How do you not spend money?

Ever been dead broke? Every dollar already spent, can't miss a minute of work or I'm sunk broke? If you manage to live through it, you learn to turn off spending. Immediately. 

Artificially limit yourself. I have multiple bank accounts for different uses, and I set things up to automatically set money aside for: mortgage, retirement savings, bills, etc.

I'd say to let yourself have a small raise of maybe 10%-20% over what your discretionary spending used to be. Have that direct deposited into your primary checking account that you've been using. Have fun with that enforced budget.

Open a second checking account to put the remainder into. Then use your secondary checking to do all the financially savvy planning following a guideline similar to what MTN suggested.

Appleseed said:

Ever been dead broke?

I remember tapping into my neighbors Christmas lights one year to run my mini refrigerator which was a big upgrade over mixing free creamer packets with water to make milk...today, I routinely gain or lose $20,000+ a day based on how the stock market preforms.

In reply to RX Reven' :

Ha. Dropped my peanut butter toast on the floor. Picked it up, covered in dog hair...and ate it. It was my last piece of bread that I bought with my very last dollar.

In reply to Appleseed :

You aristocratic bastard, I had to eat my dog 

ProDarwin said:

MTN, I think you need IRA/Roth IRA (if eligible) between item 4/5 on the list.

That is item 5, but also read the subtext.

Oddly enough, we don't have a budget and never really did.

As I said above, we just trained ourselves to maximize value for each dollar spent.  That doesn't mean we always bought the cheapest option, or never bought anything fun.  Rather, we bought the most cost effective option, and we really thought about whether the fun things would stay fun before spending money on them.

Consequently, we can comfortably live indefinitely on one of our take-home salaries. This is excluding health care - a considerable exclusion, I'm aware.  But once we're no longer putting money aside for retirement, that amount can be redirected to more than cover health costs.  Ditto our one remaining car payment.

Don't think of it like a Weight Watchers "counting points" system to dictate how much you can indulge your eating... I mean spending.  Instead, get yourself into the habit of making judicious financial decisions as a matter of course.  Make the fundamental lifestyle change rather than relying on an external set of rules, unless no other method works for you.

Here are some savings strategies that worked for us:

1. All of our net pay is direct-deposited into a savings account; we only transfer as much as we need to cover each month's bills into the checking account.  That sets the default to SAVE rather than SPEND. It helps us keep a regular eye on total expenditures.  It is also immediately clear when that savings account goes up or down as a trend.
    
2. Maximize 401(k) and HSA contributions if you can - ideally via payroll deduction before you ever even see the money.  If you can't maximize them to the federal level, at least make sure you put away enough to get any employer matches.  Out of sight, out of mind... and while you ignore it, it's quietly making more money for you.
    
3. DO NOT use credit cards to borrow money.  Get one with cash back, use it for everything you would normally buy, and pay it off every month.
    
4. If you finance a car, get the payment automatically deducted if you can (such as via an employer credit union if available).  Don't finance a car for more than 4 years tops; preferably 3.  Then, once the loan is paid off, keep getting that same payment amount deducted but divert it to a "future car" savings account.  Don't buy another car until it is no longer cost-effective to own the current one.  Use that "prepaid" car payment to buy your next car with cash or significantly reduce the future loan amount.
    
5. If you have a mortgage, double your principal payment every month.  Early on, this will not add too much cost - it will rise slowly over the years, but theoretically, so will your income.  Doing this will significantly speed up the payoff and reduce the total interest paid by tens of thousands of dollars.

One thing my father did that worked for him:  every time he got a raise, he put at least half of it into long-term savings or retirement.  The remaining portion went into the regular budget.

+1 to Duke.  Its a mentality/state of mind, not a list of strict rules and budgets.

ProDarwin said:

+1 to Duke.  Its a mentality/state of mind, not a list of strict rules and budgets.

I will agree with these gents. 

I would add, that strict rules are not the way I would go. My father used to work with a gentleman that was bound by strict rules of his own making. No frivolous spending, no vacations, and all the overtime allowed. His eyes were set on retirement. He retired at 62. He and his wife went on one cruise. 3 months later he died of a heart attack. After a lifetime of preparing for the future, he had none. I was about 18 when that happened and it really had a profound impact on my savings. 

I decided that retiring a little poorer was the better way to go. Enjoy life while you can with a nod toward tomorrow. Buy the expensive meals, take the trips, and play with the toys. Tomorrow you may not be able to.

I find it's convenient to set percentages for categories so as income increases the budget self adjusts for the most part.  I agree that mind set is important, but putting the budget down on paper or digitally can provide a healthy dose of reality. This is particularly true when you have a big change in income or need to make a major decision. 

 

Lots of good advice above.  I've found that if I don't look for things to spend money on, I don't spend money. 

So ignore the ads you see, stay off FB marketplace, don't browse carmax, or car gurus, or GRM's cars for sale forum,etc.  

At some point, you can learn to be (mostly) happy with what you have.

In reply to ProDarwin :

One of the "rules" we have used for years is only going out to lunch once a week, cap $10. We also used he "want or need" when it came to purchases. When we had a mortgage we made sure we had 6-12 months of mortgage and bills covered. Now we make sure we have enough to cover 12 months of electric, fuel and food. 

I love talking about this stuff because I finally got myself to a good/better place. 

First of all congrats on the new job and bigger salary! That's super exciting and before you start getting all analytical, do something nice with some of the money from your first paycheck. Nice dinner, buy something you've wanted for a while, etc. Have a little splurge and get it out, responsibly-ish.

Pay yourself first. I have my paycheck split up by my employer and it goes to...

