8 Important Money Reminders


Ok, I have a confession. I went a little crazy on the spending in December.  Perhaps it was the new credit card I received early in the month. Or maybe it was the new job conveniently located opposite a mall. I don’t know. What I do know, however, is that a “finance guy” such as myself should know better. That’s why I have called this article “8 Important Money Reminders“. Don’t expect to find some new revolutionary money tip here. I’m going back to basics, if not for you, then definitely for me.

1. Track Your Spending

For the first half of last year Kathryn and I had the good habit of writing down everything we spent. It seems, however, that we left this habit in Australia as we completely stopped it after the move. It’s such a simple, yet highly effective habit because it makes you conscious of every dollar you spend.

2. Include Family Members

If you have a partner or kids (or all of the above!), there is little point watching your spending while they run amok. Make money management a team effort. The best way I know how to do this is to do the following  together…

3. Set Goals

What are your financial goals? The start of a new year is the perfect time to take stock of your situation and work out what you want to achieve financially. We want to put enough money away for a Maui holiday in the first half of this year, but after a some liberal spending in December it is clear we need to be more disciplined.

4. Know the Difference Between Needs and Wants

Saying “we need to be more disciplined” is one thing, but what does this really mean? Well take, for example, my comment just now that “we want to go to on a Maui holiday”. Now I would be willing to argue that everyone needs a holiday each year for the sake of their own sanity. But there are certainly less expensive ways to holiday than jumping on a plane and flying to Maui.

There is nothing wrong with having wants, just don’t confuse them for needs. Needs are those things you must pay in order to live and avoid bankruptcy: mortgage/ rent payments, taxes, groceries, etc. Wants are the sorts of things you don’t explicitly need, such as expensive vacations and dining out.

5. Be Prepared To Make Sacrifices

One aspect of financial discipline is a willingness to make some sacrifices in terms of what you buy and consume. In December I wasn’t willing to make sacrifices. I fell into the “if I want it, I’ll buy it trap”. And I know I’m not the only one. My friends south of the border in the United States have a mind boggling $800 billion in credit card debt. For some reason to Rolling Stones song “You Can’t Always Get What You Want” comes to mind here. Then again, if all this talk of slashing expenses doesn’t interest you there is always the option to….

6. Make More Money

If you focus solely on cutting expenses, then you are neglecting half of your Income Statement. In addition to everything I have said so far, Kathryn and I are also busy working on ways to improve our financial situation by making more money.

The New Year is a great time to start thinking about ways to increase your income. Can you apply for a job with a higher salary? Do you have any ideas for developing other streams of income? Now is the time to take action!

7. Use Debt Intelligently

A simple rule to live by is to not pay interest on anything that loses value. Although I was a bit reckless with my new credit card in December, I haven’t paid interest on credit card debt in years because I know how debt works (I work in banking) and I have, for the most part, pretty good spending habits. When you think about it, to use debt intelligently you need to have some financial smarts. An excellent place to start is by reading a couple of great blogs dedicated to all things money, Get Rich Slowly and The Simple Dollar.

8. Avoid Store Cards

I succumbed to the oldest trick in the book – I signed up for my first store card so that I would receive a discount on my purchase. Now I can’t wait till they send me the thing so I can cut it in two and send it back (with a cheque for the balance of course). I know you can get little discounts here and there by having store cards, but at the end of the day these cards don’t save you money if they tempt you to spend more on stuff you don’t really need.

So now that I’ve come clean about my month of reckless spending, do you have any bad money habits you want to confess?

Photo by 401(K) 2012

13 thoughts on “8 Important Money Reminders”

  1. Anja, I think it just depends on the person. A credit card is a convenience and for the most part it I get a benefit from having one. Some people should definitely stay away from them though! Btw the only reason I got a new one was because I was changing my card from an Australian one to a Canadian one.

  2. Jason Harrington

    Great post Peter – sometimes the basics, or the fundamentals, are exactly what need to be worked on. Often times even just the reminders, as you pointed out, can work wonders in setting your mind straight.

    I’ve been working on changing my mindset avidly for the past few months now, and finances are my next targeted growth area. #s 1,3, and 4 I have found the most helpful thus far. It is really amazing how all of the little things truly add up to create a big change

    Keep up the good work,

  3. Thanks for the tips. I can use them for our upcoming trips. The family is about to go on a vacation next week to Bay Area. Gonna set me back at least $600 for 6 days! Ouch. We made the mistake of making flight reservations on the last minute. That cost us dearly. Next month, Florida vacation. Gonna plan that one properly! Ouch, my bank account is hurting!

  4. I completely understand what your going through here Peter, this December I to, went overboard on my spending.

    Ha Ha! The good thing about winter shopping is that it is so close to the new years that you get to make some new spending resolutions!

    Prosperity to everyone this New Year!


  5. What I like about your article Peter is it is basic. The more life experience I get the more I learn that it all is really simple. Basically it boils down to consistently following the basics. No more, no less.

  6. Ouch, a couple of these tips hurt! In that they point out some very wise things I’m *not* doing. The tip that hurt the most for me was getting your family involved. My husband and I have the desire, but not the action that leads to good spending habits. But, that’s just an excuse. I now vow to have a planning session where we create a strategy for spending. I think it’s also time to bite the bullet and keep track of every penny spent.

  7. Great tips Peter, I have always been an advocate of:

    “It’s not what you make, it’s what you spend!”

    I have always practices to live beneath my means, yet still live comfortably. I have been very fortunate that my spouse also share my same feelings for the most part. Finances and money are one of the major reasons young couples struggle in marriage. Many go into it with out ever having the discussion about a budget or spending.

    I really like your idea of improving your income and looking at the other side of the balance sheet. It is always nice to have more to spend if you cannot control bad habits, as many in our society cannot!


Leave a Comment

Your email address will not be published. Required fields are marked *