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Cash-strapped? Try these nifty ideas to get ahead in 2017

By Suzanne Kiraly - 10 January 2017 33

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This is the time of year you might be considering improving your finances or saving for something really special, like maybe a holiday, a house or a new car. Maybe you had a shocker in 2016 and really want to improve your overall finances in 2017.

Well, you wouldn’t be alone. For most of us, we are not happy with our financial situation, and we feel the need to improve it one way or another.

It might surprise you to know that the more you learn about the psychology of money, the better you can implement that knowledge to get ahead financially. Kabir Segal, neuroeconomist (and yes, there is such a thing), and author of the book “Coined”, explains that the effect of money on our brains is akin to the effects of cocaine!

“Neuroeconomists [scientists who research how the brain is affected by money] have performed several brain scans on individuals who were about to make money, and the results were staggering,” Sehgal told Time magazine. “The studies show that these people had the same neurological response to making money in their “pleasure centers”, as someone who was high on cocaine.”

And, if psychology plays a large part in our financial behaviour, it only stands to reason that we should use psychology to improve our situation.

In this vein, I’ve been collecting some money ideas for a while now that play on our psychological attitude towards this concept of money and its accumulation. Here are some that I found to be really nifty suggestions, not too hard to do for most, and which could make a little cash go a long way towards achieving your financial goals or at least improving your financial destiny in 2017.

(1) One idea from a friend of mine is to put away $1 in week one of the new year and then increase the dollars with every week – so that you save $2 in week 2, $3 in week 3, and so on. Or a reversal of this is possible too – saving $52 in week 1 and $51 in week 2, and so on. You’d be surprised how much you will accumulate by the end of the year and this strategy plays on the idea that it’s a game or challenge, so it becomes none too painful.

(2) Another nifty idea that is sound psychologically (and which I am trying myself this year), looks like it works a treat – it is via an app called https://acornsau.com.au – where you get to invest the small change from your daily purchases and see how your money adds up. You can also nominate regular micro-payments to be added to your account and of course, in addition you can choose to invest lump sums if you wish. It’s really a very clever, simple little concept which plays on the notion that we don’t notice the small amounts that slip through our fingers. The founders of this app recently floated it on the stock market, I believe, with share offerings to the investors who use it. This one could go a long way in the future too, with our fast-growing, cashless society and our ever-growing financially savvy population post-GFC.

(3) This next idea is a psychological ploy, where you trick yourself into thinking there is no such thing as a certain denomination within our currency system – say the $10 note, by way of example. (Although you could easily choose the $5, $20, $50, or $100 notes instead.) The idea is that whenever you get one of the said chosen notes, you stash it away and then they accumulate over time. I have done this before with very pleasant results at the end of a year.

(4) This one is an ancient tried and true method used by the wealthy. It is the principle “to pay yourself first”. This concept originally came out of a 1926 book entitled “The Richest Man in Babylon” by George Samuel Clayson, and it has had a huge impact on thousands of investors – the wealthy and wise. It means that before you pay your bills or anything else, you pay a small amount to yourself (like 10% for example), and that way, you will make sure that the most important person (you) gets paid every single time. The trick is to not touch the money and let it accumulate, with interest.

These are four of the money ideas I like most that use the power of psychology in the way we view money and our strategy for financial gain.

I am sure there are many, more worthwhile ideas out there … please do share any you think may make a difference to our readers’ finances. We are all keen to get ahead – aren’t we.

What’s Your opinion?


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33 Responses to
Cash-strapped? Try these nifty ideas to get ahead in 2017
1
Grail 10:14 am
10 Jan 17
#

Step 1: cancel subscription services like FoxTel.

Step 2: allocate a fixed amount of money per pay that you are allowed to spend. Use a soreadsheet ir an app like Pennies to help you track your spending.

Step 3: each month, reduce your spending budget. Review previous months’ spending and pick one more expense to reduce or eliminate (do not buy coffee from the cafe, that will save at least a thousand dollars a year)

Step 4: expand your spend tracking and review to other budget areas.