• Daily "Needs" checking - bills paid from here
• "Fun Money" savings - I add money to this with every paycheck and it's my "no questions, just spend it" account. New laptop? Car down payment? Vacation? If it's in this account I can do it without thinking.
• Emergency fund / longer-term savings - high-yield savings account with a different bank. I don't see this balance unless I go looking for it. 
• 401k - this is pre-tax obviously and I don't see that unless I also go looking for it, not like I can do much with it now but still. Out of sight, out of mind.

I got a raise and promotion at the start of the year and elected to put most of the raise into maxing out my 401k. I was doing fine pre-raise so no need to up my other accounts and make life "easier" per se. Now I've maxed it out before the end of the year (never done that ever before) and the last few checks of the year will be way bigger, which I plan on doing other savings-y related things with.

My only "budget" is just a basic Google Sheet where I list out my income vs guaranteed expenses each month so I have a rough idea of what's left and where I want that money to go.

Yeah, I keep my "check register" (kind of a misnomer since I practically never write actual checks anymore) in Excel.

That way at the end of the year I can just filter it and find out exactly how much gets spent in each category every year:

• Mortgage / rent
• Car payment(s)
• Insurance
• Power
• Heat
• Water / sewer
• Internet / TV
• Wireless
• Everything else - food, clothing, fuel, entertainment, travel, etc - literally everything else we buy goes on the credit card, and we can use the card website to break this category down further as needed

I find it helpful to ask the questions, how many hours do I have to work to pay for this (take home pay)?, and is it 

worth that effort?

Did think of something that may be helpful. Often when I run across something I would like and could afford but don't need, I end up telling myself "don't buy what you don't need" and think about things that I do need to buy instead. I tell myself maybe I can buy those things later if I have the money. Seems to work well.

Toyman! said:

ProDarwin said:

+1 to Duke.  Its a mentality/state of mind, not a list of strict rules and budgets.

I will agree with these gents. 

I would add, that strict rules are not the way I would go. My father used to work with a gentleman that was bound by strict rules of his own making. No frivolous spending, no vacations, and all the overtime allowed. His eyes were set on retirement. He retired at 62. He and his wife went on one cruise. 3 months later he died of a heart attack. After a lifetime of preparing for the future, he had none. I was about 18 when that happened and it really had a profound impact on my savings. 

I decided that retiring a little poorer was the better way to go. Enjoy life while you can with a nod toward tomorrow. Buy the expensive meals, take the trips, and play with the toys. Tomorrow you may not be able to.

This. 

We put money away for retirement, but no idea if we will get there. The better half has an auto-immune disease, so it's unlikely she will be able to work to the traditional retirement age. 

I've made sure that we can survive on one income, which affords us to ability to spend a lot going out and such. We should probably put a larger % of our income into retirement/savings stuff. 

In reply to RX Reven' :

A simple way I look at it. Live a year behind your income. You've made it this far on the old income level, do it for another year. I'll leave it up to you where to stash the extra coming in for next 12 months. Pay off the debt you've been carrying and put the new cash to work for you.

In reply to jgrewe :

We went through a period after we paid the mortgage where we were wondering where all this money was coming from. Not paying a couple few thousand every month adds up fast. We bumped our roths, padded our stash and savings and then had some fun.

Colin Wood said:

barefootcyborg5000 said:

Get kids. they'll spend it for you. 

I only have one kid (that just turned two). I can confirm this is true.

I have 4. I am so broke right now.

Lots of good advice above so I won't repeat any of it.  Part of my thought process for buying durable items that hold some value, when I'm not 100% sure I want it, is "Do I want to deal with the hassle of selling this to Craigslist/FB Marketplace idiots when I'm done with it?"

Toyman! said:

I would add, that strict rules are not the way I would go. My father used to work with a gentleman that was bound by strict rules of his own making. No frivolous spending, no vacations, and all the overtime allowed. His eyes were set on retirement. He retired at 62. He and his wife went on one cruise. 3 months later he died of a heart attack. After a lifetime of preparing for the future, he had none. I was about 18 when that happened and it really had a profound impact on my savings. 

I decided that retiring a little poorer was the better way to go. Enjoy life while you can with a nod toward tomorrow. Buy the expensive meals, take the trips, and play with the toys. Tomorrow you may not be able to.

Yes, the pendulum can certainly swing too far the other way. My SWEETIE (She Who Enables Every Thing I Enjoy) has long had to practically force me to treat myself to the 'wants' that I value and can afford.

A close friend of hers lost her husband to colon cancer last year. He was only like 46 or 47.  That gave me some much needed perspective, and has helped me to more fully embrace the value (find a better balance) in enjoying meaningful wants sooner rather than later. It's all too easy for a mindset of delayed gratification to turn into foregone gratification.

Humans have little capacity for significant change.

I find that our "life slope" is pretty much set early in life. If you look back at what got you here, you can pretty much predict where you are going to go.

So if you have learned the value of not spending more than you make, you will continue to do so. 

Pretty much the same science that told your teacher in grade 3 where you were going to graduate when you left  HS.

If you marry or are married to the right or wrong woman, then all bets are off. 

Pete

Late to the discussion and a lot of very good advice has already been given. Congratulations on the new job and the pay increase, that’s awesome.   

I’ll suggest trying to live on close to what you were making before for a while and build up some savings.  I’ve been in sales for more than 20 years and with the somewhat cyclical nature of the beast we’ve always tried to concentrate on putting some extra aside in “good” years in case there were some not so good ones.  Paying off debt first as you mentioned is great idea too.  It’s absolutely OK to have some fun too just can’t go nuts.