Earning money can be hard, but saving money is easy if you track your spending, live cheaply and are money-conscious.

Every week, we go to the local market for our routine fruit and vegetable shop. But something stood out last week – the vegetable seller used an abacus to tally our bill.

In our world of smart phones and lightning-fast internet, an abacus is not something you see every day. But it got me thinking – some of the best tools to save and manage money are often the most basic.

Here’s five basic tricks we follow to maximise our savings and, ultimately, to help us retire early.


1. Track your spending with pen and paper

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While unsophisticated, tracking your spending with pen and paper is very effective.

Studies show that most wealthy people religiously plan and track their expenses each month. Once you know what you spend every month, you’ll know how much money you can devote to investments.

So, in October last year, we decided to start tracking our expenses. Brad had previously tried using the Monefy app but found it annoying to use. Instead, we decided to use the tried and true method of pen and paper.

It’s this simple – we have an A4 piece of paper on our fridge, on which we write down our daily expenses along with the expense category e.g. groceries, dining out, internet, petrol, etc. At the end of the month we manually enter it into a spreadsheet and, voila, out pops the totals for each category. Then we can see if we’re meeting our goal of living on 30% of our income.


2. Use cash – it’s tangible

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By using cash, your spending will feel more ‘real’.

In Australia, spending money has become too easy and mindless. All it takes is a tap of a card or a wave of a phone and, poof, the money is gone from your account.

In comparison, when you use cash, you physically hand over notes and coins to another person, after which you can see that you have less money in your wallet. It forces you to be more connected – physically and mentally – to your money.

For this exact reason, my friend’s psychologist makes her clients pay with personal cheque (there’s no option to pay by card). Because the psychologist believes that the physical act of writing and handing over a cheque makes people more conscious of their spending. While I hate cheques myself, I do think she has a valid point.


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3. Avoid window shopping – it leads to unnecessary purchases

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If you don’t window shop, you won’t buy what you don’t need.

Marketing gurus thrive on creating a shop display, a promotional sign or an in-store scent that will entice you to spend money. So, unless you hate shopping (like my husband), or have exceptional willpower, it’s best to avoid going to the shops. That way, you can’t buy something you don’t need.

I had to learn this trick the hard way. A few years ago, when I worked in the Sydney CBD, I would pass countless numbers of clothes, shoes and accessories shops on my twice daily ten-minute walk between the bus stop and my office. And naturally, when I saw a nice dress on display in a shop window, or a huge SALE sign, I couldn’t help but go take a look, which often led to unnecessary purchases.

Now, because I drive to work, I don’t pass any shops during my commute. And on weekends, I make an effort to avoid the shops unless I really, truly need something, which when I do I try to buy when on sale. So, it’s the perfect solution – by not going to the shops, I don’t give myself the chance to spend money.


4. Be frugal, like Warren Buffett

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Instead of buying a yacht, save your money for early retirement

Warren Buffett may be one of the richest men on the planet but that doesn’t stop him from living cheaply. He still lives in his Omaha, Nebraska, home that he purchased in 1958 for just USD 31,500. He has simple tastes in food, including McDonalds hamburgers and cherry Coke, and disdains expensive toys and luxuries.

While we earn much, much less than Mr Buffett (unfortunately), we too believe in living below our means.

When it comes to technology, we opt for basic Android phones and only buy a new laptop once it’s dead (it took seven years for our Macbook to die, after which we begrudgingly replaced it). I have five outfits that I wear to work and one pair of shoes to match. We chose not to have gym memberships, to get $10 haircuts, and fly on low-cost carriers when we travel.

Not spending money can be a surprisingly hard thing to do, but you’ll be thankful when you’ve got extra money to invest at the end of the month. Bring on early retirement!


5. Be money-conscious when making life decisions

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When making a life decision, think about the financial impacts

Spending money is a lot easier than earning it, so it pays to be conscious about your money when making life decisions. For example, questions like where should we go on holiday, should we buy a new car, or should I accept this new job all have financial implications. Reviewing the pros and cons of all possible options can prevent hasty spending and money trouble.

But it’s important to remember that not all choices are purely about money. For example, when we had our son, we decided that my husband would stay at home to be the primary carer. This was important to us and, as a result, we live cheaply (see point four) as a way to counter the lost income.

As you can see, there’s nothing complicated about these five tricks and tools. Yet amazingly, these actions will be a huge help to achieving our goal of saving more money and investing smartly so we can retire early.

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