Video: 7 Tips For Saving

Here’s another installment from my KLRN public television video series “It Just Makes Cents.” This one is on how to save money.

The text is linked here, if you like to read.

Or…if you like your juicy savings tips in podcast/audio format…we’ve got that too!

Fine, fine. Here’s the actual text on KLRN

You want to save money. Duh. Who doesn’t?

I’m a true believer in one way above all others. Let’s start with the one TRUE thing before reverting to other tried-and-true pieces of savings advice. 

1. Automation

I believe in this above all other savings methods. Automate regular contributions of a set amount, on set days, into a savings account. You set up this automated plan with your bank or credit union once and then let it run in the background of your life. For the rest of your life. Every week, or every other week on payday, or every month (or whatever, knock yourself out, set it on daily, go crazy!) you automate a transfer from your checking account into a somewhat-harder-to-access savings account. 

The key is to make today’s decision to save happen automatically in the future. Electronic. Programmed. Unchanging. Savings by Robot. That way, You don’t have to make the decision more than once. We’re not strong enough for that. But automation doesn’t depend on us being strong. Which is exactly why it works.

My bank takes a small amount of money every few days out of my checking account, automatically, and puts it into my savings account.

I’ve also successfully used the automated savings app Qapital for this automating function. This is by far the best new school way to save money and if you’re not doing it then I don’t know what to tell you except this, in a deep Arnold Schwarzenneger voice: DO IT. 

After automation, tips 2 through 7 could also help.

2. Goal Setting

First – set a specific dollar amount. Next, name it. Write it down. Make it real. The idea here is that when you name your goal “Three fabulous new outfits to rock the house,” “Dream trip to Dollywood, TN,” or “BMX racer” or whatever you’re actually saving for, you change the feeling of savings from that grey gnawing emptiness in your belly into something tangible, exciting, colorful, and worthwhile. Going without today is a necessary step toward having something awesome tomorrow. Goal setting can help do that.

3. Round-ups

The old school way was to drop that pesky pocket-change of coins and small bills, collected throughout your day, into a change jar for a year or so, and then bring that all down to your bank or that coin machine at the grocery store.

The new school way is to use ‘round-ups,’ essentially the less-than-a-dollar change you’d get from making plastic purchases (via debit & credit cards) and then electronically tracking all that electronic loose change. When it reaches $5, you automate that amount into a savings account. Many banks can do this automated round-up thing for you, as will many savings apps like Qapital and Acorns.

Does it work? Yes, it works. Mostly because of (see above!) Automation.

4. Identify the Tiny Leak, maybe?

Maybe you can’t save, and you don’t know why. The answer is, maybe, in the small stuff? The dreaded answer, if you’ve ever read those other finance blogs aimed at Millennials, is your regular latte or your avocado toast. And you’re sick and tired of hearing that cliche. So you hope I won’t mention the words L*tte or a*ocado t*oast anymore.

Look, the big idea here is not to forbid you from having those things, or some other small luxury item you crave. The big idea is to find out – maybe just for informational purposes! – what you’re spending money on. So…try for a week…write down every single purchase you make. Tic-tacs. iTunes. Hulu subscription.  Everything. Did you find the leak? I’m not saying you can’t have those things, but rather – it’s worth maybe knowing where the leak is coming from. Right? Well, maybe.

5. Sorry, But It’s Actually The Big Stuff

The worst thing about the avocado toast and latte lecture to Millennials is not that it’s a cliche (although the cliche is admittedly bad) but that it’s not even the heart of the matter. The ‘matter’ being your struggle to save money. The true fact is that most of your money is going to housing and transportation every month, not lattes and avocado toast. Which seems pretty immovable. But also…the correct answer to the savings puzzle – the mathematical answer – is your house payment and car payment. Do you really, really, really want to save money but can’t? Big changes in savings won’t happen without making difficult choices about your house or car payment. Sorry, I didn’t invent math. I’m just reminding you of it. 

