Friday, November 16, 2007

Money Management

This has more to do with gathering thoughts than a real-live post. Someone has asked me how to manage money--Not sure why they pick me as a mentor in this particular subject, but I'll do what I can. The particular case is about barely over minimum wage management, not day trading or house flipping.

The concepts of managing money aren't complicated--Pay close attention to income and spending, manage risks and prioritize.

Spending priorities:

1. Keeping your job.
2. Generic food--NOT restaurant food. not convenience food.
3. Shelter.
4. Limited clothing
5. Emergency reserve

Circumstances may shuffle these a little. If you can't afford these, there's a good chance it is because you didn't prioritize properly earlier.

Tasty food, entertainment, cool clothing is all way down on the list, although with imagination you can afford at least some of each.


You're buying money with your time, you use the money to buy other stuff--Mostly the products of other people's time. Get to work a bit early, so if something delays you, you get there on time anyhow. I show up for work. I think I average less than a day per year missed. I don't push limits at work. This means that I survive staff reductions, and if I do screw up badly, I'm liable to get more leeway.

Auctions, garage sales and thrift stores are good ways to get stuff cheap--Clothing, small appliances, and household goods. Be creative--Do you need a stove, or can you make do with a hotplate and a toaster oven for a while?

Learn to fix stuff. I'm not entirely sure how far others can take this advice--I don't know if I've got a talent so I fix stuff, or if I've gained the talent by fixing stuff. I suspect both. If you're going to throw it away because it is broken, you might as well try to figure out what is wrong with it--Even if you fail, chances are you will learn something that will make it easier to fix the next thing.

A crock pot is a nearly essential tool for cheap cooking--Most good, cheap food takes a long time to cook. Learn to like stuff made with dry beans--Cheap, easy and nutritious. Ham and beans, chili, 15 bean soup. Cut the meat to a minimal amount--consider it a flavoring, rather than a main ingredient. You would have to try hard to not get enough protein in the US. In general, ready to eat foods are the most expensive, completely from scratch the cheapest.

Take care of your stuff. Keep a set of clothing when you might get greasy or dirty, not your work clothes. Don't leave your bike in the rain, keep it oiled.

Figure out what it really costs to have a car--You may need one for a better job, but you might also be better off taking less pay within walking or bicycle distance.

A bicycle is real transportation.

Don't smoke.

1 comment:

  1. #5 saved my butt a coupla times when I was first starting to get this whole deal under some semblance of control. The only problem was looking at the money I had saved up 'for a rainy day' and then looking at all the possibilities for new toys.

    A little bit each payday add ups...