Realistic Personal Finance Hacks

Hacks are hard because shortcuts rarely exist. Prizes take time and effort. These aren’t fun hacks, but no one said this was easy.

1. Accepting that living below your means requires suppressing your ego to below your income.

Spending above a certain level of basic needs/leisure is mostly ego and social climbing. So savings is just a diversion from boosting the appearance of your status today for more productive use tomorrow. When you define savings as the gap between your ego and your income you realize why many people with decent incomes save so little. It’s a daily struggle against instincts to extend your peacock feathers to their outermost limits and keep up with others doing the same. People with enduring personal finance success – not necessarily those with high incomes – tend to have a propensity to not give a damn what others think about them.

2. A spouse who sees eye-to-eye on spending.

The fastest way to break your finances is to marry someone with wildly different spending expectations.

3. Avoiding trouble to begin with.

Charlie Munger: “Nobody survives open heart surgery better than the guy who didn’t need the procedure in the first place.” A corollary: No one gets out of debt faster than the person who avoided it to begin with. 

4. A finely tuned radar that screams “red alert” when promises of abnormal gains without abnormal sacrifice are offered.

This includes skepticism of most financial hacks, which tend to be appealing but fictitious shortcuts.

5. Pick a career that may not be your passion but pays a decent wage.

Chris Rock’s advice for kids – you can’t be anything want; you can be anything you’re good at, as long as they’re hiring – is good. Scott Galloway’s advice – people who tell you to follow your passion are already rich – is great. It’s unpopular to say, but a career that isn’t your passion yet earns a good income can be preferable to the alternative. This is less about money and more about freedom: A low-income passion job may breed resentment as you age and have kids, mortgages, all kinds of higher bills that become burdens large enough to suffocate the joy you get from working in your passion. But a job you merely like that pays a decent income – provided you live below your means a save a chunk of that income – can eventually offer a level of financial flexibility that lets you pursue passions as hobbies, purely for their pleasure.