1. Keep $ from Uncle Sam’s claws legally.

Set up a business. What is your hobby? Turn it into a business by submitting some simple documentations to set up a Liability Limited Cooperation (LLC.)

My hobby is to help every day common people like myself build wealth, so I started my blog, contributing to PMD, giving speeches (unpaid), and writing books. With the modest income from this hobby, I set up the DWM LLC, which allows me to deduct business expenses, pay my kid for her work (allowing her to fund her Roth IRA at the tender age of 9 years old).

Sky is the limit once you set up a business; even if your business is net negative like it was for me in early years, it helps with reducing your taxes, effectively allowing to keep more of the money you earn.

Uncle Sam loves businesses, that’s why businesses pay themselves first before paying taxes while every day employees (who work for but do not own the business) pay Uncle Sam first before taking care of themselves.

So join the game! Set up a side business and deduct (legally) away and reduce your taxes.

  1. Keep $ from retailers.

Don’t buy anything full price! Duh. Does the instant gratification of buying something full price/ at a premium bring you lasting happiness? Not for me. Buy all things on sale and buy used whenever possible. Gentler living on the earth is great for your wallet too.

  1. Keep $ from banks.

Strive to be like the big bad banks. They borrow from tax payers at prime rate of 0% (not long ago, currently 0.25%) and they practically predate on ordinary people 30% APR when someone misses a payment or 2. I know the pain the vicious cycle of such a debt, as I picked up 7 odd jobs to help my parents pay their 20k credit card debt at 30% while double majoring at UC Berkeley.

Be selective with where you set your cash. If it is not making you more than 3% annual return/interest, you need to find better opportunities.

I have less than 1k sitting in liquid savings with the banks because they highest interest they’d pay me is 1.11%, deplorably less than rate of inflation.

All my money are working hard for me in the stock market, in low fee index funds at Vanguard. My rainy day fund resides in the endless credit card offers I get, where I can purchase or get emergency cash whenever I need it. And frequently, there’s incentive such as cash back, gift cards, or air mileage to borrow for emergency. Not to mention the sweet 0% APR for 15-21 months depending on the credit card terms.

  1. Keep $ from consumerism.

Whenever you want to buy something, ask yourself:

One, do I need this?

Two, how long does this make me happy?

Three, why does this purchase make me happy?

I hardly find any purchase that warrants legitimate answers from these 3 questions.

The more I buy, the poorer I get. I know what it’s like to be the consuming poor, we are in a nation of ironic and counterintuitively causative rampant consumerism and poverty. Want to reclaim some tax payer dollars from the super-rich? Stop buying stuff from the rich who made the stuff!

  1. Keep $ from your kids.

For those of us who are minimalist and non-material, we find it easy to splurge on our loved ones. The material luxury that never interest us seems perfectly befitting to be bestowed on our loved ones, especially our little princes and princes. Guess what, I learned the hard way!

It is not good to shower our little ones with material luxuries. Excessive materialism (nice looking stuff, new toys) is toxic to all of us, particularly to the young, malleable minds.

I learn that it is ok to spend money on her pilot lessons, but not ok to spend the same hundreds of dollars on clothes, fashion, school supplies, etc. Desire for possessions is a monster with insatiable appetite. While I thought I was giving the best I could to my girl (Mini Wise Money), I really was setting her up for failure in life.

After the sharp U-turn, Mini and I have learned together just because we have $ doesn’t mean we should spend it on how we look or on adding to our possessions. We learn that $ is better spent on experiences that make us better people, or on making someone else’s life better, or simply invested so that our $ works for $, and we are free to work to learn and improve ourselves.

Personal Finance, Investing, Retirement, Lifestyle More articles like this on Physician’s Money Digest.

5 Ways to Keep More $