6. Only Carry Cash

You take out a certain amount of money. You buy stuff with that limited amount of cash. You don’t use plastic. When you run out of the cash, you don’t buy anymore, because: NO MORE MONEY. Your grandparents did this. They saved money this way. This is decidedly old-school and a bit extreme, but try it. Maybe it will work for you. 

A variation on creating an all cash world is the envelope trick. Some people swear by this one. It’s similar to the “Only Carry Cash” tip, but a bit more organized. You label a bunch of physical paper envelopes with your specific monthly budget. Things like “Rent,” “Utilities,” “Groceries,” “Entertainment,” and “Gas Money/Transportation.” On payday, or the beginning of the month, you withdraw a set cash amount and put that amount in each envelope. When the money runs out this month, no more spending on that category until the next pay day. No plastic. No cheating. Again, it’s extreme. But this has worked for millions of people, and might for you.

7. Bargain/Haggle

You know what else Grandma did? She haggled. Everywhere. With her limited wad of cash. With all the shopkeepers. Like, every day. You can offer less than the store wants at pretty much any place that isn’t a complete chain store. All furniture stores, for example. Any service provider. All locally-owned businesses. Pretty much every business owner has a bit of flexibility in their prices, if you ask.


Does that seem uncomfortable? Would you be embarrassed to do this? 

Well, put it this way: Would you make yourself momentarily uncomfortable by sticking your arm under the driver’s seat of your car to retrieve a $20 bill? I would. Well, haggling at the store is more like sticking your arm in an uncomfortable position with hundreds of dollars within grasp, and thousands of dollars at stake per year. Try a little discomfort. Your grandma actually enjoyed it. You might also.

But can I remind you of the one best way? Ready? 

Automate your savings! 


(Thanks, Arnold.)

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Automatic For The People


For getting started with basic finance goals, we need robotic automation, not human resolution. I’ll explain.

Did you know that January 17th of each year is officially “Ditch New Year’s Resolutions Day?” This post lands squarely in the spirit and timeline of that tradition. Resolutions never work. Instead, automation works.

I’m a finance guy so my “automation, not resolution” idea pertains to your savings and investment goals. Like most sentient beings, you’d like to save more money and invest more money. But your best financial intentions for savings and investment in 2018 have already been ditched in advance of Ditch New Year’s Resolutions Day.

And I’m so, so sorry to learn your other 2018 New Year’s resolutions about eating clean, exercising more, and paying closer attention to family members isn’t working anymore. Same here.

If only I were a robot, I think, I would fulfill my resolutions so much better. Robot-Mike would never miss leg day at the gym. Robot-Mike would never eat those donuts. Robot-Mike would pay close attention to his beautiful children, instead of reading Twitter on his phone.

I just want to describe for you three automation things for savings and investment that worked for me in the past year. The beautiful thing about automation is that it brings that steely robotic resolve to solving the squishy human problem of savings and investment. Each one took about 10 minutes (maximum!) to set up. Then the automated process just hums in the background of your life. Human weakness regarding sugar, carbs, exercise-laziness and Twitter-distraction can’t knock these financial bots off track.

In the beginning of June 2017 I signed up for an automated savings program offered by my bank called “Tracker.” This is a goofy and effective savings scheme in which my bank slips a varying amount, between $1 and $9, out of my checking account and into my savings account, every Monday, Wednesday and Friday. The amount varies according to the bank’s own proprietary system, although it will not transfer any money if my checking balance drops below $100.

The “Tracker” app, with a picture of a dog, then sends me an encouraging text message to my phone every day about how much I have in my checking account, or how much I’ve saved, or some dumb factoid about either dogs, or money. This is silly except that I saved $504 over the course of 6 months without even noticing how. (Well, I noticed the text messages.)

And I know, $504 is not life-changing, but it’s also much better than not having that extra $504 in my savings account, without even trying. My bank built the Tracker app but I’m pretty sure any bank you may use in 2018 will let you set up an automatic transfer program to slip small amounts out of your spending account and into a harder-to-spend-from savings account.

