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How To Learn The Value of Money


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I wrote this on my blog and thought it might be relevant for some of you on the forum. Money is a VERY touchy subject. For many it is more sensitive than talking about health, career or even relationships.


For me, I’ve lost the sense of what value money really has. I’ve always been fairly frugal, have never been in debt and having graduated with a degree in Finance, definitely know what value money has intellectually. The problem is, in the modern economy, I hardly ever touch or see medium or large amounts of money.


I pay for my lunch using a smartcard (at Microsoft). I shop in stores using a credit card. I pay for most of my bills electronically or using check. I buy things online using paypal. My paycheck is directly deposited to my bank account.


All of this means I rarely have more than a $50 in my wallet at any given time.


In the process, I seem to have lost touch with what value a dollar really has. When was the last time you held several hundred dollars in your hand? For me, it has been years.


Yesterday, I decided to close out a bank account at a local branch I was hardly ever using since I now do all my banking electronically. The balance was $207.11. I asked to withdraw the money as cash….all of it…..in $1 bills!


The teller was astonished, and proceeded to ask me if I really wanted to do that. She had to run the transaction as a couple batches, and asked if I was cool with the machine bill counting the money instead of her. I was.


She placed five large stacks on the counter. I asked for an envelope, but the largest one was still pretty small, so I asked for a paper bag. Filled with cash, I walked out of the bank followed by stares by the folks in line. They probably didn’t see that the bills were all $1’s and not $100’s.


Here is what the stash looks like:




This isn’t really that much money. At least not for me given my current salary. However, it did feel very strange to hold all that dough. It definitely felt like a lot of money. It definitely made me think about my rent and other expenses in a new light. It definitely gave me a new appreciation for my paycheck every other week.


But the exercise doesn’t stop with just holding it. I ran across a blog a few months ago (can’t remember where….if you find it, let me know and I will link to it here) about a technique for helping one to get disciplined about saving. So until my $207 runs out…..I am going to do the following:


Every day, I am going to put $1 in each of three stacks. One stack labeled FUN. One stack labeled GIVE. One stack labeled SAVE. It will look like so:




Once I run out of money, I will take the FUN stack and go do something totally ridiculous with it. Like buy a bunch of candy, and blow the money on a sugar rush at the video arcade. Something I would totally never do under normal circumstances. I will take the GIVE stack and walk down the street to the homeless shelter and give it to the folks there. I will take the SAVE stack and deposit it in my brokerage account.


The point of this? To learn the value of a $1. To learn that money can be FUN. To learn that money can HELP those in NEED. To learn that money can help me SAVE for my future.

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While I rarely carry cash, one of the things that helps remind me that all those electronic transfers from pay being deposited into my account and money spent on food and other necessities is "real" is to write everything down on paper.


I have a friend who once complained about being overdrawn on her bank account because some places take a day or two to post a debit. Before rushing out shopping, she'll look at her bank account online and see she has funds, but forget that $30.00 in gas still hasn't gone through and that an auto debited bill is about to hit her.


While I pay for most things with a debit card, I enter all the day's receipts into a notebook with a simple DEBIT, CREDIT, and BALANCE column. I compare it to my online bank info pretty much daily, checking to see what's hit the bank and what still hasn't. When something hits the bank, I highlight that row, and when something balances, I circle the amount so if I ever get off track with balancing, I only have to go back half a page or so in the notebook to have a sounding point to begin seeing where there's an error.


It takes maybe 3-5 minutes a day and a lot of my friends think it's unnecessary work, but I always know what I have to work with, and that's a good thing when the bank shows me having more money than I know I have because a debit hasn't been posted.


It may not be holding the cash in my hand, but when you write everything down, you're forced to remember that all those electronic transfers are real cash.



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It's always interesting to hear about how others handle their finances. I don't have a strict budget right now but before I completed my final degree and got out of debt, I kept a fairly strict budget. I reworked that budget every month and new exactly where I was with my finances. It was a bit of a security blanket for me and I felt lost if I went off it.


This was a bit before debit cards became so popular, therefore I did carry cash with me for the "entertainment/miscellaneous" part of my budget. I took that out of the bank at the beginning of the month and when it was gone - it was gone.


I also had savings, gifts, charity and debt worked into my budget. I found that writing down the amounts helped me stick to it. Seeing the actual numbers is eye opening. Similar to Ravi actually holding money physically. Debit cards and credit cards are designed to distance us from our money so that we'll spend more. It's ingenious and it works!

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It completely changed my relationship with money. I am an avid saver now as I never was before.


Living below your means (i.e. saving money instead of being in debt) is the "secret" of the real successful retirees - it's not so much related to how you invest in the stock market. If you hear something on the news or in conversation often then someone is probably trying to sell you something because someone is making money off of it. It's like veganism and eating whole foods - no one is making a ton of money off it so no one is pushing it, so you don't hear too much about it. But compound interest and investing in the stock market for the long haul? There are entire shows about that type of stuff. You can do the math yourself. Except that you can't, and that's the whole idea.


I could really get on my soapbox about money (this thread hit a nerve) but I'll stop now. I'm old enough to have been burned by the system while following all the "rules" and have discovered that following conventional advice about money is as intelligent as following conventional advice about health or nutrition.

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I thought this might be interesting since DV mentioned that there is not a lot of money to be made from our diet. Veganism is a 2.8 billion dollar a year industry...and it probably generates more money if you consider all the fruit and veggies we buy.




I definitely agree that saving is important. I think investing is also a good move, but done after you have a good amount in savings for emergencies and don't have a lot or any debt for that matter. For example I have a friend who never has any money by the end of the month, but this individual owns stocks. Yeah its an investment in the future, but they have tied up several hundred dollars which could be used to buy food, pay rent, even put gas in the car.

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Thanks for sharing Ravi. It is god to se that you are thinking about this. I am also glad that your 'experiment" includes giving to others. I think that is very important. So many folks make a good salary but keep it all to them selves, while others struggle. Also, there are so many great groups doing important activism out there and need financial support.


I guess my lessons in finances have always been about how to stretch a dollar. I can work wonders with our income. People make fun of us for using coupons, and we laugh because we are saving at least 100.00 a month with them. We have learned to be creative and to have fun with out money.


I think it is important to think about what things cost and if your time (what you get paid for at your job) is worth what you are "selling" it for. I am often outraged at what others have come to expect. Like the price of a hotel ( a place to sleep for one night) or clothing etc.

Our society/culture is very capitalistic and it is hard not to "buy in".


Anyway I think this is a great topic and that people should be more comfortable discussing it and challenging their thoughts and ideas about it.

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People who laugh about coupons, Lotus, are the same people who probably have nothing in their savings account and lots of debt. Living below your means is the best way to save and be prepared for emergeincies yet most people live well above their means. You are teaching your children a great lesson about finances.

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I'm having fun with my "3 stack" experiment. I've already noticed my perception of money change (for the better!).


Looking forward to making use of my "Give" stack in a few months (and of course my "FUN" stack as well!)

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