Start off the new year with money in the bank

Pinching Pennies in the Priciest Place on the Planet

If your New Year’s Resolution is to get your spending habits under control, this blog’s for you. I’m no financial wizard. I’m not a CPA – far from it. I’m just a former overdraft queen who has mended her ways. So as the new year approaches, I thought I’d share some useful tips. Here’s how I stay solvent in this expensive country, even on a modest income.

Being overdraft-free may seem like an impossible dream, especially now that The Economist has informed us that Tel Aviv is the most expensive city on earth. But I’m here to say that you can do it. With some self-discipline and a few new habits, you can beat the high cost of living – even in the priciest place on the planet!

I came to Israel without money. Never had a stock portfolio, never won the lottery, and never inherited money from anyone. And I never minded any of that a bit. I’m delighted to have been working full time for the past 50 years and hope to go on doing so for years to come. I’ve never been rich, probably never will be, but I’m proud to say that I now live within my means, and even manage to put some money aside each month.

It took me quite a few years to get to this point. And it wasn’t easy. There were years of struggle and dreaded discussions with the bank; negotiating higher and higher overdraft allowances and resorting to ill-advised credit-card loans when even those high overdraft amounts had been exceeded. There was nothing extraordinary about this behavior. In fact, this fiscal irresponsibility was – and still is – business as usual for many Israelis. The mystery is that I have had the luxury of full employment all of my working life – even during hard times – thanks to my education and language skills. As a professional in the private sector, there was absolutely no justification for my economic bad behavior.

I am thankful to have a job that I love. My work is rewarding, though far from lucrative. I teach Business English. There is no high-tech salary in this job. I get paid by the hour – only for the hours I actually teach. No extra pay for the time spent in preparation for each lesson. No year-end bonus, no overtime pay, no perks, no annual raise. No matter. I feel extremely lucky to work at something I love and to be able to do it from the comfort of my own home – thanks to zoom.

I do just fine on my modest wage. I even manage to save a bit of money each month! For this, I thank the bank clerk who sat down with me about 8 years ago, patiently explaining what I needed to do to get control of my spending. He told me things I had been told many times before, about planning and budgeting. Nothing I hadn’t heard before, but this time I listened. He showed me how to go through my monthly bank and credit card statements to see what I was spending (or wasting) my money on. He made me look at all the overdraft charges and exorbitant interest rates on those credit-card loans. He reminded me of how hard I actually work for the money I earn, showing me the folly of my ways – wasting that hard-earned money. For someone who has worked an average of 10-12 hours a day for 50 years, it’s astonishing that it had never occurred to me to draw this conclusion. Here I was working, earning and then throwing the money away, i.e., turning it over to the bank in the form of interest payments, loan costs and penalty fees.

For years I prided myself on my Israeli-ness – live for today and devil may care what tomorrow has in store. I never glanced at a bank statement, never tried to balance a checkbook. Thankfully, checkbooks are a thing of the past. But I am pleased to say that if I did have a checkbook today, I would and could balance it at the end of the month. I may not be a whiz at math, but I can add. And I can certainly see the glaringly high charges on an invoice when they appear. I can do that because now I am paying attention, at last. I have learned to pinch my pennies, or rather, to save my shekels. And my bank balance is proof that it is possible.

As a teacher, I love giving my students tips and tricks. So, here are my tips about how to live within your means, even in the priciest city on the planet. This is not rocket science. Nor is any of this original. Many financial advisors have given us this advice in the past. But this advice comes straight from a former queen of the overdraft. Here, for what it’s worth, are my 12 penny-pinching tips – one for each month of the coming year.

1. Pay attention: Sometimes all we need is a bit of focus in order to see what is happening. Look at every bill and cashier receipt and let the numbers register in your mind. Mindfulness works when trying to change old habits.
2. Pay cash: When you have to count out the shekels you are much more prone to noticing how much things cost. This is a huge change for many of us. It’s hard to pass up the convenience of credit cards and contactless payments. But it’s worth the effort.  (See Tip #12 about credit cards).
3. Write it down: Prepare a budget and write it down – in a notebook or an electronic spreadsheet. Save your receipts and cashier slips so that you can log how much you actually spent. For me, just the act of writing an expense down makes me think twice about it.
4. Think about it: One of the biggest sins in my overdraft days was lack of awareness. Now I force myself to think about my finances and what I can do with the money I save. I stop to think before every trip to the shops. Is this trip necessary?
5. Be prepared: Before any shopping trip, whether to the supermarket or shoe shop, make a list and try to stick to it. I know, we’ve heard this advice for years. There’s a reason for that: this trick really works!
6. Shop wisely: Having a shopping list is crucial, but in a world filled with temptations, it is not enough. Once in the shop I use all the self-discipline I can muster to avoid temptation.  It may look pretty, but do I really need yet another decorative coffee mug?
7. Check the bill: Annoying as this may be to the harried cashier, it is smart to check your bill and make sure you haven’t been accidentally overcharged.  Everyone makes mistakes, especially overworked cashiers and store clerks at the end of a long shift.
8. Reduce: Buy less. Of everything! This Corona era has taught us that we can go without many of the things we used to buy without thinking. Check the fridge carefully before going out to the market and see what you can use, and what you should use up, before buying more. It’s good for the planet AND your wallet to avoid buying unnecessary items.
9. Try the Thrift Stores: Another way to save – and help save the planet – is to buy used clothing and household goods at your local thrift store. With a bit of patience you can find good quality items at very reasonable prices. My favorite shop in Ramat Gan is HaMetzion https://hamezion.co.il/ which is partnered with the ‘Shekel’ organization employing people with disabilities. A good price and a good cause. What’s not to like?
10. Have fun cooking: Thanks to this pandemic, I have rediscovered the pleasure of making food for myself. 2020 found me working from home for the first time in my life. I was concerned about gaining weight and wary of spending too much on expensive take-away meals. So I turned my daily meal-planning and preparation into a fun project. Working from home meant I could spend the time to prepare fresh food every morning. Now I enjoy delicious salads, soups and other dishes I concoct. I save money, yes, but also benefit from eating fresher, healthier food, made with local ingredients.

Have fun planning menus – photo by Nili Bresler

1. Think outside the box – and outside the supermarket! I buy my fruit and veg at my local outdoor vegetable market. This makes economic and health sense. Supermarkets may offer discount prices, but most of the produce at the supermarket is pre-packaged, leading to waste. Also, much of the produce in the supermarket has been sitting in cold storage for a while. It makes more sense for me to pick exactly what I want at the outdoor market. I save money by buying only what I need. The food is fresher, and I can easily find out which fruit or veg are local.  And in the process, I’m also fighting the unfair pricing practices of the large supermarket chains which hurt our hardworking farmers.
2. Pare down the Plastic: How many credit cards do you really need? Just one or two credit cards should be enough for most people. If you travel overseas regularly, it’s worthwhile to obtain a second card in foreign currency. You can get one from the Postal Bank at a very reasonable fee. Credit or Debit Card?  Go to the bank and switch at least one of your credit cards for a debit card. This pay as you go tool will help keep you within your budget.

Happy New Year, friends. May the next year find you happier, healthier and more solvent than the last!

Save Your Shekels = photo by Nili Bresler