The easiest way to save money is to change your mindset. But first let me start at the beginning:
I’ve been thinking a lot about how we spend money lately. Mainly because I recently stumbled on the concept of Financial Independence via Mr. Money Mustache. Not a very reliable sounding blog name, but Mr. Money Mustache is kind of a financial genius if you haven’t heard of him.
He lives with his son and wife in CO for only $25,000 a year. I realize that for some people that might seem normal, but for a family like ours that lives in the super expensive Seattle area that is mind boggling.
The best part about Mr. Money Mustache is he doesn’t even try to save money it just comes naturally to him with his Mustachian lifestyle. Essentially he believes we need to use money to optimize happiness, and if buying something isn’t really going to make you happy what’s the point?
He and his wife retired at around 30 years old because they were able to save so much money and then live off the dividends of investing this money in index funds.
His blog has inspired me to reassess how our family spends money.
After only two weeks of evaluating every purchase we’ve saved 100% more than we normally save in one month.
What the heck were we doing with our money?
This is just crazy to me because I feel like we haven’t really done anything that drastic except for really thinking about everything we buy and making sure that it is really worth it and isn’t some stupid purchase.
The craziest thing is that I feel happier and more at peace than I’ve felt in a long time. I realized that shopping is actually really stressful, and going to Target for fun like many moms do in the area where I live is not going to make anyone any happier.
A lot of times we shop because we’re bored.
Or just out of plain habit.
The problem is that it’s not just our savings that are being negatively affected by this but it’s also our psychological state.
I believe we’re not really meant to live in a world where everything has a monetary value and is essentially a scare resource.
This mindset of scarcity is stressful to our brains. It makes us feel fearful all the time.
The thing that we forget when living in a first world country is that we need only like 10% of the things we spend money on. The rest aren’t going to make us happy.
Spending time acquiring things that we perceive as scarce is just an exercise is stressing ourselves out for no reason.
Money = Scarcity, not Happiness
I grew up in Ukraine before the Soviet Union fell. I lived in a tiny village with no running water and no cars. And you know what? I remember by childhood as happy. We don’t need that much to be happy.
In the past couple of weeks, I’ve seen a trend in the activities that make me stressed out. Any activity that has a monetary value gives us underlying stress.
Even if it’s only $5. Because you don’t have infinite 5 dollar bills. You need to work to earn money, your work is not infinite therefore neither is your money. It is scarce.
I challenge you to stop doing any activities for 2 weeks that cost money.
You don’t have to cancel anything that you already paid for, I still have my Crossfit membership so I’m not a money saving saint or anything.
But on the weekends try activities that don’t have a price. Walks, playgrounds, hosting brunch, things like that. Any activity that doesn’t have an admission price or value attached to it.
Why? Because you can take endless walks, and endless trips to the park. There is no price on that. When you go to the zoo and pay $50 for your whole family that is not a sustainable activity.
It’s freeing to not have to depend on spending money. It’s a form of independence.
And it feels good.
There is a freedom in not having to limit or ration the activities you want to do. You don’t have buyer’s remorse when the trip to the zoo ended up being an epic failure. You don’t have the pressure of staying at a location to make sure you get the most of your money.
You don’t have to come home exhausted from packing snacks, driving, parking, eating out with kids.
I think there is an underlying stress to any activity that costs money that we don’t see until we stop paying money to do stuff.
What You want me to stop having fun?
No, all I’m saying is that this is working for us. And it seems to work well for the families in the FI space. The thing about money and spending it on random day-to-day fun is that you don’t focus on the big picture.
If you focus on more long-term savings you might discover that will a little more savings you could actually retire in 10 years instead of 40. Think of how much fun you could have spending more time with your family.
You need less than you might think. Take a look at this Early Retirement calculator to see how you could optimize your savings.
We used to be pretty happy with slower lives
I know using historical logic is often a weak argument, but our ancestors did not live this way on a day to day basis.
It seems that sometimes loading our schedules with activities is a way to avoid negative feelings like boredom. But the problem is after you come back from said activity the boredom is still there.
If you find a free way to conquer boredom the world is your oyster in a way because you will have and an endless supply of interesting things to do that won’t end if you need to save money.
I’m ready to start saving where should I start?
Essentially what I’m saying is that the easiest way to save money is to change your mindset.
How do you do that? You get excited about the freedom that saving will give you. You learn that money=freedom. You see that spending that money won’t make you happy. You learn to cut on things that are a waste.
If you’re ready to start looking at saving in a whole new light then I suggest you go over to Mr. Money Mustache and start reading his stuff.
If you’re a podcast lover like me then you should check out The Mad Fientist’s podcast, he interviews all the big names in the Financial Independence niche and their stories are extremely inspirational. If you listen to one a day a guarantee it will help keep you on track in achieving your savings goal.
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