spending less and earning more

16 Tactics for spending less, earning more and living a “rich” life [PMP #104]

If you've followed me for a while you'll know I'm all about living a happier, healthy lifestyle where I can live on my terms. And part of living on your terms involves getting control of your personal finances. Money is one of the biggest things we worry about. But remember, it's not the money that's important, it's what the money allows us to do that really matters.

One of the most insightful things I've read that really changed my perspective of money is what Tim Ferriss has to say in The 4-Hour Workweek (read my summary):

“$1,000,000 in the bank isn’t the fantasy. The fantasy is the lifestyle of complete freedom it supposedly allows. The question is then, How can one achieve the millionaire lifestyle of complete freedom without first having $1,000,000?”

To take control of your personal finances and live on your terms, I'd like to share some tips I've used to reduce spending, earn more and live a “rich” life.

Before we begin, here's my big disclaimer:

I am NOT a financial adviser. Everyone's situation is different. If you don't agree with my ideas, that's fine. I'm sharing advice that has worked for me based on my situation and I don't expect this to work for everyone. All good? Great!

Don't want to read this post, listen instead:


Track your spending

First things first, you need to know where your money is going and where it's coming from. If you don't know what you're spending money on or how much you're bringing in, how can you even begin to make improvements? Establish the baseline (i.e. what's my financial position right now) then you can begin to make changes.

I've been using Pocketsmith (affiliate link) for the last 5 years to track everything about my personal finances. Pocketsmith is packed with features. Learn how to get started with the essentials in this post. Use the code 50OFFPREMIUM-5G7T to get 50% off for your first 2 months of Pocketsmith premium. This can be applied in your account settings after you sign up for the trial.

Define what a “rich” life means to you

In this book, I Will Teach You to be Rich (summary), Ramit Sethi redefines what it means to be “rich”. Being rich isn't all about having lots of money in the bank. It's about being happy, whatever that might mean for you. This could be rich in time, friends, freedom and location independence.

What does living a “rich” life mean to you?

Think about and define your “rich” life and you'll quickly realise what really matters.

In my case, I'm earning a decent income from my business and while I could hire some people, grow and earn more, I don't want to scale because this would mean I would have to sacrifice my time and freedom.

Spend less than you earn

After paying for essentials like groceries, power, water etc. don't spend money unless you have it.

This sounds obvious but it's crazy how many people don't follow this simple principle. Especially as credit (other people's money) is so easy to borrow. This means a lot of people get into trouble because they're buying stuff they don't need (more on this below) with money they don't have.

“But using credit means I can buy things now with the money I'm going to earn later”

While this might be true, what you're actually doing is artificially pushing up the cost of everything you buy. So if you buy a $5,000 TV and pay 20% credit card interest, that same TV now costs $6,000 over a year.

It's simple, if you don't have the money to buy a thing then don't buy it. Even if you think you can afford the weekly loan payments, if you have to borrow someone else's money to buy stuff this is an indicator that really you can't afford it and shouldn't be buying it.

Pay down debt

Earlier this year I shared our personal finance philosophy and one of the key principles is paying down debt.

Firstly, as I said above, don't take on more debt unless it can be used to get a good return e.g. buying property or investing in education.

If you have excess debt, make it a priority to pay this down as fast as you can. With the TV example above, debt pushes up your costs and the longer you take to pay off your debt, the more expensive things become.


Don't get suckered by grocery brands

Sometimes you can justify buying a particular brand if you need higher quality. You might have seen that I'm an Apple fan-boy and so I'm definitely paying more than I need to for my computer and phone (see: spend where it counts).

But there are times when brands that look higher quality are identical to the cheaper alternatives.

When you're doing your weekly grocery shop it's very easy to overspend by purchasing the “fancy soap” or the “nicer coconut oil” when in fact so many products that look better quality are actually identical to the home brand or budget options.

Buy second hand

When you need to buy something, our default responses is often to head to the mall or jump online and start shopping. Instead, ask yourself first, do I need this brand new, or will second hand do?

When we were preparing Jay's nursery before he was born we purchased almost everything second hand. The cot, feeding chair, clothes draw and pram (that's a stroller for you American readers). We actually found with everything we purchased it was in great condition because most of the people we were purchasing from had only owned this stuff for a few years, so we were able to get really good quality stuff for a fraction of the original price.

Look for hand me downs

On this same thread, we were recently looking at getting a new TV. Our old TV was about 10 years old, so we thought it was about time to get something a little better.

We looked at a few options but I really struggle to spend money on TV's because I feel like it's such a cliche consumer good that you can easily waste money on.

