Fundamentals of Less Doing is a series of articles detailing how we think about productivity from a conceptual level. If you are new to Less Doing, the Fundamentals series is a great place to start.
The Less Doing lifestyle is obviously about efficiency, and we believe that should translate to financial savings too. It’s not enough to simply manage your finances, we want you be a financial sushi chef, cutting out all of the fat and leaving nothing but the tastiest bits….now I’m thinking about sushi….anyway, to accomplish these goals you need a clear picture of where your money is and where it’s going. It should go without saying that you should be signed up for electronic statements with all your banks so you don’t get the paper and everything stays organized online.
Where’s My Money and Where am I Spending It?
Typically a person might have a checking and savings account at a bank, a debit card, a credit card, and maybe some kind of 401K or investment portfolio. If you have a business or several, you can see how the number of accounts you have can get to unmanageable territory very quickly. That’s where Mint.com comes in. You supply the site with the login details for your various banking sites. You can input personal accounts, credits cards, business accounts, auto loans, and stock portfolios. If you want something that’s strictly for business than should use InDinero, which adds access for an accountant. It automatically pulls in all of your info every day, categorizing transactions and giving you a very nice overview of your financial health. Mint will email you when an account has a low balance or a particularly large deposit clears which is very convenient if you want to make sure that paycheck got into your account. Once everything is in and it starts analyzing, you get to really learn some things about yourself. Mint can set budgets based on a past spending and will alert you when you exceed those levels. So for instance if you see that you’re spending a lot of money on Restaurants this month, it might be time to start cooking at home a little bit more. Finally, the site will show you credit card and checking account offers and show you exactly how much money they will save you in the long term.
Now if you want to get serious about analytics, than you need to check out OneReceipt. The service automatically pulls in all of your e-receipts from your emails and lets you add paper receipts by snapping a picture and emailing it to them. OneReceipt uses powerful programming to breakout the individual receipts to show you the actual products and services your buying. Is it bad that 28% of my monthly income goes to Amazon?
Save Some Dough
I am a big fan of a site called BillShrink. You put in a few details about driving habits, checking account, cell phone usage (which can be pulled from your providers site), and television service. The site will show you all of your alternative options for these services and how much money they will save you over the next 2 years. After about 10 minutes I quickly found out that over the next two years I can save about $14,000 between all the different services. The site will email you as new deals become available. The process of being efficient is one of constant evolution and adaptation and it’s very easy to get comfortable with your current credit card or checking account not realizing that with a little effort you could save a sizable amount of money by switching providers.
Another option that works very well for people who want to simplify as much as possible, especially if they travel a lot, is to eschew credit cards and only use debit cards. Nowadays debit or check cards offer many of the same benefits as credit cards in terms of loyalty rewards and purchase protection. A debit only solution means you don’t get a credit card bill, you never have to worry about paying interest or late fees, or actually going into debt at all because if you don’t have it in your account you can’t spend it. American Express credit cards are not accepted in many parts of the world and often not for small purchases, so debit cards are more convenient in that way too. If You Only Walk Away With One Thing You need to analyze your spending in order to determine the best way to cut the excess fat, start with an organization system, and get a little help from deal recommendation sites.