Also: get a piggy bank. When you get home each day just put all your coins in the piggy bank. Bank the coins at the end of your year (financial year, birthday, Christmas, wedding anniversary, whatever)

You will probably save another $400/year this way.

Report this comment

2
Maya123 11:40 am
10 Jan 17
#

Grail said :

Step 1: cancel subscription services like FoxTel.

Step 2: allocate a fixed amount of money per pay that you are allowed to spend. Use a soreadsheet ir an app like Pennies to help you track your spending.

Step 3: each month, reduce your spending budget. Review previous months’ spending and pick one more expense to reduce or eliminate (do not buy coffee from the cafe, that will save at least a thousand dollars a year)

Step 4: expand your spend tracking and review to other budget areas.

Also: get a piggy bank. When you get home each day just put all your coins in the piggy bank. Bank the coins at the end of your year (financial year, birthday, Christmas, wedding anniversary, whatever)

You will probably save another $400/year this way.

+1

Allow me to add a few more suggestions.

Step 5: Pack lunch for work; rather than buy lunch, and as Grail suggested, don’t buy a coffee. Have a kettle at work and boil that and make your own coffee/tea.

Step 6: Don’t go near shops (such as malls) without a need, as this will assist eliminating unneeded purchases. Then, buy what you need and leave. Don’t hang around. An extension of this, is only to buy new clothes when they are actually needed. IE, your other clothes are worn out and beyond mending. And really, if you have half a dozen good shirts, do you really need another!

Step 7: Don’t eat out or buy takeaways. Cook you own food; it’s usually healthier and it’s cheaper. This is, if you don’t waste the food and throw it out, as do a high percentage of people. Learn and get in the habit of using all the food. Drink (tap) water with your meal, rather than juice, wine, etc. Grow some of your own food, to reduce the food bill further.

Step 8: In winter, close doors of rooms you are not using and don’t heat them. Turn off heaters when you go to bed and are not at home. In summer, use an electric fan rather than air-conditioning.

Step 9: Don’t buy fizzy drink, fruit juice and the like. Definitely don’t buy bottled water. Drink our good tap water. Include fruit as part of your diet. At present, free fruit can be picked in the wild.

Step 10: Consider other ways to get to work, besides driving. When purchasing a car (if you find it difficult to be without) get the most fuel efficient one you can. Smile sympathetically, as your neighbours, the Jones, drive up in a new large fuel consuming 4X4, that they will likely never take off road.

Step 11: Consider if you really need to renew subscriptions to magazines and the like.

Step 12: This is a ‘given’ of course. If you are one of the few who still smoke (less than 14% in the ACT, I believe). Give it up. It only makes you look like a loser anyway.

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3
Masquara 12:53 pm
10 Jan 17
#

Acorn require access to your bank account, which is off-putting. When they started up I asked them whether they were concerned at all with ethical investment and the answer was “no”, and with no plans to look at ethical investment in the future. So, via Acorn, you could be investing in asbestos products, smoking-related products, and fossil-fuel anything, unfortunately.

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4
Maryann Mussared 1:07 pm
10 Jan 17
#

This is an excellent article for the beginning of the year. Even if we choose not to make resolutions that are so easily broken, it is interesting to focus on managing our finances. I always say not having a credit card until I was in my mid 20s taught me some good habits – i.e. they didn’t exist other than Amex and Diners Club. Who remembers ‘hire purchase” or HP which is what you did to buy, by instalment, something you really wanted? Default and it was repossessed. I have Foxtel and it means we don’t go to the cinema very often. A night out at the cinema for two with drinks and perhaps a meal crashes through the $100 barrier every time. My great investment for 2016 was a Soda Stream. I did a ‘make-over’ on my kitchen (i.e. I did not strip out and start from scratch, but got new drawers, cupboards, benchtop and taps for 1/3 the cost of all new) and had a filter tap installed. Then I started looking at the amount of bottled water I was purchasing and did my sums – and started to feel guilty about the effect on the environment. Now I save hundreds of dollars each year by ‘fizzing’ my own water and I prefer it. I even took my Soda Stream on holidays recently!