In May 2017 I wrote about a funny savings app called Qapital (which I enjoy pronouncing incorrectly as Kwapital.) Qapital, like Tracker, slips small bits of money – you determine the amount and timing – out of your checking account and into a Wells Fargo account you access through the app. Qapital encourages you to set final goals for your savings (I chose to save $500 in order to purchase shares of stock for my daughters) and to pick the triggers for transferring. My trigger was a “52-week rule,” which started with $1 in the first week, and increased by $1 each week that followed. By November 2017, right on schedule, my Qapital savings account reached $500. The beautiful thing about Qapital, like the Tracker app, is that the tiny amounts of weekly money never pinched. I never missed the money removed from my checking account.

In May 2016  I downloaded and started investing through the Acorns app. Like Qapital, Acorns lets you determine an amount you’d like to automatically transfer from your checking account on a daily, weekly, or monthly basis. After a bit of prodding from the app, I settled on a plan to transfer $5 per day to Acorns according to their “Aggressive” (aka risky) portfolio of ETFs. Why $5?

Like many caffeine addicts, I can easily spend $5 or more on coffee and other non-essentials per day, so I decided $5 was the right “punishment” amount to contribute to Acorns.  21 months later I have $5,875 in my Acorns account. Most importantly, I’ve never missed the daily $5 hit to my checking account.

Maybe you’re thinking that $500 of savings ($1,000 if you count both Qapital and Tracker!) or $5,875 of investments doesn’t make a whole lot of difference in one’s life. You’re not impressed.

“Big deal, finance blogger,” you’re thinking, “what about the real money?”

“Ok, Big Shot,” I’d respond to you, “fine.” All of these automated processes work at a larger scale as well. Crank it up to 11. Make my day. Go for the real money. That would really show me up. But also, the Acorns app has a neat little projection graph that shows my dumb $5 per day building up to a $100,000 portfolio by age 65 and a $400,000 portfolio by age 85. Which could matter some day.

automatic_for_the_peopleThe point here isn’t that your favorite finance blogger is really good at savings and investments. Rather, the opposite. The point is that anyone not very good at savings and investment could produce similar (or far better!) results while hardly trying. The further point is that automation of savings and investments means you don’t have to be disciplined throughout the year. You don’t have to stick to any resolutions. You make the robot do the thing for you.

After the initial 10-minute set-up of automated transfers, just literally do nothing the rest of the year. Heck, the rest of your life. Doing nothing becomes, in fact, the key to your success. “Doing nothing” feels like a New Year’s resolution we can stick to, long past January 17th.


A version of this post ran in the San Antonio Express News and Houston Chronicle


Please see related posts:

Whoa…Acorns is really good

Qapital is goofy but might help kickstart savings



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IFTTT with Qapital

qapitalTransitioning from being a paycheck-to-paycheck person to a person with actual accumulated savings in the bank is one of the classic problems of personal finance.

Maybe you got there easily, as soon as you started earning money. If so, you are not the majority. Some never get there. A large number of people are in the middle, struggling from year to year to make progress on the problem of building up some savings.

If you have a problem saving money, maybe you need a fin-tech crutch, one of which I just tried using last month, called Qapital. **

The national average savings rate of 5.7% (saving $5.70 for every $100 earned) is not only well below the minimum recommended 10% rate, but also is well below historical averages in the United States. Not only that, but average means that for every above-average saver, many have no savings at all.

We know from behavioral economics that automation is one of the things that works for both savings and investments. Automation – the slipping away of bits of unnoticed money from your account over time – is the most important tool for savings and investment that I know of. Automation is why 401(k)–type plans work

I picture the power of automation in the context of dieting. If I’m served a big plate at a restaurant, you’re darned right I’m going to finish everything there. Proudly. But if I had a secret invisible robot to remove a portion of food from my plate at every meal, unnoticed by me, I might just slim down faster. Acknowledging my human frailty and appetite, I might just benefit from this technology solution.

