How I Finally Reined in My Spending

What a Little Gamification Can Do to Your Personal Finances

See my postscript below for what I think of this method, two years later.

It’s been more than two years since I achieved the Holy Grail of personal finances: Keeping your expenses low even as your income grows. Before two years ago, any time I got a bump in my income, whether it was a new job or a windfall from consulting or app development, my spending would creep up such that I would ultimately feel as poor — or rich — as I was before. Then, whenever my income dipped, my spending would feel like a noose, forcing me to anxiously ax my spending.

Today, my disposable wealth is stable and growing despite no substantial gains in income over the past couple years. And even though my habits are completely different now — I cut my own hair, I eat at home, my media subscriptions are low-to-nonexistent — the individual habits aren’t what made the difference. Rather, it’s a simple technique I gleaned from I Will Teach You To Be Rich, written by my former classmate Ramit Sethi. Self-help books usually have one great idea, and you often find them in the introduction. For Ramit’s book, I got it from his analogy to dieting:

When it comes to weight loss, 99.99 percent of us need to know only two things: Eat less and exercise. Only elite athletes need to do more. But instead of accepting these simple truths and acting on them, we discuss trans fats, diet pills, and Atkins versus South Beach.

This cut-to-the-chase mindset was lacking in my efforts. Just as dieting can be reduced to “calories-in minus calories-out,” finances can be reduced to “monthly revenue minus monthly expenses.” So I dusted off my account on Mint, a site which aggregates your bank statements, and focused on two numbers: the first two digits of my spending per month. If I spend $3,400, then my score is 34. If I spend $4,580, my score is 46. The goal is to get those numbers as low as possible.

With this mindset, spending becomes a game. If you want to buy a new iPad for $399, that’s 4 points. If you want to take a trip to Denver, maybe that’s 10 points. This mindset also makes gauging recurring expenses a cinch. If you spend around $15 per meal, twice a day, that’s $30 x 30 days, or 9 points. If you subscribe to Netflix for $9/mo, that’s about a point in a year.

For me, this led to some interesting cuts. I was spending $15-$35 for each of my haircuts every 2–3 weeks, which comes out to about $650 in a year, or about an extra point every other month. So I stopped going to my stylist, and instead bought some mirrors ($5 from Target) and clippers ($20 on Amazon), and started cutting my own hair. Another example: I was haphazardly choosing where to eat, so I set a $7.50 cap on lunches and a $10 cap on dinners. This cut 4 points out per month. I consolidated my hosting providers and domain names down to about $15-$20/mo. from a high of $40-$50/mo., which is another 5 points or so spread throughout the year. I then called up my Internet provider as well as my provider for homeowner’s and car insurance, and I talked them down, saving probably 1–2 points per month. Finally, I cut needless gym/media memberships, saving another point. And so on and so forth.

In the old days, I’d randomly get a surprise $5,500+ credit card bill that I would excuse by saying, “Well, that was a crazy month.” Sadly, “crazy months” would come every 2–4 months. These days, it feels like there are no crazy months. Every month tacks close to the 25–35-point range, and any deviation from that is scrutinized. Sometimes I’ll get lucky and have an 18-point month. Such frugality was unheard of before.

This scoring method led to a few sub-methods. The goal isn’t to become a scrooge, but rather to drive your spending towards concrete goals. Ramit suggests listing your top three spending priorities. For me, the top one is investing in capital, number two is passions, and number three is social. So my money goes into things like having a good laptop (since I’m a coder), spending on bucket list items like snowboarding for an entire season, or paying for nice dinners with friends. Where it doesn’t go into is my house, car, entertainment, furniture, travel, etc. Those things are all thinly funded, while the stuff that matters to me is loaded. In that way, I’m rich.

Another method, one I created, is to ask myself two questions before each purchase: Is this emotional and is there oversight? Emotions and oversight were the biggest causes of poor scores starting out. So I try to relax before I buy anything, while also comparison-shopping and checking reviews. Both methods are two sides of the same coin: One corrects over-enthusiasm, the other corrects inattention.

But it all comes back to that first principle: “money-in minus money-out.” If I can make peace with my two-digit score, then I’ve made peace with my spending. My income may rise and fall depending on professional successes, which should hopefully accumulate over time. But if I’m comfortable with my means today, there is no reason I shouldn’t be comfortable with them tomorrow, and this ever-widening gap between income and expense should pave the way to wealth.

— Philip Dhingra


PS. I abandoned this method in March of 2018 because I felt it didn’t scale well. When I came into some money after the sale of my condo, I tried maintaining the method, but it made me “penny-wise, pound-foolish.” For example, when I moved from Texas to Nevada, I nickel-and-dimed all the parts of the moving process, which turned an already complicated process into a logistical nightmare. Meanwhile, I wound up with an apartment that was ultimately a lot more expensive than I could have gotten had I taken a bigger picture view of the move.

However, I’ve kept many of the habits of this method, even though I’m not busy assigning points to every purchase. It’s also the second-longest method I’ve maintained (4 years), second only to my daily practice of meditation (7 years and counting), so there may still be something here.


Check out my latest book Dear Hannah: 70 Methods I Used and Abused to Change Who I Am.

For Philip’s 14th birthday, Hannah gave him Dale Carnegie’s How to Win Friends and Influence People, which kicked off a life-long obsession with self-improvement. Over 16 years, Philip wrote 82 letters to Hannah describing every book, pop psych article, and method that he used — or abused. Dear Hannah is either a cautionary tale about self-improvement, or it is a filter for the 10% of self-help that may actually change your life.

PHILIP DHINGRA is a President’s Scholar from Stanford University, where he received his B.A. in Mathematical and Computational Sciences. In addition to authoring books on life change, he develops best-selling iOS apps including Nebulous Notes and The Creative Whack Pack (a collaboration with creativity pioneer Roger von Oech). Philip divides his time between Austin, Texas, and San Francisco, California.