Why We Use Megabanks

There are two big reasons most people I know use Bank of America or other megabanks (Citi, Wells Fargo, Chase):

• Megabanks’ size provides a sense of convenience (e.g., nationwide ATMs).
• Megabanks have bought up smaller banks and converted customers’ accounts. (And customers don’t switch away).

A huge ATM network seems like a plus, and big banks do offer other perks, like iPhone apps and fancy programs that round up your debit card purchases and put the difference into savings. But still, for average individual banking customers, bigger isn’t necessarily better.

ATMs Everywhere

Yes, there are more megabank ATMs worldwide, so you may be more likely to find one when you’re away from home (and thus avoid a fee). But just because they have a huge network doesn’t mean you’ll find an ATM when and where you need one. And megabanks are more likely to charge you a fee for using another banks’ ATM (in addition to the fee the ATM bank charges). Bank of America currently charges customers a $2.00 fee for using a non-B of A ATM ($5.00 outside the US).

The Customer Service Myth

Next comes convenience, like 24/7 telephone customer service. But recall the last time you called a huge company’s 800 number. Was it a pleasant experience? Perhaps you were put on hold or you wound up talking to somebody who just read from a script and tried to sell you something.

Every time my wife calls Bank of America for a routine account change, she waits; and something gets screwed up.

She called up over a month ago to change her name after we were married. They said it would take seven to ten days for her new debit card to arrive. It hasn’t come. Nor has any indication they processed her name change. Looks like they totally “forgot”. Another time she called, the operator pitched a credit card that my wife had no interest in. My wife said “no, no, NO!” Guess what came in the mail a week later? The credit card she made very clear she did not want.

In my humble opinion, no matter how hard big banks try to spin their customer service, you’ll always be dealing with a big corporation in which you’re just a number and a potential profit.

Why Small Banks and Credit Unions are Better

I have held my primary checking account with two institutions: Formerly I banked with a Massachusetts credit union; now I’m with a small Maine community bank. They offer “all the basics” that big banks do: Free checking, online account management, and bill-pay. But the following are some benefits I’ve experienced with these community financial institutions that you won’t find at the megabanks:

ATM Fee Refunds

My current bank refunds any ATM fee charged by any ATM, anywhere in the world. Immediately. No limit, no exceptions. Whether I get charged two dollars, three, or even five, they put the money back in my account the next day. I’ve withdrawn cash in the Caribbean and Eastern Europe. The fees have been reimbursed. My old credit union refunded ATM fees too, but they did it once a month and had a cap on how much they would refund each month. Either way, these perks mean I can use whatever ATM is convenient without worrying about fees.

Real Customer Service

When I call up my bank, I get somebody on the phone immediately who is in-state and who sounds like they value my business. When I walk into a branch, I’m treated like a person, not just a profit opportunity. I can ask to speak with a branch manager who is not just a cog in the wheel of a giant national corporation, but who has real decision-making authority.

Personal Lending

When you apply for a credit card, personal loan, or mortgage with a big bank, you really are just a number. They look at your credit, assets, and debts and make a decision on whether to approve you and for what rate. End of story. At small banks or credit unions, you can sit down with underwriters who will listen to your situation and make personalized recommendations. Of course, I’m not going to sugar-coat this: Small banks and credit unions still want to lend you money (and earn interest from you), and they’re not going to give you a loan if your credit stinks. You do, however, have the opportunity to put a face on your loan application, which can make a huge difference.

As an example, when small banks and credit unions write a mortgage, they don’t sell it to investors. They hold it. That means that they’re not going to make a home loan they know a customer can’t afford. That’s why local financial institutions aren’t nearly as affected by mortgage defaults and foreclosures as the big boys. And that means that small banks’ customers are still able to afford their mortgages—and are staying in their homes.

Better Rates

Banking is a competitive business. Remember when I said that a lot of people I know are with megabanks because those banks bought up smaller banks and migrated their accounts? Changing banks is intimidating, and most of us don’t do it unless we become really fed up with our current bank. To win new customers, small banks and credit unions often offer much better rates on CDs and loans, and even checking accounts, like a 4.01 percent checking account at one credit union.