Analogously, the automation of savings keeps our greedy little hands from spending all of our money as soon as we get it. The Qapital app which I’ve been trying since April applies this power of automation to the problem of savings, with a few clever twists.

iftttQuick side note: I guess the app is pronounced “Capital,” because “Kwap-ital” is just too absurd and awful. My wife, however, decided to call it Kwap-ital and that makes me laugh every time.

Anyway, about the app. First, it suggests that you set a goal for savings, such as going on a trip, a specific purchase, or paying down debt. You name your goal in the app. We probably need specific monetary targets, for a specific purpose, in order to do the hard thing.

In mid-April I decided to set a goal of saving $500 so that each of my daughters could have $250 to purchase more shares in their favorite stock. Man, they just love stock investing! I mean, not really, but a Dad can dream. My wife set a goal of saving for a vacation to Scotland. Man, we just love eating haggis. Again, not really.

Anyway, next the app prompts you to link your checking account, which funnels money into a newly-created savings account, held at Wells Fargo and fully FDIC-insured. No word yet on whether Wells Fargo will create a bunch of fake accounts in your name afterwards. (I kid. But they deserve it.)

unicorn_frappucinoFinally, Qapital came up with clever rules to encourage your savings – some sensible, some goofy. You can program Qapital to transfer money into a savings account for accumulating sports memorabilia whenever you use specific hashtags on Twitter, like #TomBrady is the #GOAT. You can set a rule that transfers money to pay for your CrossFit membership whenever you make a terrible decision like purchasing a Unicorn Frappuccino from Starbucks. You can save money for a cruise vacation whenever the temperature in your town goes above 75 degrees, or whenever it rains. You can set a rule that transfers money to savings – to be donated to your favorite political cause – whenever Donald Trump tweets. Seemingly anything that can be measured electronically can be linked to a Qapital rule. These programmed money transfers are known as “If This Then That” technology – or “IFTTT” for the cool kids.

Other rules follow a more prosaic program for regular transfers into your savings account. A friend of mine uses Qapital to automatically transfer 30% of every freelancer paycheck he receives, so that he’ll have enough money socked away at tax time. That seems like a very sober and clever use of the app.


I chose Qapital’s “52 week rule” in which on week 1 I save $1, on week 2 I save $2, and so on increasing each week by a dollar for 52 weeks. More poetically, they could have named it the “boiled frog” rule, as I feel like the slow increase in savings will be practically unnoticed by me over the course of the year.

Whenever the money moves from my linked checking account into savings, the app sends me friendly reminders and small encouragements. As of this writing I have $10 already in my account. Sweet! Go me!

All of you reading have no doubt already calculated in your heads that I’ll reach my target of $500 by week 32, or around November 26th. Also, if I let it ride for the whole 52 weeks I’ll have set aside $1,378. You can mark your calendars and send me a tweet to ask how the process went. Even better, you could program your Qapital account to transfer money into savings every time you tweet at your favorite finance blogger.


**Also, I’m putting this link here and hoping you’ll forgive me and think I’m not just a hacky shill for $5. But if you do sign up for Qapital after clicking this link, I think I get $5. And so do you!

A version of this post ran in the San Antonio Express News and the Houston Chronicle.

Please see related posts:

Check out this Acorns thing

Automatic deductions is the key to getting wealthy

Daughter’s first stock investment



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Ask An Ex-Banker: Use Savings Or Debt To Pay For School?

Note: An ex-student of mine reached out to ask a question many face… Is it best to use savings and investments for graduate school, or to take out loans?

