Money is freedom
On the last money article, we saw that money does not bring happiness, but it can buy us freedom, increasing our chances to be happy. So how do we achieve this freedom?
By saving money!
It is crazy how much money-saving is still overlooked. We are always in the incessant search for the one investment that will make us rich, but finding it — or if it will work — is completely out of our control.
On the other hand, how much we save, keeping our expenses low, and being financially efficient are way more within our control — although we often neglect those.
We usually focus on accumulating future wealth or purchasing things, but the benefits of saving money go way beyond that.
You don't need a specific reason
Most of us only save money when we have a specific goal in mind. We save money for a new car. We save money for the house of our dreams. We save for our retirement. This is great, but to actually save money we don't need any specific reason.
Saving for specific things we want to buy makes sense in a predictable world, but unfortunately ours isn't.
"Savings is not a tool for us to achieve a desired spending goal. Savings is a safety net against life's inevitable ability to surprise us at the worst possible moment", Morgan Housel.
It is not easy though. Saving money consistently without a reason is not an easy habit to build, as we see no short-term value in it. If we save little money today, we are still not millionaires, so why bother?
Intangible happiness
It is easy to save money when focusing on the tangible, but it is the intangible that can bring us true happiness.
Gaining control over the intangible gives us options and flexibility — which will increase our feeling of control over our lives.
Saving money gives us the ability to wait and the opportunity to take action. Gives us time to think and lets us change course of our lives in our own terms, whenever we deem necessary.
This is priceless and immeasurable, but because we can't measure it, we have a very hard time doing it. We only see the value of saved money when we actually need the money — and by then it is already too late.
Living in your own terms
When we lack control over our lives, we are forced to accept whatever comes our way.
If we lose our jobs and we don't have a safety net, when the bills come, we need to take any job that we can get — even if we don't want it and we don't like it.
We no longer have the flexibility to wait for a better opportunity — the feeling that we are in control is gone.
If we have the flexibility, we can wait for the opportunities to come to us. We are in the driver's seat, defining where our careers should lead us. We'll have the money to invest in ourselves to learn a new skill. We'll feel less pressure to find a new job. We'll have less pressure to find our passion.
We can live our lives at our own pace, according to our own terms.
But even if we all know the above, why we still don't do it? Because of a very powerful force that works against us — our very own egos.
Keep your identity small
We all need the basics. Once we are past this point, we have another level of comfortable and, after that, everything is pretty much extra.
But let me be clear here, I am not talking about living a shitty life and saving every cent you make. That's not the point here. We still have to enjoy the present, otherwise why would we save money to not use it?
The issue is that we often go beyond our comfortable levels, not because we actually need more, but because our ego needs to show other people that we have — or used to have — more money than them.
It is a constant battle to not fall into the vicious cycle of trying to keep up with others.
I read something very powerful on a book called The Psychology of Money — One of the most powerful ways to increase your savings, is not actually to raise your income. It is to raise your humility. Savings is the gap between your ego and your income.
Rethink money-saving
Having more control over our time is becoming one of the most valuable currencies in the world. That’s why more people can — and should — save money.
We don't need a specific reason or spending goal to save. We must make a habit out of it and, in time, we will achieve the security we need to feel in control over our lives.
Savings can be created by spending less. We can spend less if we desire less. We will desire less if we care less about what others think of us.
The more I study, the more I see it. Money is not about finance or math. It is about psychology and understanding money beyond the numbers.
Start saving today!