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5
MERC600 2:01 pm
10 Jan 17
#

Maya123 said :

Grail said :

Step 1: cancel subscription services like FoxTel.

Step 2: allocate a fixed amount of money per pay that you are allowed to spend. Use a soreadsheet ir an app like Pennies to help you track your spending.

Step 3: each month, reduce your spending budget. Review previous months’ spending and pick one more expense to reduce or eliminate (do not buy coffee from the cafe, that will save at least a thousand dollars a year)

Step 4: expand your spend tracking and review to other budget areas.

Also: get a piggy bank. When you get home each day just put all your coins in the piggy bank. Bank the coins at the end of your year (financial year, birthday, Christmas, wedding anniversary, whatever)

You will probably save another $400/year this way.

+1

Allow me to add a few more suggestions.

Step 5: Pack lunch for work; rather than buy lunch, and as Grail suggested, don’t buy a coffee. Have a kettle at work and boil that and make your own coffee/tea.

Step 6: Don’t go near shops (such as malls) without a need, as this will assist eliminating unneeded purchases. Then, buy what you need and leave. Don’t hang around. An extension of this, is only to buy new clothes when they are actually needed. IE, your other clothes are worn out and beyond mending. And really, if you have half a dozen good shirts, do you really need another!

Step 7: Don’t eat out or buy takeaways. Cook you own food; it’s usually healthier and it’s cheaper. This is, if you don’t waste the food and throw it out, as do a high percentage of people. Learn and get in the habit of using all the food. Drink (tap) water with your meal, rather than juice, wine, etc. Grow some of your own food, to reduce the food bill further.

Step 8: In winter, close doors of rooms you are not using and don’t heat them. Turn off heaters when you go to bed and are not at home. In summer, use an electric fan rather than air-conditioning.

Step 9: Don’t buy fizzy drink, fruit juice and the like. Definitely don’t buy bottled water. Drink our good tap water. Include fruit as part of your diet. At present, free fruit can be picked in the wild.

Step 10: Consider other ways to get to work, besides driving. When purchasing a car (if you find it difficult to be without) get the most fuel efficient one you can. Smile sympathetically, as your neighbours, the Jones, drive up in a new large fuel consuming 4X4, that they will likely never take off road.

Step 11: Consider if you really need to renew subscriptions to magazines and the like.

Step 12: This is a ‘given’ of course. If you are one of the few who still smoke (less than 14% in the ACT, I believe). Give it up. It only makes you look like a loser anyway.

Just one more suggestion…Home Brew !

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6
devils_advocate 1:17 pm
11 Jan 17
#

Reducing consumption reduces utility. There is no gain to made here. If you thought it was worth buying before, then by not buying it you’re (by definition) giving up something of equal or greater value than the amount of money you save.
Giving up coffees at the café is particularly terrible advice.
For the sake of a couple of thousand dollars, you have just given up one of the most ubiquitous networking opportunities that exist in the modern workplace (now that smoking is basically banned); given up the productivity benefits that exist from taking a cognitive break and getting out of the office (and the caffeine!) and perhaps worst of all, identified yourself as the office tightwad/social recluse.
People have been meeting to talk over a beverage for centuries. The only other significant opportunity I can see to achieve the same outcome is after-work drinks, but that has its own health and financial costs which in my view far outweigh that of the mid-morning café one-on-one.

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7
devils_advocate 1:23 pm
11 Jan 17
#

Maya123 said :

An extension of this, is only to buy new clothes when they are actually needed. IE, your other clothes are worn out and beyond mending. And really, if you have half a dozen good shirts, do you really need another!

This is unfortunately an all-too-common poor person’s mentality. A mentality of abundance would drive you to find a brand that you really like, that fits you well and makes you feel like the professional you want to be. And when they’re on sale, buy ten of them. Classics never go out of fashion and you will get the same number of wears out of an item of clothing or pair of shoes, whether they are your only pair or you rotate them through once a week. One of the worst mistakes I used to make was having only two pairs of “work” shoes (one black, one brown) and then having to pay full retail when they wore out. Now I stock up when I see a good sale, and have saved hundreds if not thousands.