Dear Banker, 

I saw you answered  a question from a former student about paying down debt and being unemployed on your blog. So I thought I would give it a shot! I am going back to school in January for 1  year accelerated program that will cost 40k-50k, I am not quite sure yet.
Side note: I thankfully do not have loans from undergrad. 
So I will have to take out student loans but I am unsure if I should take out the whole 40k-50k or use some of my assets to have less debt after I finish.  
I currently have $9,000 in and individual investments with Capital One, $12,000 in Mairs and Power mutual fund that my parents put money in since I was a child. I also have $3,000 dollars in my savings account. I know I shouldn’t use all the money I’ve invested and saved but I was thinking maybe $10,000 dollars to have less students loans to pay back? I’m not sure what is a better decision financially. What would you suggest?
As well, I am going back to school to be a nurse so I can assume that my salary will be around 50k-60k a year. According to this website
I saw your blog on Facebook and thought I would ask!
M.C. (San Antonio, TX)

Hi MC,

Thanks for your question and for thinking of me. I’d like to think a few of the things we talked about in class were helpful.

I hope post-College life is treating you well. Congrats on having real savings and investments at this point…this is really commendable. Plus, no undergrad debt is also a blessing. A good place to be! About your future decision to use savings vs. take out debt for a nursing degree:

I don’t think there’s a single obvious solution. You could approach this various ways and still be making the ‘right’ choice. Also, I’d probably need more info on your situation to give more confident advice. But, here’s the principles I would keep in mind:

1. Student loans – especially for a professional upgrade in skills – are not “bad debt.” Mostly they have low interest rates, with generous payback terms. If they help you achieve a good salary and life-satisfaction, they are “good debt.” $50K of nursing school debt is a lot, but manageable in the long run. The fact that you’ve got some savings and investments already also suggests that you are able to live below your means, which bodes well for your ability to pay back debt over time after you get training and when you are earning money again.

2. If any of your Betterment, Capital One, or Mairs & Power accounts investments are in retirement accounts –  tax advantaged accounts like an IRA – don’t take any money out of there to spend now. You might pay taxes and penalties to extract the money, so its better to leave those for the next 40 years to accumulate compound returns.

3. For invested money not in retirement accounts, its ok to take the money out and spend some on a worthy project like a professional upgrade. BUT…if you’re able to resist taking money out, it’s better for you in the long run. It’s so very difficult to actually accumulate savings and investments – especially when you’re in your twenties – that I think you should try extremely hard to preserve it, invested in the markets. This will mean more debt (and therefore more risk) but it seems justifiable, at least to me.

4. Leaving money invested in stocks/ mutual funds is tax efficient (meaning, every time you sell you’ll owe taxes on the gains.).

5. It’s also slightly riskier (stocks/mutual funds can lose value). But the longer you can leave them alone untouched, the better your prospects for building wealth with that money.

6. I think, psychologically, its easier to save and invest if you already have something saved, rather than zero. So I wouldn’t want you to go to zero on your investments.

Those are my thoughts. Feel free to write back or call if you want to discuss/clarify/argue about any of this.


By the way, how do you like Betterment? I haven’t really explored it but it seems like the targeted solution for your demographic. I’ve been enjoying an app called Acorns which I quite like. I wrote about it here:


MC’s response:

Thanks so much for getting back to me! I’m sorry it took me a while to respond I went away for a week right when you wrote me back. 
I was thinking that it would be better in the long run to not touch my investments but taking out such a big loan does make me nauseous when I think about it. However, I think I will stick with that strategy because I know if I leave nursing school with no savings I won’t feel good about that either.  Thanks for going through the pros and cons its way more helpful then my internet searches have been!
I don’t have an IRA right now but I know I should set up a Roth IRA soon but I wasn’t sure yet if I wanted to use that money for school.
As for Betterment, I really like it! I started an account in August 2011 and just give about 60 dollars a month. According to my performance chart my return rate is 37% with an allocation of 100% in stocks. If I had 80% stock and 20% bonds it would be 44% right now. My original allocation was actually 70% stocks and 30% bonds but after your class I decided to try 100% stocks which, just like Acorns, Betterment refers to as ‘aggressive”. The majority of the investments are in different Vanguard funds and iShares. I like that part of it as well because if I’m not mistaken to open these account individually sometimes you need 1,000 or up to 3,000 dollars. I think Betterment is great for people my age! I always tell my friends to sign up who don’t know anything about investing. 
Thanks again for responding and teaching a great class I think all students should be required to take it!
MC, Ok good luck! You’re going to do great, because you’ve already done the hard part, which is to begin saving and investing in your early 20s.