• Read More: How to change your primary financial institution.

My old credit union consistently offered auto loans at a point or more below anybody else. They issued credit cards with eight or nine percent fixed interest rates, compared to 12, 15, or 20 percent rates offered by the big issuers.

• Find Top Rates: MoneyAisle searches top bank rates in your area.

The Bottom Line

No single bank or credit union “has it all”. Those that offer unlimited ATM refunds may not have the top savings rates; big banks that have ATMs and branches everywhere charge more fees to pay for all of that infrastructure. But in my experience small banks and credit unions (which, by the way, are non-profit, and reinvest earnings in perks and lower rates for members), consistently deliver personal service and a much better value than the megabanks.

What do you think? Let us know where you bank, and what you like about your institution. Can you defend Bank of America or another big bank? Love your credit union? Have a horror story? Share your story in a comment!

Related posts:

1. Credit Unions: Non-Profits Offer a Great Alternative to Banks
2. Fraud Hits Small Banks Too
3. For the Lowest Credit Card Interest Rates, Look to Small Banks

I hear this all the time. When it comes to money, many of my peers (at least the ones not completely afraid of their finances) are concerned with upgrading their cars and homes, developing their career, and finding a partner or getting married. These are all good things to do, but something’s missing. We often hear about the same few financial steps for twentysomethings:

• Learn to budget
• Build credit
• Get out of debt
• Save an emergency fund
• Buy a home

Don’t get me wrong. These are important steps! I write about them all the time. But there are other financial habits that we twentysomethings don’t hear about as often:

• Plan for retirement
• Start investing
• Set financial goals
• Give to charity
• Get insurance

It’s not surprising we don’t pay much attention to these “forgotten” financial habits. (Perhaps they’re not forgotten; we just have yet to learn them.) After all, we’re not earning much yet and haven’t had time to accumulate wealth. That makes it seem a little silly to think about things like investing, insurance and—gasp—actually giving some money away!

But how we manage money in our first decade of independence will sculpt our lifelong financial habits. That’s why the sooner we start developing these good ones, the less we’ll have to think about making them as we age (and these habits become ever more important).

Plan for Retirement

This one is a no-brainer. Retirement savings accounts provide great tax benefits. Social Security will not be enough for our generation (if it’s around at all). And even small amounts saved in your twenties can grow to hundreds of thousands over 30 to 40 years. Save for retirement! Read last week’s article 23 things beginners absolutely must know about saving for retirement to learn more.

Start Investing

Yes, saving for retirement is investing. But money-savvy folks realize that investing isn’t just for retirement. A few good investments can help you reach other financial goals faster (like buying a home, starting a business, or sending your kids to college). That’s why it’s never to early to learn how to make smart investments and develop the habit of putting a few dollars a month aside to invest (independent of your savings and retirement contributions).

Set Financial Goals

Obviously, you don’t need a boatload in the bank to start jotting down a financial plan for yourself. Yet for some reason I don’t think most of us do this. Having a written financial plan helps us identify where we want to go, what it will take to get there, and how we can get started. If nothing else, I recommend everybody (at whatever age) have a five-year financial plan.

Give to Charity

Regardless of what consumer products marketers try to tell us, most of us living and working in developed countries are earning far more than we need to meet our basic needs (food, shelter, medicine, etc.) It’s selfish not to give at least a small portion of what we earn to help the greater good.

Maybe you’re not comfortable giving away ten percent of your income while you’re chipping away at debt or trying to move out from a cramped apartment; but get in the habit of cutting a few small checks to charity every year. As they say, it’s the act of giving—not the amount you give—that counts the most.

Get Insurance

You need to have health insurance! Getting health insurance coverage is one of the most important things you can do for yourself financially.

• Read more: What Every Young Person Needs to Know About Healthcare

But don’t stop there. Insurance is designed to protect our assets from unfortunate events. Crash your car? Insurance pays for the damage. House burn down? Insurance pays to rebuild. Make a habit of understanding how insurance works—and asking whether you have enough of it. As your bank account grows, so should your auto and home insurance limits.