I realise it’s not 100% applicable to women’s fashion but most women I know still have a few classic items (suits, heels, bras etc) that they wear from season to season.

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8
Grail 2:27 pm
11 Jan 17
#

For the lucky ones there is also Step 0: get a better paying job (or get your partner a better job, or get a partner with a better job).

Money can’t buy you happiness but what it does get you is a whole lot of comfort!

Report this comment

9
Maya123 12:01 am
12 Jan 17
#

devils_advocate said :

Reducing consumption reduces utility. There is no gain to made here. If you thought it was worth buying before, then by not buying it you’re (by definition) giving up something of equal or greater value than the amount of money you save.
Giving up coffees at the café is particularly terrible advice.
For the sake of a couple of thousand dollars, you have just given up one of the most ubiquitous networking opportunities that exist in the modern workplace (now that smoking is basically banned); given up the productivity benefits that exist from taking a cognitive break and getting out of the office (and the caffeine!) and perhaps worst of all, identified yourself as the office tightwad/social recluse.
People have been meeting to talk over a beverage for centuries. The only other significant opportunity I can see to achieve the same outcome is after-work drinks, but that has its own health and financial costs which in my view far outweigh that of the mid-morning café one-on-one.

Um, we used to sit around and drink coffee and tea we made ourselves at work. You can still network and save money by making your own coffee and tea. None of us had a problem with this. You say it’s a “couple of thousand dollars” a year. Well, that’s a couple of thousand off the house mortgage, plus saved interest, adding up to greater amounts over years.
Your comments bring it home why some people have difficulties budgeting. It’s attitude.

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10
Maya123 12:34 am
12 Jan 17
#

devils_advocate said :

Maya123 said :

An extension of this, is only to buy new clothes when they are actually needed. IE, your other clothes are worn out and beyond mending. And really, if you have half a dozen good shirts, do you really need another!

This is unfortunately an all-too-common poor person’s mentality. A mentality of abundance would drive you to find a brand that you really like, that fits you well and makes you feel like the professional you want to be. And when they’re on sale, buy ten of them. Classics never go out of fashion and you will get the same number of wears out of an item of clothing or pair of shoes, whether they are your only pair or you rotate them through once a week. One of the worst mistakes I used to make was having only two pairs of “work” shoes (one black, one brown) and then having to pay full retail when they wore out. Now I stock up when I see a good sale, and have saved hundreds if not thousands.

I realise it’s not 100% applicable to women’s fashion but most women I know still have a few classic items (suits, heels, bras etc) that they wear from season to season.

devils_advocate wrote, “This is unfortunately an all-too-common poor person’s mentality. “

On the contrary, this “mentality” lets some people pay off their house in a few years, while others on the same income or better, still have a mortgage and are complaining about lack of money.
I remember being told many years ago that the typical millionaire (this was when a millionaire was worth something) was not like people who aren’t millionaires would think they looked. The typical one I was told would likely own a good business in a country town, drive an old car and not look showy. In fact, someone working in a country bank told me he wouldn’t cache a cheque for someone because he didn’t think the person presenting the cheque looked like he had that much money. It turned out he was the richest person in town. They don’t get rich by wasting money.
This excerpt from a book is interesting, ” The Millionaire Next Door: The Surprising Secrets of American’s Wealthy
By THOMAS J. STANLEY, Ph.D and WILLIAM D. DANKO, Ph.D
Longstreet Press
CHAPTER ONE
Meet the Millionaire Next Door
These people cannot be millionaires! They don’t look like millionaires, they don’t dress like millionaires, they don’t eat like millionaires, they don’t act like millionaires–they don’t even have millionaire names. Where are the millionaires who look like millionaires?
The person who said this was a vice president of a trust department. He made these comments following a focus group interview and dinner that we hosted for ten first-generation millionaires. His view of millionaires is shared by most people who are not wealthy. They think millionaires own expensive clothes, watches, and other status artefacts. We have found this is not the case. “

I found several articles that said similar. I imagine this is now dated, as millionaire isn’t was it was once, but the basis of this still applies, so what you are expressing is actually the “poor person’s viewpoint”.

