Monday, 27 February 2017

You have no money here

When I first started saving the best trick I ever pulled on myself was to simply have no money.

ring ring
"Hey Dad, how's work going?"
"Good, what do you need?"
"Can't I just call because I want to talk"
"Generally not, we do that when I get home, so what do you need?"
"Okay, you're on to me, I'm a bit short on cash, can you transfer some money over for me?"
"No worries, how much do you need?"

Every week I would get paid, and every week I would transfer my paycheck (minus $200) into a savings account and pretend it didn't exist. This left me with $200 a week I could carelessly spend on anything I wanted, and as a teenager living at home who wasn't asked to pay board, $200 was a lot of money. It funded energy drinks, bus tickets, text books, coffee, day old half price sushi, fast food, video games, and anything else I could imagine. Almost.

This was back before phone banking, so I couldn't get to that money when I was out and about. If I saw a really cool jacket at Midwest Trader (a bricks and mortar version of Hot Topic if anyone remembers that place) I could generally afford it, but I also knew I might have to skimp on coffee for a few days, something I would never do.

Once or twice I would call my dad and ask him to shift some money so I could make a big purchase when I spotted it on special, e.g. when I found a Playstation 3 for $100 off. Yepp, that opening phone call with my dad wasn't begging for his money. The Bank of Dad had the password for my accounts so when I needed some money moved around, Bank of Dad was there to save the day. Sometimes he would grill me on my purchase, but he never refused to move my money. After all, it was mine and the Bank of Dad could see that most of my money stayed in my account.

Invisible money never stopped me from buying the things I wanted, but it stopped me from buying the things I sort of wanted. Knowing I had to ring my Dad and interrupt him at work for the extra cash always made me stop and think about whether this shiny new thing was really worth all that trouble, and nine times out of ten it wasn't.

I even remember calling Bank of Dad one time to ask for another $100 to be shifted to my debit account because I was going clothes shopping. When I came home he asked what I had bought and the answer was nothing. After all the trouble of hassling Bank of Dad nothing I came across that day seemed worth the hard earned cash.

With this super basic savings technique I put aside $20,000 in 2012 when I was only 21. At the time I was a full time student studying an hour away from home, working at Hungry Jacks (Burger King for any American's reading this) and funding a negatively geared rental property where the costs exceeded the rent return. This was before budgeting, and before I tried any version of tracking my spending. The simple trick of 'out of sight, out of mind' let me save more than 50% of my income for years and put me in an excellent position to be able to analyse purchases and decide whether I sort of wanted it, or I really wanted it.

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