Single twentysomethings don’t need life insurance, but if you get married (or even live together and split expenses), you need to consider it. Term life insurance is dirt cheap for healthy young people and can provide a vital safety net for a surviving spouse should the unthinkable happen.

If you’re well on your way to mastering the financial basics, start to make these “forgotten” financial habits a part of your money plan. The sooner you do, the more time (and money) you’ll have to do other things as you go along.

Related posts:

1. Budgeting In Your Twenties
2. Do You Need Health Insurance in Your Twenties?
3. How to Create a Five-Year Financial Plan

I recently read an article on The New York Times, four money talks to have before marriage, and a response at Get Rich Slowly. I agree that this is critical, but not just for couples considering marriage. A lot of us youngins shack up long before we marry, if we marry at all. So I think these articles need to be re-framed as money talks to have before living together.

What Should You Talk About?

The Times article illustrates four topics couples need to cover, and I can’t think of much to add. They are:

• Ancestry. What did your parents teach you about money? What are your financial predispositions?
• Credit. How do your credit scores compare? What does this say about how you have managed money in the past? How will this impact your ability to reach future financial goals?
• Control. Who handles what bills, how much can each partner spend independently?
• Affluence. What are your financial goals?

Why Have the Talk?

For married couples, the reasons to talk about money are more or less obvious: Your finances are now legally combined and financial problems are the leading cause of divorce.

But if you’re not married, why bother talking about money?

At the very least, if you’re living with somebody, you’re sharing a big chunk of your monthly expenses (housing payments, utilities, groceries, etc.) Do you know what you would do if one of you lost his or her job? Could you still pay the rent?

And although you may be less likely to merge finances than married couples, how you each handle money independently will still impact your common financial goals.

For example: Do you hope to take a vacation this year? Are you both saving for a trip, or will one of you go into credit card debt to make it happen? Do you hope to upgrade your apartment or buy a home? What will it take to move up?

How to Have the Talk

As much as Jay Monee is trying to change public perception to the contrary, I think most would still agree that personal finance is decidedly not sexy. (A million in hundred dollar bills showered on a hotel room bed? Sexy. Comparing credit scores? Definitely not.)

To ease the discomfort of talking about finances:

• Plan a time to talk about money. Carve out an hour or two and sit down over coffee or wine. Whatever you do, don’t spring the subject of your partner’s spending habits at the end of an otherwise romantic dinner.
• Prepare for the talk. With your discussion scheduled, you should each pull your credit scores, write out your latest monthly budget, estimate your net worth (assets and debts), and jot down your financial goals.
• Be understanding and open. As you start to talk about money, listen to your partner’s side. For this to work, there are going to be compromises. Shopaholics can usually learn to tame some spending, but spendthrifts can learn to live a little, too.
• Write it down. Finally, take notes. Write down any financial changes you want to make along with your joint financial goals.
• Keep it going. Talking about money should be an ongoing dialogue, not just a one-time down-and-dirty negotiation. The more you talk about money, the more comfortable it will become, and the easier you and your loved one can find common ground and begin achieving financial goals together.

What about you? What are the most important financial topics you discuss with your partner? Has it been difficult to have these talks? How have you made it easier?

Related posts:

1. We’re Getting Married (In a Week!) How Will Our Finances Change?
2. Unmarried Couples & Money: Financial Tips for Shacking Up
3. How Do You Split Expenses with Your Partner or Spouse?

Unfortunately, “keeping up with the Jones’” plays a big role in the psychology of spending. We spend to keep up because we envy things other people have. We spend more with friends to win and maintain their acceptance. And when we do it, we usually spend more than we have.

When we assert our frugality before our desire to fit in, however, a new problem emerges: We risk offending our friends, standing out as a cheapskate, or—worse—becoming alienated from them.

