The Ultimate Guide to Making Money

Tip #27: Use barriers to prevent yourself from spending money

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This is Tip #27 of of the Save $1,000 in 30 Days Challenge. (See past tips.)

Today’s tip is to use barriers strategically to save money.

barrier-in-road.jpg

It comes from Liz Steihart of Los Angeles, CA:

With regard to all emails from retailers or etailers: remove yourself from their daily or weekly email lists. I don’t care if you love the shopbop.com emails, or the updates from Old Navy. Remove yourself and you won’t be tempted to internet shop impulsively because there is a new collection out, it is a new season, there is a sale.

Liz’s key insight is to use barriers to prevent yourself from spending money.

In my original article on barriers, I defined them in two ways:

Active barriers, the kind that stop you from doing something, and passive barriers, whose absence actually stops you from getting things done.

* Active barriers are physical things like the plastic wrap on my food, or someone telling me that it’ll never work, etc. These are hard to identify, but easy to fix. I usually just make them go away.
* Passive barriers are things that don’t exist, so they make your job harder. A trivial example is not having a stapler at your desk; imagine how many times a day that gets frustrating. For me, these are harder to identify and also harder to fix. I might rearrange my room to be more productive, or get myself a better pen to write with, etc.

Read the entire article and check out some examples of barriers.

How to apply barriers to your personal finances
1. When I wrote about how I track credit card receipts, I mentioned that I keep a folder on my desk that I check once a week. This is incredibly useful when it comes to actually managing my receipts. If I kept the receipts all around my house — or even in a folder in the next room — I wouldn’t bother checking the receipts. The barrier and activation energy to locate, gather, and sort the receipts would be too high.
2. Lots of people talk about freezing their credit card in a block of ice, or hiding it with a friend. If you have a problem with self-control, make something as difficult as possible to reach. Watch too much TV? Smash your remote control with a hammer (send me the video, I’ll post it). Eat out too much? Stock your fridge with perishable goods and force yourself to eat at least 50% of them before they go rotten. Your food goes rotten too fast? As soon as you get home, cut everything up and put it into bags that are ready to consume (more about packing lunches here).
3. Liz’s specific point is great: If you find yourself spending too much on shopping, make it harder for yourself to shop! Unsubscribe from all magazines and email lists you’re on. The simple fact is, if things are automatic, you will do them. And as the excellent book Nudge demonstrates, you can engineer whether these automatic things are good or bad.

Key point: Don’t just look for where you’re spending today. That’s surface-level. Look deeper to see what’s causing you to spend, and if you decide you don’t want to continue, then eliminate those causes.

Total savings: $10 to $200 per month

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

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Hardly anyone in the personal finance space talks about the psychology of money (barriers, invisible scripts, etc.) Yet, as you can see, these are some of the most powerful factors determining whether we actually live a rich life. If you want more tips like these, I’d love if you joined my FREE Private List.

Each week, I’ll send you:

  • Ways to overcome psychological barriers that hold you back
  • How to use systems and automation to grow your money on a schedule
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30 Comments

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  1. I have employed this tip by avoiding the mall. If I don’t see the latest thing or the sales, I won’t know what I am missing. To do this we avoid movie theaters in the mall.

  2. I use a few barriers for weight control – not finance, but might be helpful for some.

    1. Chocolate – I found that chocolate was something I ate way too much of, so I swore it off three years ago as a New Year’s resolution. I allow myself one day of chocolate (Jan 1st) each year to eat as much as I like. This really helps when we go out to eat and the desserts are all chocolate. I just shrug it off and save several hundred calories.
    2. Food bag – I don’t have a lot of self control, and when I’m alone in the house I tend to root through cupboards for snacks or cereal. At my request my wife started locking these foods up in a gym bag with a combination lock. Now knowing I can’t get at it, I don’t even crave the stuff any more.

  3. This blog should be renamed to “Save $1,000 in 30 Days Challenge”.

    What happened to the old “I will teach you to be rich” and the quality we were used to?

  4. Nice post. One thing that is effective in helping create effective barriers is to create specific goals for your finances – do you want to drive a new car?, buy a new house?, retire early?

    Then remind yourself of that goal anytime you plan to spend money friviously. This reminder of your specific goal then acts as your barrier.

    My goal is buy a house (condo actually) so I’ll take small picture of a nice house that I cut out of a magazine and wrap it with a rubber band around by credit card. Every time I take my card out to make a purchase I then see the picture of the house and ask is the purchase I am about to make necessary, is it a wasteful expenditure that is going to put me one more step away from my ultimate goal of a new home.

  5. Uh, the fact that I haven’t gotten to 30 tips yet?

  6. Hi Ramit:

    I just wanted to let you know that I MADE $156 last week thanks to your advice. I have been on the frugality stuff for a while now, but your words that at some point, you just need to make more money finally echoed in my head enough to urge me to apply for a part-time job…after my full-time job.

    I’m not making much per hour at the side job, but it’s more than I was making just sitting at home. It was tiring to race from my regular job to the side job, but I still have enough time to sleep (and read blogs, apparently).

    So thanks!