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11
Maya123 12:51 am
12 Jan 17
#

In further response to devils_advocate’s comment about buying coffee, that it’s only $2000 (I took that to be for a year), I went to a compound interest calculator and put in $2,000 a year for 40 years at 3% interest. After 40 years that’s $150,803 extra you could retire on if you had only forgone buying coffee. True, that amount of money in 40 years won’t be worth as much as it is now, but coffee will also increase in price over this time and I didn’t allow for that.

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12
devils_advocate 8:38 am
12 Jan 17
#

Maya123 said :

On the contrary, this “mentality” lets some people pay off their house in a few years…

So, just the one house then? And what about the v12 or (insert exotic car of choice) to park in the driveway, where does that come into play? In addition to the non-deductable primary residence I always pay cash for cars as well because they’re a depreciating asset.

Maya123 said :

In further response to devils advocate’s comment about buying coffee, that it’s only $2000 (I took that to be for a year), I went to a compound interest calculator and put in $2,000 a year for 40 years at 3% interest. After 40 years that’s $150,803 extra you could retire on if you had only forgone buying coffee. True, that amount of money in 40 years won’t be worth as much as it is now, but coffee will also increase in price over this time and I didn’t allow for that.

I have a lot of sympathy for this view because I used to be in the same mindset. Whether it was coffee, after-work-drinks or professional clothes, I viewed them as an expense rather than an investment. What did it get me? I was in my early 30’s, bouncing from one EL2/senior associate job to the next, all the while wondering why my technical ability was no longer enough to get me to the next level.

Luckily I met someone who was prepared to tell me how things really work and I was able to switch my mind set. Maybe the merit principle is a complete joke, or maybe merit is a broader concept than simply technical ability and experience. Regardless, you don’t have to have a PDS attached for something to be a sound investment.

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13
devils_advocate 8:45 am
12 Jan 17
#

Grail said :

For the lucky ones there is also Step 0: get a better paying job (or get your partner a better job, or get a partner with a better job).

Money can’t buy you happiness but what it does get you is a whole lot of comfort!

There’s a quote often attributed to David Lee Roth: “Money can’t buy you happiness, but it can buy you a big enough yacht to sail right up alongside it!”

Report this comment

14
dungfungus 9:08 am
12 Jan 17
#

devils_advocate said :

Grail said :

For the lucky ones there is also Step 0: get a better paying job (or get your partner a better job, or get a partner with a better job).

Money can’t buy you happiness but what it does get you is a whole lot of comfort!

There’s a quote often attributed to David Lee Roth: “Money can’t buy you happiness, but it can buy you a big enough yacht to sail right up alongside it!”

Similarly, “the one thing money can’t buy is poverty”.

Report this comment

15
TuggLife 9:34 am
12 Jan 17
#

Maya123 said :

In further response to devils_advocate’s comment about buying coffee, that it’s only $2000 (I took that to be for a year), I went to a compound interest calculator and put in $2,000 a year for 40 years at 3% interest. After 40 years that’s $150,803 extra you could retire on if you had only forgone buying coffee. True, that amount of money in 40 years won’t be worth as much as it is now, but coffee will also increase in price over this time and I didn’t allow for that.

I think you’re spot on with the coffee idea. Feeling time poor in the mornings, I used to drop the kids at childcare, and then drive through McDonald’s to get a coffee to drink on the drive to work. I realised how much it was costing me, and just started drinking the instant coffee at work (it’s no worse than a McCafe coffee, anyway). Making the coffee at work also meant I had a couple of minutes to switch into my work mindset, rather than being rush, rush, rush all day. I don’t go out for a coffee during the day, either – my colleagues are in the tea room, and they’re the ones I’m networking with to help my job prospects, not the bloke that runs the cafe over the road. If I need a break, I switch tasks or go for a walk at lunch.

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