Seeing Both Sides

I’ve been on both sides. Before my “financial awakening“, I was the guy rallying my friends to hit the hottest restaurants, throw lavish parties, even jet to Vegas for the weekend. But my frugal friends had no problem telling me “I’m not paying for that!” Others came along, but tempers spiked when it came time to split the tab. (It’s easiest to split, but what happens to the guy that just got water and a salad? Separate checks, please!)

More recently I’ve been the one declining plans (or carefully budgeting for them). Fortunately, most of my friends are cheap and/or broke too, so finding affordable entertainment isn’t as much of a problem.

Just Be Honest

The next time your friends want to grab $200-a-bottle table service at a club, use honesty to squelch their complaints at your reaction. Saying something like:

“As you know, I’m trying to be smart with my money and put some away. I’m not sure blowing a couple hundred bucks here is gonna help that. Do we really want to spend our money this way? Can we do something cheaper?”

Unless your friends are legitimately loaded, chances are they are almost as uncomfortable spending that much money, too. They may just be afraid to question it for fear of standing out.

So yes, it does take courage to call out your friends‘ overspending. But the more you do it, the more comfortable your group will get with talking about money and choosing affordable activities.

What Not to Do

Only excuse yourself from plans as a last resort. If you can’t get your friends to turn down that costly club, make a polite excuse and head home. (Avoid going with as paying the check may cause some controversy even if you don‘t drink or eat as much).

If you do have to turn down one or more events because of your budget, try planning another less-costly get-together shortly thereafter so your friends know that you haven’t been bailing on them, just their expensive affairs.

What about you? Have you had to deal with friends that spend way more than you? How have you handled it? Were you able to remain friends despite your fiscal differences?

Related posts:

1. Don’t Let Money Ruin Friendships
2. The Wallet Buddy: The Best Idea EVER
3. Use Your Health Insurance!

When it comes down to it, a big component of building wealth is learning to stop being wasteful. We need to stop wasting money (so we can save and invest it), but when we stop wasting money, we also stop wasting the things we use money to buy. And when we buy less of things that leave carbon footprints when they are produced and transported across the globe, we in fact help slow climate change.

Does getting wealthy and buying less seem counter-intuitive? It really isn’t.

There is a part of Americans’ collective conscious that immediately links wealth with excess. Only the rich own multiple cars, big houses, and private planes. So being wealthy must mean being wasteful, right?

The reality is that for every one millionaire who owns more vehicles and a bigger house than she needs, there’s a millionaire who looks like you and me—living in a modest home and driving a dinged-up Toyota with more than 100,000 miles on it.

In fact it’s not only common to be wealthy and frugal, most people have to be frugal before they become wealthy. And being frugal is good for the environment.

That’s why a big component of my financial plan is living with less. I don’t want a big McMansion and a ton of possessions. I’m not saying I’m going to stop consuming altogether; I’ll still buy things that I will really value, but I will buy a lot less.

Critics say that people who want to live with less have given up “success”.

But I assure you, if you are learning to earn more and consume less (and grow wealthy in the meantime), you are not “giving up” on success. You are redefining it.

Related posts:

1. Building Wealth by Owning Less
2. The 10 Habits of Self-Made Millionaires
3. Pinching: Keep Your Change

Somehow, I then thought of this old picture of me in college wearing a paper bag over my head and holding a can of Coors Light (or is it spelled “Lite”?) That picture is like “bad decision” illustrated. There’s the fact that I’ve obviously had a few too many, that I left somebody photograph me with a bag on my head, and the fact I’m drinking Coors Light. Ick.

How many bad decisions are in this photo?

But what do sleeping in and embarrassing college photos have to do with personal finance?

Simple: They are examples of decisions many of us occasionally make—albeit poor ones.

And how well or how poorly one manages their finances generally comes down to a series of decisions. There are big decisions, like whether to go to college and what job to take, but there are also thousands of small ones, like whether to buy this or that on any given day.

Unfortunately, it’s really easy to make bad decisions. So I thought, let’s take a look at the anatomy of a bad decision.

