Part III: 3 principles for saving money every day

Hack Your Way to Freedom: The Psychology of Saving Money Section 1 – Setting a Solid Financial Foundation
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Transcript

If you've heard of the fire movement, you may already know about what the power of saving can do. If this is your first time hearing about it, fire stands for financial independence retire early. The main concept is that you get to a point early in life where your expenses are much less than your income and your income is made in a way that is typically passive. You aren't actually working for a living, your money is working for you. In today's world, the internet has made it quite possible to start a business online and reap the benefits for years to come. Once this mindset is achieved, the lifestyle that goes with it can be one of living and working remotely since your paychecks are coming in no matter where you are in the world.

It is also quite possible to arrange for remote work with your current job if you are what's called an information worker or someone whose primary responsibilities do not require you To interact with clients or co workers face to face and there is a fair degree of flexibility in your working shifts. So how do we start saving money? Well, I've given this a lot of thought and did a lot of research. There are so many people out there teaching you how to budget, but that's only a small piece of the larger picture. If we look at another industry, like the weight loss industry, we see that there are also so many people teaching how to lose weight, supplements, exercise, calorie counting, fad diets are some of the tools that are used to help people do that, which is the ultimate goal, reduce the intake lower than the output.

You want to eat just enough for your body to metabolize food. If you were to simply maintain your weight, you would eat the same amount and not fluctuate in way too much. But you also wouldn't be losing weight. The same goes for saving Money. If you keep doing the same things, you won't be getting to your ideal savings go low weight. But losing weight is hard.

This can be true, but things like the keto diet have actually been proven to help people lose weight because if it's very cool, its goal is simple. Reduce that which is causing you harm, in this case, carbs and sugar and replace it with healthier alternatives. The results are shocking to someone they don't even feel like they're on a diet. If we apply the same thinking to saving money, we will simply be replacing the activities and products that are causing us to spend money or gain weight with that which is more productive or healthier for us. When we make this process automatic, it starts to become a habit and habits are what are going to make us save money or lose weight. That's not to say that we can't splurge a little on the contrary Once we get in the habit of saving, we can use a little bit of the extra savings to do things that we love.

The fact that we aren't indulging all the time makes the experiences that much more rewarding and special. It also allows us to get better at predicting when we should be indulging and when we should be saving. This is the hallmark of creating a budget being able to predict our spending. And if we take the weight loss example one step further, we see that being able to predict how our exercise affects what we eat, and when we eat. Our budget comparison only grows stronger. It's the interrelation of our actions to our bank account or waistline.

There are three ways our mindset can change if we want to start saving money. If we start thinking differently than we have in the past, we can start to do things that we haven't been able to before. If we think big, we start to see that not only Saving money possible, we can actually save the whole of money by building on the basic principles of saving a little bit of money. By thinking smart, we can sustain that savings for the long term and start to see opportunities where once we couldn't. Things like making new year's resolutions or yearly budgets only take us so far, the magic is in the way we stick to it. Not letting minor setbacks get the better of us being able to better predict what we're realistically spending and readjusting at the beginning of every month.

Being stuck in our ways or rigid for the sake of saving money is what actually gets us into trouble. Not being flexible and not having an emergency fund does more harm than good. It's having these insurance policies that ensure success.

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