Realistic Personal Finance Hacks

Hacks are hard because shortcuts rarely exist. Prizes take time and effort.

The personal finance industry – filled with advice that sounds and feels good without moving the needle – needs to recognize this.

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. It’s the most underrated finance skill.

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. Two people who spend a lot is probably safer than one saver and one spender, since money disputes are a leading cause of divorce. A related personal finance hack: don’t get divorced.

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. Count how many programs there are to consolidate and manage student loans compared to those encouraging strategies to get a degree without debt – 100 to 1, at least. Same in investing. Part of why get-rich schemes are popular is because so many people need to get rich quick after delaying savings too long. An underappreciated truth in finance – especially investing – is that you don’t need to make many great decisions to do well over time. You just have to consistently not blow it for long periods of time.

4. Utilize low-status, high-efficiency services.

The biggest are community college for GE credits, in-state tuition, and public libraries.

5. A finely tuned BS 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. Also: sales commissions, and suits when they’re unnecessary.

6. 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.

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