  7. I take my lunch for the whole week to work on Mondays. So when someone asks if I want to go out to lunch, I just have to say, “Sorry, I brought my lunch.” A perfectly legitimate answer.

    As for TV, for the longest time I had this idea of throwing it out of my fourth-story window and devote my time to reading. It never happened. Now I have a flat screen and I’m more hooked than ever….

  8. I find that going out to eat is the biggest challenge, so I take the time to get stuff from Costco for example, that is majorly easy to make…. that way I never have an excuse…

    Writers — thats funny that you menton about the TV — a few years ago, when I was living in an apartment, someone actually launched an old TV out — I have pictures somewhere, but I thought it was rather humorous at the time….never did find out why…..

  9. LOL Ramit

    I have made sure to not spend money by leaving my debit/credit cards and cash at home. If I don’t have it on me, I for sure won’t spend it!

  10. About 10 years back, we were trying to dig ourselves out of debt after an expensive but necessary cross country move, and we found unexpected help from the Nation’s Most Primitive Credit Union. They didn’t have ATM networks (they claimed their members had said they didn’t need them); they didn’t offer debit cards (ditto). So if you wanted money going out of your checking account, you had to either write a paper check or get cash from an inconveniently-located branch office that was open irregular hours.

    And we got out of debt faster because they made it hard to get money on impulse. If you ran out of cash on a weekend, you had to wait until Monday to get more. Pretty simple in concept, but it worked well in theory by forcing us to better plan and prioritize outward cashflow. Though I do have to say we switched to a different credit union, complete with ATM cards and everything, when the really good credit union in the area made us elgible for our membership pool a couple years later.

  11. I think that credit cards make purchasing too easy. Getting rid of credit cards and paying cash is a barrier that works wonders for me.

    I love the idea of freezing them in a block of ice!

  12. Jeff — I agree that credit cards make purchasing to easy, but I think there is considerable value… as Ramit has pointed out, you’re getting something for nothing, so to speak… whether its points, cash back, etc…. It just takes lots of restraint…. you can’t go and say “well if I buy this $200 jacket, I’ll get $2 cash back” … that doesn’t work, but, say you’re going to make the purchase anyway, then that $2 cash back is pure gravy, e.g. an incentive to use the CC, not an incentive to spend the money..

  13. [...] but Ramit has some ideas about actually creating barriers for yourself to minimize spending. (Read it at I Will Teach You To Be [...]

  14. [...] Use barriers to prevent yourself from spending money [...]

  15. Interesting and thanks for sharing this with us. This is completely new for me and i liked the idea.

  16. [...] when you’re not at the office, are you creating barriers and setting expectations for your co-workers as to your [...]

  17. [...] personal entrepreneurship. His series outlines the various ways we can keep money in our pockets.Tip #27: Use barriers to prevent yourself from spending money Today’s tip is to use barriers strategically to save [...]

  18. [...] can apply barriers to prevent yourself from spending money, cook and eat healthier, exercise more, stay in touch with your friends and family, and virtually [...]

  19. Is it possible for a kid like myself, 2 years out of college, to sign on to debt settlement with only school and auto loans? Or are these more for people with credit card problems? I don’t believe I have a spending problem, but I am in debt more than $40k between school and my car.

  20. [...] can apply barriers to prevent yourself from spending money, cook and eat healthier, exercise more, stay in touch with your friends and family, and virtually [...]

  21. [...] I Will Teach You To Be Rich wrote “Tip #27: Use Barriers to Prevent Yourself From Spending Money“ [...]

  22. Barriers… very good point, we all need them. Well, most of us anyway. Thanks for the tip.

  23. [...] I had credit card debt, taking the cards out of my wallet was a easy and effective step. I had less temptation to rely on them when I wanted to make an impulse buy. I was creating a barrier for myself and improving my [...]

  24. [...] learned about creating savings barriers from Ramit Sethi over at I Will Teach You to Be Rich, where he has an informative write-up about the psychology behind savings. It’s not about [...]

  25. [...] understands her own behavior and how to strategically apply barriers to control her behavior. Here’s a good sign of someone who’s expert at self-awareness: “If I spend over [...]

  26. [...] It is. It’s also effective. Ramit Sethi, author of I Will Teach You to Be Rich, advises you to use barriers to prevent yourself from spending. The classic example is freezing your credit card in a block of ice. This is the same idea: I’m [...]

  27. [...] It is. It’s also effective. Ramit Sethi, author of I Will Teach You to Be Rich, advises you to use barriers to prevent yourself from spending. The classic example is freezing your credit card in a block of ice. This is the same idea: I’m [...]

  28. [...] It is. It’s also effective. Ramit Sethi, author of I Will Teach You to Be Rich, advises you to use barriers to prevent yourself from spending. The classic example is freezing your credit card in a block of ice. This is the same idea: I’m [...]

  29. [...] can apply barriers to prevent yourself from spending money, cook and eat healthier, exercise more, stay in touch with your friends and family, and virtually [...]

  30. [...] can apply barriers to prevent yourself from spending money, cook and eat healthier, exercise more, stay in touch with your friends and family, and virtually [...]