Personal Finance: Saving Money – Where do I start?

Personal Finance: Saving Money – Where do I start?

In the world of personal finance, you’ve got to start somewhere. I think we all hit a point where we say to ourselves, “Enough is enough! I am exhausted with trying to keep my head above water with all these bills, credit cards, loans, etc. ….. How can I get out of this mess???”

It is simple really. But simple does not mean easy.


SAVINGS= INCOME- EXPENSES. That’s it.  The end.  Period.  Pretty simple isn’t it? And once savings is achieved, that money can be used in ways that will allow it to compound and grow, which then leads to Financial Independence, Early Retirement (if that is what you want to do), travel, and Freedom!!! Then why is it SO difficult to do?

Priorities, priorities, priorities. It is the same in life overall as in personal finance and savings. Our thinking process with money has to be re-set to a way of thinking that makes savings THE #1 priority. The problem, however, is that we first need to know the “big picture” before we can get started with any of the priority fixing. Knowledge is power, right? So we need to start by actually knowing what we are spending our money on – and this is harder than it looks.

When I started this step, I did it old school – with a notebook and paper ( this is not for everyone, but it does work!) . I wrote down every single thing that my wife and I spent any money on. This was with her cooperation and permission of course (I don’t want to upset the missus for no reason!), and it is vital that there is a synergy that exists between the two people in a relationship for this to work.  Without it, it can be a recipe for relationship disaster … Warning given.

There are other methods of course. You can utilize websites like It is good for what it does, and even better over longer periods of time. You can also use a single credit card to track things, but it is likely that at this stage of the game, credit cards are part of the problem, and not the solution, so it may be a bad idea.

Personally, I liked using cash and writing down all of our expenditures for the month. It was HARD work …. for sure. But it also opened my mind to how we spent money and where most of our excess spending actually was. I couldn’t believe it when I first saw it, but our biggest area of overspending  was ………. GROCERIES !!!  Sounds silly, I know, and everyone needs to eat, right??? But there is a difference between buying to eat a healthy diet, and all of the extra spending that just wasn’t really necessary (did we really need Starbucks brand beans for our coffee?) .

One month for figuring out our spending is good, but it needs to be done for 2 or 3 months to be accurate. This really helps to if you happen to have  a single month where something unusual comes up sidetrack you into thinking that you spend a ton every month (though you should eventually try and have an emergency fund for such things). Once you track your spending for a couple of months, you should have a pretty good idea of where your money is going.

Once you have done this, you can see where your money is going every month, and you quickly see the problem areas – where you are bleeding money every month!  Everyone is different of course, and this requires a very honest evaluation of what is important to you. Most bloggers tend to avoid this troublesome point in the personal finance world. To some people, having a double soy latte everyday is more important than saving the money! Or, the $200 a month cable package is something that they truly enjoy and is a great source of fun for that person. However, if you want to save, you need to look at an important concept and figure out what it means to you personally (and your spouse). What is a need, and what is a want?

Truth be told, the human animal doesn’t need all that much to survive – food, shelter, and companionship. However, none of us just want to survive, and we enjoy having things we want. The secret to saving money over time is reshaping our wants into things that are less expensive while still enjoying them as much as we did enjoy more expensive things previously. Sometimes this is just because they are cheaper, and we can take pride in getting a deal, but other times it is just relearning things that we did not take the time to consider before.

A good example for me would be music. Once upon a time (not so long ago), I would buy a lot of CDs (yes I  know I am dating myself here, don’t even talk to me about my cassette tape and LP collection), and I took pride in my collection. Looking back, I probably spent about $20 a week on CDs. It doesn’t sound like much, but over a year it adds up – $20/week x 52 weeks = $1040 per year. On CDs!!! If that money would have been saved and invested from 20 years of age until the present, compounded at 4% I would currently have …… $40,645 for $24,000 invested. That is completely ridiculous once you take time to think about it. Thankfully, I gave up my CD collection addiction several years ago.

How did I do that?  I transitioned over the years into playing more music on instruments. I started playing and singing (poorly) the music that I was listening to on my oh so expensive CDs. As I became better at playing music, it became more rewarding, and more enjoyable to do, and replaced any desire I had to buy CDs. This replaced my expensive hobby of CD collecting, with an equally enjoyable (and much cheaper) hobby of playing music. Add to it that I can now teach music and perform it for money (if I choose), and it all ends up with learning to play an instrument being an investment rather than an expense. It sure is nice to go from spending $1000 a year on something to learning a skill that can make money!

Once you embrace this idea, you can start to apply it to different areas of your life to cut expenses, What do I need? What level of want is this? What does this expense do for me as a person? Do I go to Starbucks for my Latte because the other people on the shift go as well at break time? If so, is this coffee just filling a social need that you feel you need to get with your co-workers? Can it be fulfilled in any other way? Coffee here is only one example, and the various expenses can be substituted as you go through them mentally. Funny enough, this part of the personal finance journey is perhaps the most trying – it requires an honest self examination that is very difficult at times.

In this whole process, it does help to have a place to write down everything as it is spent. You can use duotangs or the good old Hilroy, or a decent budget planner book like this one: Budget Planner: Cute Cactus Large budget planner, (8.5×11 inches) : Expense tracker for 24 Months . I used one that is very similar, and it helped with keeping things organized. Otherwise, you end up with papers all over the place, and it is good to have it all in one place once you want to start looking back at things.

I hope that you all can try and start to look at your spending in a way that is not overly critical. Also, if you are doing this with a partner, tread carefully and be mindful of each others emotions in this process – often money questions can be hard ones that many couples do not generally discuss.

Stay tuned for Personal Finance 2 and Travel Destinations!

Marco Polo Money – Be safe and travel far!






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