Save More
Posted by creining | Filed under Financial Independence
In my previous post I covered spending less. It follows that after you spend less you now have money saved. Personally I have always been a saver. I remember when I was 15 working in my first job as a dishwasher at an Italian restaurant and I would do calculations on how many hours I would have to work in order to buy things. I would ask myself if it was worth it to exchange 4 hours of steamy dishwasher labor for that Blind Melon CD at Kmart. Typically the answer was no, so my paychecks piled up in my savings account. My parents played a role as well as because they were penny pinchers. As far as I know they did it because they grew up with Depression-era parents. With that in mind I understand why they lived like that but I feel like they were not working towards any financial goal. I have a goal around why I am saving and that is to be financially independent. I look at it as a sacrifice now for a better tomorrow.
Someone looking at the way I save would probably wonder what the point is. I sometimes hear the “well you only live once” to justify spending fat wads of cash and making it rain. Well what I do know is that by spending more money I was never that much happier. The key I found is to think about the things you spend money on that do not make you happy and eliminate those. After that think about what things spending only a little bit of money makes you really happy and/or improves your quality of life immensely. This is a better payback. I found that I would eliminate spending money on certain things I thought I did not need but they adversely affected my quality of life so I added those things back in. For instance coffee. Yes, a lot of people stop drinking coffee and survive. However, I really enjoy the taste and ritual of drinking coffee in the mornings and since I brew it at home it costs me around $5.00 a week.
Granted going down this path can be a brain shift in realizing what out of life makes one happy and undoing the money factor inevitably tied into it. Over time I realized that buying stuff does not make me happy. Going out and blowing money on crap I don’t need will not make me happy. My things, the material possessions that I do currently own, do not make me happy. Walking a dog makes me happy, cooking a dinner with a special someone makes me happy, visiting with friends and family makes me happy, doing yoga makes me happy, reading a book (from the library of course!) in bed makes me happy, taking a bath makes me happy, having a full belly makes me happy, riding my bicycle around the lake makes me happy, strolling the farmer’s market makes me happy.
So how do I save money from a money flow perspective? Well I use the age old adage of “pay myself first”. This means before anyone else gets my money, I get my money. Automatically on the first of the month I have a set amount of money withdrawn from my checking account, where my paychecks end up, and deposited in my brokerage account. This money I use to invest in stocks on a regular basis. My money needs to work for me and that is why I invest it. My goal is to pay myself 50% of my after-401k and after-tax pay per year. I can say that I have been meeting this goal, less 23 dollars! I can’t say that it has been easy because it hasn’t but it has been fun! Meeting the goal and watching my wealth build is exciting to me. Also I have been transitioning over to this model from early 2010. This year I have made a lot of changes with my various personal finances in order to get them lined up how I wanted. Starting in early 2012 everything will be humming along with less time I will need to devote to my future financial independence.