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Financial Readiness – My 5 Stages of Grief

financial_readinessMy personal bank – which also offers insurance and investments – recently invited me to discover my ‘Financial Readiness’ score, available in five minutes by taking a quick online survey.

Now, I am a competitive person who likes to win. For example, I know my SAT scores from high school, as well as my fastest one-mile and marathon racing times, by heart.

As a finance guy, I knew I would rock the Financial Readiness score. Bring. It. On.

The online survey asked me about my type of work, personal annual income, plus household income. Not bad, I thought, not bad.

Next, I answered questions on whether I rented or owned a home, the size of my monthly housing payment, and whether or not I budgeted. Home ownership, yes, budgeting, not so much. I hate budgeting.

Further questions prompted me to discuss my insurance against disability or loss of life, my dependents, and my retirement savings and investments. Well, I like to think I don’t over-insure, but I do have some retirement accounts.

Finally, the survey asked about whether I have documented my will, and whether I have named a health-care proxy. Yes. Totally. Nailed it.

My score

At the end of the survey my pulse quickened in anticipation of a huge pat-on-the-back for my incredible financial readiness.

I got a 66. Out of 100.

What?! Me? There must be some mistake.

A 66?

I’ve never gotten a 66 on anything in my life. Even worse, a 66 on my finances?!

I have three thoughts about my Financial Readiness Score.

A 66?!

My first thought I already told you, which is: “What?!”

That thought represents “Denial” and “Anger” steps in my five stages of grief.

Second Thought

My second thought – (possibly part of “Bargaining and “Depression”?) – came from a closer review of the Financial Readiness plan which my bank provided, following my score.

My Financial Readiness Report showed areas where I could improve my score, by reviewing and changing my approach to savings, planning, and financial protection.

The report suggested setting budgetary goals. That’s probably not happening. It also prompted me to consider upping my insurance coverage. Not surprisingly, my bank is also involved in savings accounts and insurance, so you can see a bit where they’re coming from.

I’m not saying their wrong. I’m just saying they have an agenda.

I have strong feelings about some of these things, and I think on at least a few topics, reasonable people could disagree.

Building an “Emergency Fund” – which my report strongly encourages – happens to be something which I philosophically disagree with, as I’ve written about in the past. LINK []

Boosting my auto-insurance total coverage, or my wife’s life insurance coverage – also recommended by my Financial Readiness report – also is something I’m not likely to do, as I’m philosophically an insurance minimalist [LINK:]

In exploring these areas for boosting my score, I noticed robust prompts to action. In modelling out my retirement planning, for example, I got a chance to see how my intended retirement age, as well as my appetite for risk, would affect the probability of meeting my retirement goals. It was pretty cool, actually.

Third Thought

financial_readinessMy third thought about my Financial Readiness score, as I move toward “Acceptance,” is that these simple but potentially catalytic surveys – paired with calls to action – might be quite useful. Let me expand on that thought for a moment.

Most of us need financial guidance. A fundamental theme of my financial writing is that almost nobody feels confident that they have all their finances figured out, yet few know where to turn to a trustworthy source.

We don’t like banks. We don’t trust our financial advisor. Insurance confuses us. The last thing we want to do as adults is spend precious free time with a lawyer to talk about what happens to all our stuff when we die. In all that confusion and natural aversion, we tend to not even know where to begin. So, like everybody else, we punt decision-making until some medium-distant future, maybe months from now, maybe when a crisis happens, or maybe until never.

Possibly, a five-minute internet-style quiz from my bank becomes the on-ramp to better planning and decisions?

I mean, not in my case, since the quiz is obviously flawed and they got my score wrong. But, you know, maybe for others.


A version of this appeared in the San Antonio Express News


See related posts

Why I hate my bank

Emergency Fund – That Silly Sacred Cow





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