanities, marketing, impulse buys, and all the other things we dicker with everyday. You create a wall between the money you’re actually saving and the portion you’re still fooling with.
There are countless other tricks but they are particular to one’s lifestyle. I ride my bike to work. I practice perimeter shopping in the grocery store. I live near my family and we often have group meals where everyone contributes. I rarely buy anything but discounted games. I keep a gigantic change jar that is half-full at this point. No cable and I rarely air condition or heat my apartment. I also take advantage of several tax write-offs for business expenses like my cell phone bill, internet bill, and HSA funds. It takes a little reading and you might want to ask an accountant, but it pays out in the long run.
So far I am pleased with the system. I have been tinkering with it for months and this is the latest model. Some weekends all the social funds are spent and I even dip into the reserve to get by. But for many I make a point of not going out so that my reserve funds get built back up. I suppose there is a bit of gamification to it all and one of the lessons I learned from game design. When it comes to goals, there is the long game and the short game. And the less you try to worry about the long game, the better.