Become a Money-Saving Jedi

Lunch-and-learn on saving money
A recent lunch-and-learn on saving money

A friend recently asked me to speak to her company at an informal ‘Lunch and Learn,’ about a common financial problem many of us face, namely “How Can I Save Money?”

My initial thought – and some version of this is same thought occurs many times somebody asks me to help with anything[1] – is that I’m not the right person to lead that discussion.  But I’ll get to that point later.  As Suze Orman was apparently unavailable that day, I put together my thoughts, and this is what I came up with.

Beyond Rational Thought

Saving money, losing weight, or kicking addiction all exist in that realm of adult behavior change which are immune to rational solutions.

I can enumerate four good factual, rational, reasons to not eat cupcakes, but that rarely stops you from ordering the red velvet with icing and a cherry on top.

I can list 10 techniques for cutting out non-essentials from your daily expenses but you’re still probably going to blow $30/week on the Venti Iced Pumpkin Spice Caramel Double Shot Frappuccino, aren’t you?

(Incidentally, I don’t think it will work, but if you do want a list of at least 51 great ways to save money,  the best chapter I’ve ever read on the topic is Chapter Two of Andrew Tobias’ excellent The Only Investment Guide You’ll Ever Need, which is entitled “A Penny Saved Is Two Pennies Earned.” I reviewed Tobias’ book here.)

Purchasing non-essentials doesn’t make any financial sense, and it certainly doesn’t help your diet when it involves things like cronuts, but we’re in the realm of deep subconscious decision-making here.  You can’t rationalize your way into good decisions in this realm.

Can this Jedi help you save money?
Can this Jedi help you save money?

Trick the Mind

In short, you need a Jedi.

My advice for someone struggling with saving money on a monthly basis is to realize that rational thought is helpless in the face of subconscious desires, and that only by tricking our rational mind do we have a chance. 

Consequently, I’ve got three Jedi mind tricks to offer:

1. Hawthorne effect (aka, “Observer effect”)

Scientists – ranging from quantum physicists to weight-loss investigators – struggle with the “Hawthorne Effect” the idea that in the act of observing something we inevitably alter the thing we study.  How does this relate to saving money?  You can be your own frustrated scientist by studying your household budget, as I wrote in an earlier post.

You could decide to buy budgeting software like Quicken, or use an online service like, or or just save your money and create your own Excel Spreadsheet.  You’d need to record every single monthly expense, then categorize it into essential, useful, and non-essential.

As you dig into where your money goes and start observing closely, you will gather data.  And that data can be helpful in its own right, but does not actually constitute the Jedi mind trick I’m talking about.

What I am talking about is that you will probably begin to skew the data in a positive direction by the mind trick of the Hawthorne effect.  The longer and more closely you begin to observe your spending patterns, the more likely you are to shift your spending patterns toward a more positive direction.  That skew that frustrates scientists will nudge you to better choices.

Also, lest you forget, Try not.  Do, or Do Not.  There is no try.

2. Radical Transparency and Positive Peer Pressure

As sober alcoholics know, most of us need a group.  We need to be able to tell our story. 

Having trouble saving money is hard enough, but it’s especially hard because it typically happens in secret.  Our shame and personal struggle to save money is in our heads, and we console ourselves with the fact that at least other people don’t realize we have growing credit card debt.

And when we go out with our friends, we’ll happily pick up the tab because, shit, I don’t want anybody to suspect I’m broke. 

Obviously, this is part of the problem.

As a result we’ve got to trick our minds.

Something that seems to work for saving money is radical transparency – oversharing with others who will cheer you on, pick you up when you fall, and ideally join you in the journey.

The first step on the journey would be to pick the peer group, and often including a partner or spouse would be an important first step.   

Maybe they’ll come from your regular Wednesday 6am Yoga class.  Maybe they can come from a subset of regulars at your favorite Magic: The Gathering game store.  More likely, these days, you will draw your social network of radically transparent money savers from Reddit, or Facebook, or Twitter.

Or maybe they will come from the Jedi Council. 

It doesn’t matter so much how you form the group.  What matters is that you feel responsible to others and you don’t try to save money alone.

Each person in your group who commits to saving money further commits to transparently share their struggle, methods, successes, and failure in saving money each month.  When you get tired of posting that you’re broke, or watching your friends do the same, you move that tendency to radical transparency in a positive direction and get people to help you form an action plan.

The reader profiles on a site like Free Money Finance are an attempt at this kind of radical transparency.

Forcibly trick your mind away from keeping your spending patterns secret, and instead tap into the pride and peer accolades you will get at making the difficult money-saving choice.

3. Out of sight, out of mind

I typically don’t use either of the two savings plans above, but I absolutely use this one.  Money you don’t see is the best way to save.

After all, these are not the dollars you are looking for.  Move along.  Move along.

If we don’t have money in our hand, or if in fact we never even see it in our bank, it’s much easier to forget that we ever had it in the first place.  Which, naturally, means we’re more likely to save rather than spend. 

Automatic payroll deduction is by far the most important Jedi money-saving trick available.

This one works, and it’s particularly awesome when saving for long-term problems like retirement or college tuition.  If you’ve got an employee-sponsored 401K plan or 403b plan, there is simply no better way to create saving than to have your paycheck automatically deducted.

Automatic bank transfers, if you don’t have access to a 401K/403b plan, work next best.  Most banks and most investment programs will happily set up automatic transfers between your accounts.  Slipping a few hundred dollars per month out of your checking account into a savings account, or College saving 529 account, or a mutual fund account may be the only way for most of us to actually accumulate savings over time. 

Most of us badly need this Jedi mind trick.

The least financially efficient – but still frequently used – version of this is the IRS tax withholding/refund trick which many of us use.  We love it when the IRS sends us a few hundred or a few thousand dollars refund after we file our taxes. 

Unlike automatic payroll deductions or automatic bank transfers, the tax refund trick is inefficient, as you end up giving the federal government a 0% loan until you get your refund.  But it also constitutes a major part of many people’s savings plan.  

Ideally, we would act like the Russian-accented flying bug Watto, and refuse Imperial Credits.[2]

But because ‘out of sight, out of mind’ works so well, we end up using tax refunds as a kind of savings plan as well.

When you feel artificially poorer you adjust your lifestyle and spending accordingly.

Concluding thought

Messing with yourself with Jedi mind tricks like a  science project, radically exposing your finances to others, and tricking yourself into feeling more poor than you really are – each of these techniques are irrational.  Each of these operates on the subconscious in a way that doesn’t make perfect sense.

But because that’s often where the problem lies in savings money, that’s where the solution will come from as well.

Post-script: Incidentally, who is best qualified in your life to help you learn to save money?

It’s not me. 

My guess is that the best person to help you figure out how to save money is somebody who has suffered from living beyond their means in the past, and who has developed effective strategies for overcoming this problem. 

I’d rather ask a formerly-chubby-now-turned-Cross-Fit-stud for weight loss advice than I would the naturally skinny person who has never struggled with extra pounds.

Just like a recovering banker turned blogger has something to offer a society trying to recover from the particular affliction of banking, you need hard-won experience to understand and change certain behaviors.

Having told you why you shouldn’t take my advice, I went ahead and offered it to you anyway.  Which is kind of irrational.  I hope it works.


[1] I don’t think my instinctual “I’m not the right person” comes from pure laziness or avoidance of helping others. 
However, I am reminded of this great piece of advice from Jack Handey:
To me, it’s always a good idea to always carry two sacks of something when you walk around.
That way, if anybody says, ‘Hey, can you give me a hand?’ you can say, ‘Sorry, got these sacks.’”

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