How We Make Decisions

We make hundreds, if not thousands, of decisions every day. What route will we take to work? What will we eat for breakfast? What task will we do first at work? Some decisions are so routine, we don’t even think about them; our habits condition us to decide one way or another (bad habits, bad decisions).

When it comes to bigger decisions, however, the factors that may influence our decisions are so vast that psychologists spend their entire careers studying them. And we’re all different. Famous behavioralist Isabel Briggs Myers claims that we make decisions based upon our unique personality type. Even then, other factors may come into play:

• We may weigh the pros and cons of both sides
• We may make the decision by chance (flip a coin, cut a deck of cards)
• We may rely solely on intuition (our gut feeling)
• We may rely upon the advice of an expert or someone we trust

Why We Make Bad Decisions

One reason we make bad decisions is that we don’t consistently do any of the above. We don’t weigh both sides, listen to advisers, or even flip a coin. We just do what we want. And, usually, what we want means what we want right now. Instant gratification. We don’t think; we just do.

We want to sleep in, so we do. We want to drink too much, so we do. We want to spend instead of save, so we do.

Delayed gratification, it turns out, is actually hard work! In fact, we’re all naturally impulsive.

In a leading experiment on the science of self-control, scientists gave children the opportunity to have one piece of candy immediately or two pieces of candy if they waited a certain period of time. What they found was that almost everybody wanted the one piece of candy immediately. Unless the children were given something else to do that would take their minds off the candy. This “strategic allocation of attention” made it easy to forget about the potential for immediate reward while waiting for the delayed reward.

Interestingly, chimpanzees can do the same thing.

Bad Decisions and Risk Aversion

Some risk is good. Without it, we would live in world without entrepreneurs willing to bet their savings on a business idea, and without bankers willing to risk lending money to businesses and home buyers.

Sometimes we make bad decisions because we’re risk averse.

Imagine the woman who wants to leave her boyfriend because he doesn’t treat her well and doesn’t share her goals. She knows she needs to dump him, but on some level she knows she’ll miss him, she’s afraid of being single again. She’s thinking about the risks of leaving her boyfriend (regret, loneliness), even though the rewards (the chance to meet somebody better) are better.

Other times, however, being risk adverse can actually help us make better financial decisions.

The article The rich get richer and the poor get poorer: On risk aversion in behavioral decision-making discusses an experiment in which:

Fifty participants conducted a manipulated decision-making task in which one group gained money, whereas the other group lost money, followed by [a gambling task]. Participants who experienced a prior monetary loss displayed more risky choice behavior [gambling] than subjects who experienced a prior gain.

Although this seems counter-intuitive, it suggests that the less money we have, the more risks we’re willing to take to get a little bit more. The more money we have, the less risk we want to take to get a little bit more money. We want to protect what we’ve got.

I actually found this to be true of my spending patterns, too. When I was in the depths of my debt, I didn’t think much about continuing to overspend. Once I started to climb out of debt and actually had some cash in the bank, however, I started to become much more cautious about my spending because I wanted to preserve the money I had saved (and the progress on my debt).

The moral of this whole crazy story? You’ll never stop making bad decisions altogether (human fallibility interferes). But you can start making fewer bad decisions by:

• Approaching decisions rationally; listing pros and cons, and seeking expert advice
• Defeating impulsivity by improving self-control with “strategic allocation of attention” (distractions)
• Using appropriate levels of risk aversion to protect what you have

Will all this help me avoid the snooze button next time? Probably not. But it just may help me (and hopefully you) make better financial decisions when it really counts.

What do you think? Why do you make bad decisions—financially or otherwise? What strategies do you use to make better ones?

Related posts:

1. The Purpose-Driven To-Do List
2. Despite Fed Decision, Banks Are Moving Interest Rates
3. Back to School Financial Survival Guide

Gosselin said her husband tool “$230,000 of the $231,000″ in the account after TLC announced that Jon would be leaving the series. Jon, meanwhile, contends that he withdrew far less cash and that Kate has more money—perhaps millions—stashed in other accounts.

