Cash: The Ultimate Money Saver

Posted in Business, Real World

Cash money is good. Why? Because it’s tangible. You know exactly how much you’ve got to spend, and you know exactly how much money you don’t have to spend (the latter being much more salient). Cash lets you better appreciate and, likewise, better appropriate your money: when your money consists of a bunch of numbers and dollar signs printed on a small 8″x3″ piece of paper (ala bank statement), you don’t really appreciate what you’ve got.

$50,000 on paper doesn’t look like much. But a stack of $100 bills adding up to $50,000 looks like a hell of a lot. A stack of $1 bills adding up to $50,000 looks like even more. The more your money is divided up in cash, the better you will budget your money. Which is precisely the reason why I keep a fat stack of $1 bills in my wallet at all times. People think I’m cheap, but heck, saving money makes money!

This is not to say that you should always pay in cash. You should try to establish your credit as soon as possible, especially if you’re still a young adult. There are a lot of times in life when you’re going to need some money fronted in order to buy something big (unless, of course, you’ve won the lotto). Buying a house is one such example. You’re going to need good credit to get a good loan. Buying a house is the number one easiest way to make cash, especially right now, at a time when the US housing market is at a low point. As the value of your property increases, you make money.  Easy money.  I don’t know many people who go around and buy houses (at least in this northern VA, where home prices are at least $1 million) with cash (in the form of a personal check). Establishing good credit will aid you in any situation where you need to take out a loan of any sort.

I do, however, suggest against excessive use of the credit card. The credit card is a weapon of mass fiscal destruction, especially for young adults. When I first got my credit card, I was extremely excited that I could finally go around spending money without having to run to mom/dad for a few more bills. I eventually got slapped in the face with credit card statements in the thousands per month, and have never spent a dime more than necessary since. I only use the AMEX for two main things now: gas and any large expense (needs, not wants). You’d be surprised how much money you’ll end up spending at 7-11 buying misc. things if you pay by credit card, just take a written log for one week (I’m sure this is cliche and has been suggested by hundreds of other people before me, but it really works).

My point is, avoid over-indulgence. Unfortunately, I hang out with friends who lack any sense of reality, fiscally speaking, due to the nature of the area I currently live in. Even over the age of 18, their parents continue to supply them with an unlimited supply of money to be spent however they wish. This is wrong. I am still a few months away from 18, yet I manage every dime I spend. Of course, that’s because I’ve worked hard enough to own and manage my own company, and have my own money to spend, but still, I have self-control and I rarely spend waste my money. I have friends driving around town with 2008 Audi RS4s, MB C63 AMGs, and even a few with Ferraris and various Lamborghinis. But I refuse to evaporate my hard-earned money in such a manner. And that is why I am successful. Not because I make a lot of money, no, I really don’t make that much compared to most entrepreneurs. But I save every penny. I refuse to live like a celebrity, for now. Remember, it’s better to make $100K a year and save $90K of it than make $200K a year and waste $190K of it.

Which is why my wad of fifty $1 bills comes in handy. I still reap the benefits of having a fat wallet, but I don’t suffer the consequences of reckless spending.