Using Math To Help You Save Money

Whether you were good at math in school or not, you can make math work for you…and not necessarily the way you think when it comes to money.  The simple basics of addition, subtraction, multiplication and division can help change your outlook and habits when it comes to managing money.

Add.  Instead of trying to completely overhaul your financial lifestyle, just add one positive discipline at a time.  For example, consider not doing anything different other than starting to save just $5, $10 or $50 a week…whatever is reasonable for you to begin saving on a regular basis.  Even if it’s just putting the money in a jar, seeing the money add up can be incentive to then take the next step.  Other suggestions to help you add one manageable financial discipline to your life at a time:

  • Complete a budget worksheet to get a good start on getting a picture of what your financial life looks like right now.
  • Pay your credit card bills on time and try to pay them in full or pay more than the minimum.
  • Balance your checkbook once a month.
  • Keep your receipts in an envelope and add them up once a month to see what you’re spending.  After a few months take a second step and evaluate your spending on a monthly basis.
  • Take lunch to work instead of eating out.
  • Buy yourself a coffee maker and travel mug and make coffee for yourself before heading out the door in the morning.
  • Try shopping at a less expensive grocery store for a month.
  • Look into paying your bills online through your bank and save the money of postage for mailing payments.
  • Empty your pocket change into a jar and at the end of the month take it to a change machine to see how much you’ve saved.
  • Consider having a small set amount automatically deducted from each paycheck and deposited into a designated savings or retirement account.
  • If your employer offers a 401(k) or 403(b) retirement savings plan and you’re not currently participating in it, ask the human resources department at your work place for information on how to sign up.  Then take a second step and sign up to begin participating.

Subtract.  Allow yourself to subtract, or “lose,” your fear of managing your finances.  Sometimes just getting back to the basics can help loosen fear’s grip.  At its most basic, managing your money is about four simple things:

1) Knowing how much you earn

2) Keeping track of how much you spend

3) Trying to spend less than you make so you can save money

4) Investing your savings to make more money for the future

The next time you begin to feel anxious, remember that you CAN do this if you take it just one small step at a time.  Implementing just one small, positive change in your financial life at a time (see tips in “Addition” above) will boost your confidence that you can lessen the fear of taking control and managing your money.

Multiply.  It can be easier than you think to multiply what your money can do for you.  Compound interest – when your interest begins earning interest – can help your savings multiply even faster!

For example, if you have some savings at home, look into opening an interest-bearing checking or savings account that will pay you a little bit each month for keeping your money in the account.  If you have an interest-bearing account, check to see how much interest you’re currently making.  Consider whether you could make more interest by moving your money to another type of account.  Other ideas for multiplying what your money is currently doing for you:

  • Check to see if your credit cards offer rebates or points toward items that you would likely purchase. Visit to see what interest rates and incentives other credit cards offer compared to the cards you’re currently holding.  Be wise when selecting a card.  Look first for a low interest rate and review the terms and conditions.  Don’t just pick a card based on the potential bonuses you could accrue by using the card.
  • Look into Flexible Spending Accounts (FSA) that your employer may offer.  By setting up a healthcare or dependent care FSA, you can have a pre-set amount of money automatically deducted from your paycheck pre-tax and deposited into an account that you can use for qualified expenses (such as doctor visit co-pays or prescription costs under a healthcare FSA or daycare costs under a dependent care FSA).  Using an FSA benefits you in three ways: (1) the money is withdrawn from your paycheck pre-tax so you’re lowering the amount of pay that you’ll be taxed on; (2) you’re getting into the discipline of automatically creating savings for yourself and your family; and (3) you’re putting aside money that you can use to pay for future expenses instead of having to charge expenses or take money from other savings.
  • If you have multiple retirement accounts or savings vehicles consider talking with a financial professional about whether consolidating your accounts could reduce paperwork and the time necessary to keep track of them and possibly increase the money you can earn by compounding interest on a larger pool of savings
  • Donate gently used clothing, household items, etc. to a local non-profit organization or charity.  By doing so you will be reducing your clutter, helping someone else and you will get a tax deduction for your donation)

Divide.  One of the biggest obstacles to managing money is time.  Many people feel like it simply takes too much time to keep records and research potential ways to save or invest.  As with achieving any big goal, it helps to divide the job into manageable portions.  For example:

Sample Money Management Schedule

Week 1:  Set aside 30 minutes to pay bills and file bills/statements after they’re paid.

Week 2:  Schedule 30 minutes to update your checkbook with the deposits and withdrawals.

Week 3:  Schedule 30 minutes to enter earnings and savings in a budget worksheet and see how you’re doing with current spending and savings compared to your budgeting goals.  Note a few small changes you could make to bring yourself closer to your target financial goals.

Week 4:  Schedule 30 minutes to review monthly bank and/or investment statements.  Read the fine print!  Make notes about questions you have or changes you might like to make. Then contact your financial professional.

By dividing the big job of “handling finances” into four thirty minute tasks per month you can begin to get a better handle on managing your money in just two hours a month!

Four simple tips can help you organize your financial life and improve how you approach handling your finances:

ü      Add one small, positive financial action to your lifestyle at a time.

ü      Subtract fear from the money management process.  Stop telling yourself there is nothing you can do to improve how you manage your money.

ü      Multiply what your money can do — investing savings in interest-bearing accounts and participating in plans (i.e. 401(k), FSA plans), for example, enable you to save money, lower your taxable income and invest for your future.

ü      Divide up the job of managing your money into smaller tasks.

Add, subtract, multiply and divide.  Let the basics of math help you get a fresh start toward a secure financial future!


Free Budgeting Spreadsheet

I have recently started using Google Documents and Spreadsheets to manage my budget. If you haven’t heard of Google’s Docs and Spreadsheets here’s the lowdown: With Documents and Spreadsheets you can upload, create, or email yourself a document or spreadsheet and it will be saved online allowing you to access it from any computer (provided that you have a Google Account). I have found that managing, completing (and sticking to) my budget has been much easier using this method than any other method I’ve used in the past. Here’s why:

  1. You can view your budget from any computer. Having your budget available online allows you to check to see if a purchase is reasonable for that month. (For example, at the end of February I was debating whether or not to go to an expensive dinner with a friend. I wanted to go, but I didn’t want to blow my budget. So, I quickly logged in to my spreadsheet and there I had it!- I knew I had enough funds to go.)
  2. You can update your budget from any computer. You can continually update your budget and having it available online allows you to quickly go in and add an expense from wherever you are. I keep a running total of my expenses by category and log into my budget a few times a week to insert these expenses.
  3. You can share it with others. Having you budget on Google Spreadsheets allows you to share it with your spouse/significant other/partner (or anyone else you might like to share your budget with).

If you still haven’t set up a budget or don’t have one in Excel, there are two excellent spreadsheets that that you can download at I Will Teach You to be Rich. (There are two links in the middle of the post). I tested both and if you download either one to your computer and then upload it to Google Spreadsheets the equations remain intact.

Quite honestly, I have never really been able to keep up a budget before because I find it hard to sit down at the end of the month and add up all of my expenses (and I never really liked Quicken or Money). Adding expenses as I accrue them into my Google Spreadsheets budget is easy, fast, and unlike other online software programs, it’s free!