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Rounding Dollars

March 27th, 2007 at 10:36 am

http://www.bargaineering.com/articles/dont-budget-to-the-pen...

Just came across this article and I found interesting.

Since I am an accountant, people often assume that I am a stickler for pennies, accounting to the dollar. When we go to lunch people expect me to break out the calculator, and I laugh. I rather just split the tab evenly, because saves time and all works out. Since my frineds don't try to screw me over by ordering lobster while I order a salad. Wink But even if they did I would round my portion in my head and be okay with that. No calculator here.

You may have noticed I usually talk in term of round dollars, heck, I round to the nearest $5, $10, $50 often.

If you kept your checkbook in round dollars it would all pretty much even out over time. I am probably a little too anal for this - I do enter everything to the penny in my checkbook and in Quicken. But for the most part if all my investments started rounding up to the dollar or $5 I really wouldn't care. Over time it wouldn't really skew the end result.

I think I gained this attitute from my job, interestingly. My first job out of school was auditing and the first thing you figure out when you are auditing is what is a material amount for the financials you are auditing. If the materiality threshhold is $50,000, well you don't really give a damn if the bank statement is off $5 from what the client has. IT is not worth the effort to adjust it to make it perfect. Who cares. & so it goes.

Since I came to work for a smaller firm it actually drives me batty because one guy continually will ask me to make changes int he realm of pennies to account balances. It drives me so insane. It is so not worth $125/hour or so charged to the client to waste 5 minutes fixing an account for anything less than $1. Even $5 is pretty questionable. I find most people agree but I do have to work under some sticklers occasionally.

& this is probably why I don't save my change. I just find it an absolute ridiculous waste of time. I actually just spend my change as I go. My change is my fast food/eating out luxury money. I think Suze had some thing if you saved all your change you would save x dollars a year. Great I think, but then I Would have to take that much out of my ATM since most of my fun money comes from my change. So though I agree you can squeeze your change for all its worth and get something out of it... Putting it in a bucket and then driving to the bank to count it seems like an awful big waste of time to me. But that is me, if you want to do it great. Just sharing why you won't see me doing so. Wink

Another thing I round on is a lot of my bills. I round up my mortgage (which has its benefits) and the credit card I just round to the nearest $20 or so when I pay. I just don't like accounting for pennies. Unfortunately, for utilties, I don't want to confuse them so I pay to the penny. I don't know if it is necessary though. ??? & the big one-time bills I will pay to the penny. So my pennies can earn interest in the bank for the next few months. I guess those I hold on to. It doesn't really matter so much I guess with online bill pay and my automatic downloads to Quicken. Less effort on my part I guess.

But yes, for the most part, my conclusion is that pennies are not worth the time and effort on many levels.

I think this kind of goes with frugal philosophy. I rather chase the big savings than the little savings. Not that I wouldn't save 30 cents where I can (because believe me I do), but only if the savings is worth the time. I better either enjoy what I do to save that 30 cents or it better take no effort. OTherwise I probably just won't bother.

When I made minimum wage I probably felt differently. As you move up the wealth ladder though your attitude does change. Or it may not. But I know too many extremely wealthy individuals who are so penny-wise and pound-foolish. It drives me batty. I just don't want to end up like that. It doesn't serve one well. Probably another big part of my frugal philosophy.

2 Responses to “Rounding Dollars”

  1. newlyfrugal Says:

    I round everything up as well when paying off loans, but it did get me in trouble once. I got a late notice for my car payment, but was able to prove that it had been taken out of my checking account (electronic bill pay is the best!). When working it out over the phone, the lady asked what amount the payment was and I said "$220". Her response was "it will take forever to find a charge to the even dollar like that!" I thought that was hilarious! It must not have been to hard because she called back less than 20 minutes later to say they had found it. Maybe it would have been easier to look for a charge of $211.47, but I am not going to stop sending in $220 just because she didn't want to work. Smile

  2. Carolina Bound Says:

    I'm a rounder-upper, too. I round up my mortgage payment and my credit card payments. I also round up my checkbook entries -- except for the deposits -- those I round down. It gives a hidden margin in my checkbook. Every once in a while I figure out how much it is and do something with it. The original idea was to put it into savings, but usually I use it when my cash flow is low.

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