Kate told Today that earlier this year she took $100k out of the account just in case this sort of thing happened, but then she put it back because their separation agreement requires that both spouses must consent to anything they do with joint property.

The embattled couple will undoubtedly be battling it out in court soon.

What’s the lesson here? No, I didn’t just write this up because I love watching the downfall of whiny reality stars. When you get married, joint property is good, but keep separate accounts! You need to make sure you can survive if the one you love goes crazy, turns on you, and takes the money and runs.

Related posts:

1. How Do You Split Expenses with Your Partner or Spouse?
2. Stop Being Broke Right Now: Kick Off Financial Success with 10 Minutes and $10
3. When You Need to File Bankruptcy

Most often, I write about straightforward topics like debt repayment, credit scoring, and budgeting. Don’t get me wrong—it’s important stuff. But on a deeper level, something I struggle with as a personal finance blogger is that I don’t want my life to become about money.

And yet, sometimes I feel that’s exactly what happened.

In my early twenties, I spent money and racked up debt so quickly that I always needed to earn more to “feed the fire” I built. I made poor career decisions based upon how much money I could earn, not how happy I could be.

And somewhere along the way I started this blog. Fortunately, I feel like I can help readers learn about (and perhaps avoid) some of the financial mistakes I made, while at the same time motivating myself in my journey out of debt.

But here I am again, focused on money. Whether I’m worrying about my own money or brainstorming new article ideas for this blog, I’m thinking about money a lot.

Ick!

When it comes down to it, I love writing, blogging, and helping people—not money.

Has money ever taken over your life? Anybody can get caught up in earning, saving, investing, or repaying debt. When you do, it’s easy to let money take over.

Introducing Mindfulness

To help put money in perspective in my own life, I like to apply the concept of mindfulness.

Mindfulness is calm awareness of one’s body functions, feelings, content of consciousness, or consciousness itself. Mindfulness plays a central role in the teaching of the Buddha where it is affirmed that “correct” or “right” mindfulness is the critical factor in the path to liberation and subsequent enlightenment.

Put another way, mindfulness is the “the capacity to be aware of what is going on…”

Yes, mindfulness is a key component of Buddhism, but just like love is a critical component of Christianity, you don’t have to be Buddhist to be mindful.

Often times, people meditate to practice mindfulness. They tune out every distraction to focus 100 percent of their attention and energy on the present moment.

But you don’t have to meditate to be mindful.

Mindfulness is simply being aware of the moment. It sounds simple, but if we actually stop to think about it: we’re not aware of most moments in our day. Why? Because we’re lost thinking about something else—remembering the past, worrying about the future.

I practice mindfulness by reminding myself to just do what it is I am doing, and be aware of it.

• If I am eating cereal, I will be aware I am eating cereal.
• If I am walking down the street, I will be aware I am walking.
• If I am brushing my teeth, I will be aware I am brushing my teeth.

Mindfulness and Money

Think back to the last time you spent money and it really hurt. Did you have to pony up for an expensive car repair? Did you buy a designer item that you had to have even though you knew it cost too much? Did you buy something new even though you knew you could buy the same item used?

If you felt some kind of anxiety when you separated from your money, chances are you were mindful of your money during those transactions.

Now, think about all of the times you have spent money since then.

What details do you remember? Sure, you can look back at your statements and recall how much you spent, what you purchased, and when. But did you make those purchases mindfully? Were you aware of each transaction as it took place?

When you make a commitment to be mindful of your money and begin to practice it, you should do the following things:

• Think about every dollar you spend
• Keep a spending journal
• Reflect on how much you earn, and what an hour of your work buys you

This last one’s important.

Our relationship with money begins while we’re working not (as many of us believe) when our paycheck goes into our bank account.

The more we become aware of how it feels to earn a dollar, the more consciously we will spend each one.

Taking Mindful Money Further

It’s one thing to practice mindful spending; it’s another to scrutinize our relationship with money through the lens of mindfulness.

When we practice mindfulness, we accept that life is this moment: now.