Conveniently, my parents were buying a new TV and so we gladly accepted their hand me down. It's still about 5 years old, definitely not the latest and greatest. But we were happy to accept it and we didn't need to spend a thing.

Realise that buying more doesn't equal happiness

It's great to see that minimalism is starting to take off. And with it, more and more people are realising that buying more stuff doesn't equate to more happiness.

Have you ever wanted something really badly, then when you finally got it, your satisfaction or enjoyment for that thing was either a lot less than you thought or it went away very quickly?

In A Guide to the Good Life (summary), author William Irvine talks about hedonic adaption. This is where our lifestyle choices adjust with an increase in income. So when you get a pay rise, your spending goes up and as a result, we don't really feel the benefit of that extra income.

I now try and practice the opposite which is where I take satisfaction in having the discipline to not buy something. For ages, I've wanted a pair of Apple AirPods. They look so cool, don't they! But I still haven't given in because I just don't need them. Knowing I haven't given in to this material desire makes me feel great. I'm proud of myself. And I bet this feeling will last longer than the temporary satisfaction I would get if I did buy them.

Spend where it counts (conscious spending)

Another great takeaway from I Will Teach You to be Rich is the idea of “conscious spending”. This is where you make decisions about where you're going to reduce your spending so you can spend a bit more in other areas.

For example, we don't spend money on flash cars, new TV's or eating out all the time. By under spending in these areas, I'm happy to spend a bit more to buy a MacBook and iPhone.

We each have things that are valuable to us. Maybe your thing is designer shoes. Great, go nuts! As long as you've decided where to cut back so you can spend a little more elsewhere.

Reduce (silly) interest payments

Don't pay interest on your credit card (see: Take advantage of credit card rewards).

Don't get a car loan. Buy a car you can afford.

Don't borrow money to buy non-essentials.

Just don't do it!


Create a side income (monetise your skills)

This is how my business started. I was working full-time and started selling my ebooks, courses and consulting services “on the side”. Eventually, I was able to quit and go full-time which was my goal. But you don't have to do this. If you have a full-time job that you enjoy you can start a side-business to earn a little extra cash.

It's so easy to make money online these days. Become a consultant, freelance and monetise your skills (e.g. design, accounting), do some affiliate marketing and promote other people's stuff, start an online store, or just start an eBay store. The list goes on…

If I challenged you to find a way to make an extra $500 this month, I bet you could find a way to do it!

Sell your old and unused stuff

Whenever I see stuff around the house that I no longer use or need it goes straight on TradeMe (New Zealand's eBay). There's probably hundreds or even thousands of dollars worth of stuff lying around your house that you don't use that you could easily sell to someone else.

I do this for fun all the time and even after cutting down on the amount of stuff we own I'm still finding stuff to sell.

Negotiate a pay rise

If you're a salaried employee, can you negotiate a pay rise? Maybe you've taken on more responsibilities or have been with the company for a while and your income hasn't been adjusted accordingly.

While I'm not an expert on negotiating pay rises. If I were working again, I'd do everything I can to learn how to negotiate and get a pay rise.

A number of years ago my boss actually paid me a bonus for helping to implement Asana at the company (which eventually lead to me starting my own consulting business).

What can you do to add value to your company and get paid more?

Get paid for odd jobs

Drive for Uber or Lyft.

Charge electric scooters.

Become a task rabbit.

Mow your neighbour's lawn.

Become a part-time virtual assistant.

Take advantage of credit card rewards

So far I've talked a fair bit about not taking on extra debt or paying credit card interest.

With that said, we use a credit card all the time. Everything we can we put on our credit card instead of using cash or a cheque account.

Why? Rewards!

Our bank offers a cashback rewards scheme so everything we spend goes towards getting a bonus payout at the end of the year. Obviously, don't buy lots of crap you don't need. But for buying groceries, gas, insurance etc. put it all on your card and you'll be rewarded later.

The last time we got paid a reward we received about $800. Not bad.

The key to making this work is making sure you pay the balance of the card in full each month. This means you never pay any interest but still earn the rewards.

Contribute to investments and savings (even a tiny bit will help)

While not everyone may be in the position to do this, aim to save a little bit each month. Better yet, set up an automatic transfer to send 5-10% of your income to a savings or investment account and you probably won't even notice the difference.

When you do, this money is working for you 24/7 growing and growing. Over time the effect of compound interest increases and in 20-30 years you'll have a nice little nest egg ready to hatch.


I hope you can take away even just one new idea from this post. If you have any other great saving or personal finance tips, let me know in the comments below!