Everything is impermanent. What was a moment ago is no more. What is now will be gone in another moment. When we begin to live mindfully, time and relationships become a lot more important than money and possessions.

We realize our life is finite and the lives our loved ones are finite. So too, we realize that our possessions are impermanent. And even money is endangered. Should nuclear war eradicate our world’s electronic infrastructure, bank accounts will become useless. What happens if we survive but money does not? What will we have left?

Looking even deeper, we realize that:

In today’s society, we perform work that we do not enjoy in order to obtain money. Some of that money we need to survive, but some of it we spend in leisure, as a way to provide ourselves with some relief from the psychological and physical drain we experience just to go back and do more of the same work. Part of developing wisdom and understanding is performing work that has meaning to us. It is contradictory to the purpose of [mindfulness] to perform meaningless work in order to obtain money. Therefore, [mindfulness] would emphasize doing meaningful work not just working to obtain a means to an end.”

I’m not there yet, but eventually I want to create my life so that I can do the things I love when I want to do them while earning just enough money to take care of my family’s basic needs today and in the future.

If I can do that; I’ll feel very, very wealthy.

What do you think? Are you mindful about your money? Do you think cultivating a conscious awareness about how you earn and spend money can make a difference in your life? Do you agree in the futility of work that you do not enjoy? Please share your thoughts in a comment.

Related posts:

1. How Has The Recession Changed Your Life for the Better?
2. What I’ve Learned About Money
3. The Vicious Psychology of Spending

1. Use a Checkbook Register. Remember those little booklets that come with boxes of checks? I still use one! I use a checkbook register to track every debit card purchase, every deposit, every check. Since I started doing this, I’ve never had to worry about overdrafts—I’ve always known exactly how much was in my checking account. I don’t actually carry around the check register everywhere I go, but I leave it at home or in my suitcase if I’m traveling and I update it with my receipts once a day.

2. Make Your Budget with a Spreadsheet. I used to budget on pen and paper too, but I found it was a lot easier to let a spreadsheet like Microsoft Excel do the math for me. That’s why I created my original budget spreadsheet. Recently, I created a really simple budget worksheet that simplifies the monthly budget even further by grouping categories of expenses. Don’t get me wrong, I love—and use—fancy budgeting tools like Quicken and Mint.com from time to time, but I find they can’t replace the simplicity of a good spreadsheet.

3. Limit Yourself to One or Two Credit Cards. I’m still whittling away at some old debts, so I have more credit cards on my credit report than I’d like. But I’m down to using just two (that I pay-in-full every month, of course). One is a joint card that my wife and I use for groceries and recurring monthly bills; the other I use for personal expenses like gas, gifts, etc. Perhaps someday I’ll ditch the personal card all together and just use cash, but I really like the way credit card statements organize your purchases, so we’ll see.

4. Use Automatic Bill Pay. I don’t think I write a single check for a monthly bill anymore. I simply set up bill pay through my checking account and forget about it (except when it’s time to update my checkbook register, of course). I have these bills set up so that my bank pays the billers (rather than authorizing the biller to withdraw money from my account). Call me crazy, but I just don’t want to give anybody carte blanche access to my checking account.

5. Invest in Index Funds. Feel free to prove me wrong, but I open up Yahoo! Finance or listen to Jim Cramer, and I say, who in hell—other than handsomely-paid hedge fund managers—actually buys this stuff? When half of professional money managers can’t beat the stock market, why are individual investors even trying? My retirement accounts are in index funds. Done and done.

6. Say ‘No’ to Loyalty Programs. The other night, my wife was horrified that I threw out a junk-mail envelope containing a $10 off coupon for a shoe store. She’s right, coupons are good, but only when they’re for things you need to buy. Trouble is, most store loyalty programs plaster us with coupons that expire next week for items we rarely need today! I have too many pairs of shoes already. The way I see it, if I saved $10 on a $50 pair of shoes, I still spent $40 I didn’t need to. So I’m opting out of any programs that reward spending with incentives to spend more. That just doesn’t add up. Plus, I don’t want anything else on my key chain!

7. Pay Yourself First. This has to be one of my favorite personal finance concepts, and if you’re not doing it, you need to start: Pay yourself first! Whenever you get paid, transfer money to savings (or to debt if you’re digging out) before you pay anybody else. That way, you’ll never have to worry about spending money you should have saved.

8. Avoid Advertising. Advertising compels us to buy stuff we otherwise don’t want or need. Even if we’re consciously trying to ignore ads and live frugally, corporations pay ad wizards huge bucks to brainwash us. I don’t pretend I’m special and can just “tune out” their never-ending barrage of “buy-me” messages. Therefore, I try to limit how much TV I watch, and I’ve stopped reading magazines (except on long flights or in doctor’s offices). The fewer ads I see, the less I’m even tempted to think: “Ooo, I want that!”

9. Buy Only What You Need, When You Need It. This may seem at odds with the lessons of frugality freaks who stock up on certain items when they’re on sale, but I prefer to buy only the groceries I need for a couple of days. This way I’m less tempted to buy things I won’t eat quickly, and I waste less. If there’s a good price on something that keeps for a long time—say tuna fish or canned vegetables—I might be inclined to buy two weeks’ worth instead of two days’ worth, but that’s about it. This strategy also makes it easier to incorporate more vegetables in my diet, since I’m at the store every couple of days and can buy produce and consume it while it’s fresh.

10. Pair Up! I admit, before my wife and I got married (a month ago today), I was skeptical about combining finances. Although it will be a while before our finances are more combined than not, there’s a great sense of pleasure—and simplicity—that comes from combining things like our emergency fund and car insurance. But you don’t have to get married to enjoy the benefits of sharing expenses. Things are so much more affordable when you split them with somebody, be it a spouse, partner, or roommate. (Though I wouldn’t’ recommend you commingle funds with a roommate you met on Craigslist!)

What do you think? Do you follow any of these strategies to simplify your finances? Disagree with any? Have other strategies? Please share! For even more ways to simplify your money, check out Man vs. Debt’s 43 Ways to Radically Simplify Your Financial Life or ZenHabits’ 20 Money Hacks: Tips and Tricks to Improve Your Finances.

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1. How to Overcome a Fear of Dealing with Your Finances
2. Weekly Links: Simplifying Your Finances
3. Hate Budgeting? 10 Tools to Simplify Your Monthly Budget

Why Financial Literacy is Important for Everybody

It’s easy for people with their financial ducks in a row to look down at the massively indebted or the financially illiterate and think: “Those poor suckers will never get out of the hole, but at least I’ll be set.” When it comes to money, you do have to look out for your own to some extent. But can you simply ignore your neighbor’s indebtedness? Maybe not.

Few question the factors that led to our recent wide recession: Too much easy credit, too little savings. Even if you didn’t take out a subprime mortgage and fall behind on your payments; even if you didn’t max out ten credit cards five years ago, all the folks that did these things contributed to an economic crisis that probably affected you in some way. At the very least, the value of your home may have gone down. Maybe you lost this year’s raise, a 401(k) match, or maybe you even lost your job.

Therefore, it would seem to me that it’s in everybody’s interest to ensure that as many people as possible are financially responsible.

But Can You Make Other People Care About Their Own Personal Finances?

Unfortunately, I really don’t think so.

PF pundits like Suze Orman and Dave Ramsey are like evangelical preachers for the church of financial responsibility. But just like in religion, it’s hard to convert somebody to financial responsibility who isn’t ready. You need a financial “come to Jesus” moment to realize that you’re wildly in debt, have no savings, or have done nothing to plan your retirement. When people find themselves in those situations, they’re ready to care about personal finances. That’s when the pundits get their followers; when blogs get new readers.

Do you agree or disagree? Do you think it’s possible to get others to care about personal finance before they realize it for themselves? Is it our place to care? To help them?

Related posts:

1. A Showcase of What Personal Finance Blogging is All About
2. Three Great Posts from the Carnival of Personal Finance #143
3. My Favorite 50 Personal Finance Websites of 2007