How To Save $10K Effortlessly: 6 Saving Tips

Summary

This script outlines six scientifically-backed strategies to save $10,000 faster, emphasizing guideline automation, emotional banking, and the power of a strong 'why'. It discusses the psychological barriers to saving, such as present bias and gratification, and offers practical solutions like the 'not now, but later' list and the future value formula. The importance of understanding one's spending motivations and the impact of ego on savings is highlighted, encouraging viewers to adopt a mindset of humility and long-term thinking.

Takeaways

• 🚀 Implement guideline automation to save 3.8 times more money without sacrificing your favorite purchases.
• 💰 Start saving by allocating 10% of your income and consider it as a 'self tax' for future financial freedom.
• 📈 Set up a system where your paycheck is automatically divided into a spending account and a savings account.
• 🍕 Break down your savings goal into smaller, manageable amounts, like daily costs, to make the process seem less daunting.
• 🔄 Use the 'not now, but later' technique to delay gratification and curb impulse purchases.
• 🧠 Understand the psychological phenomenon of present bias and reframe your mindset to focus on the long-term benefits of saving.
• 💭 Find your 'why' to emotionally connect with your savings goals and stay motivated to achieve them.
• 🧠 Use emotional intelligence to fine-tune your saving behavior, making it 3.3 times more likely to succeed.
• 💡 Recognize the power of companies to exploit emotional banks and learn to use this understanding to your advantage.
• 🏦 Consider therapy to work through financial baggage and trauma that may hinder your saving efforts.
• 📊 Apply the future value formula to make better financial decisions based on understanding the worth of money in the future.

Q & A

What is the main idea of the transcript?

The main idea of the transcript is to provide strategies for saving money effectively, based on scientific research. It introduces the concept of guideline automation, the importance of setting a clear 'why' for saving, and the psychological aspects that affect our saving behaviors.

How does guideline automation work?

Guideline automation involves setting up a system where a portion of your income is automatically saved or allocated towards specific expenses. It leverages the concept of loss aversion, making it easier to save money by avoiding the immediate loss of funds from your main account.

What is the significance of the 'why' in saving money?

The 'why' behind saving money is a deeply personal reason that drives an individual to save. It creates an emotional connection to the act of saving, making it more meaningful and sustainable. It helps to overcome short-term temptations and stay committed to long-term financial goals.

How does present bias affect saving?

Present bias is a psychological phenomenon where people prioritize immediate rewards over future benefits. It makes it difficult to save because the immediate satisfaction of spending is often valued more than the long-term benefits of saving.

What is the strategy to overcome present bias?

To overcome present bias, the strategy is to reframe your mindset by focusing on the larger future value of saving money rather than the immediate cost of not spending. This helps to condition the mind to resist the urge to spend for immediate gratification.

How does the future value of money concept help in saving?

Understanding the future value of money allows you to make better financial decisions by considering the potential growth of your savings over time. It encourages investing and saving, as you recognize the increased value your money could have in the future compared to spending it now.

What is the 'not now but later' list for?

The 'not now but later' list is a strategy to manage impulsive purchases. By adding items you're tempted to buy immediately to this list and waiting 30 days before making the purchase, you often realize that the desire for the item was just an impulse, thus helping to avoid unnecessary spending.

What does the author suggest about the relationship between ego and savings?

The author suggests that savings are not just about income minus expenses, but rather income minus ego. Unnecessary spending often stems from a desire to keep up with others or to show off, which is a reflection of ego. By reducing materialistic desires and caring less about others' opinions, one can save more effectively.

How can therapy help with financial baggage and trauma?

Therapy can provide strategies to work through financial baggage and trauma by addressing the underlying emotional issues that may lead to poor financial decisions. It helps individuals understand and manage their relationship with money, leading to healthier financial behaviors.

What is the ultimate saving goal mentioned in the transcript?

The ultimate saving goal mentioned in the transcript is to save $10,000. However, the transcript emphasizes breaking this goal down into smaller, more manageable targets, such as saving a certain amount per day or month, to make it more achievable.

What are some practical tips for increasing savings?

Some practical tips include setting up guideline automation, using a 'not now but later' list for impulse purchases, understanding the future value of money, reducing ego-driven spending, and seeking therapy to address financial trauma. Additionally, the transcript suggests visual tracking of savings progress and breaking down large saving goals into smaller, daily or monthly targets.

Outlines

00:00

🚀 Strategies for Accelerated Savings

This paragraph introduces six scientifically-backed strategies to save $10,000 faster. It emphasizes the concept of guideline automation, which leverages loss aversion to save more effectively. The speaker shares a personal example of how they set up their finances, using a system of spending and savings accounts to automate savings. The paragraph also discusses the psychological phenomenon of present bias and how reframing savings goals can help overcome it. Additionally, it touches on the impact of emotional banking and how understanding one's 'why' for saving can significantly increase the likelihood of financial success.

05:02

💡 Finding Your Motivation for Saving

The second paragraph delves into the importance of understanding one's personal 'why' for saving money. It suggests that knowing the underlying motivation can be more effective than being aware of general financial statistics. The speaker shares their personal 'why,' which is to provide a better life for their parents. The paragraph also introduces the concept of the Golden Circle by Simon Sinek, which emphasizes the importance of 'why' over 'how' and 'what.' It discusses the impact of financial baggage and trauma from childhood and suggests therapy as a means to address these issues. The paragraph concludes with a discussion on how to resist temptations and immediate gratification by using a 'not now, but later' approach to spending.

10:03

🌱 Understanding the Future Value of Money

The final paragraph focuses on the concept of the future value of money and how understanding this can lead to better financial decisions. It explains the basic principle that money today is worth more than the same amount in the future and introduces the future value formula. The speaker shares personal strategies for saving, such as creating a 'not now, but later' list for impulse purchases and considering the future value when making investment decisions. The paragraph also addresses the idea that savings are not just about income minus expenses, but rather about reducing ego-driven spending. It ends with a teaser for additional tips on managing one's paycheck effectively.

Keywords

💡Saving Strategies

Saving strategies refer to the methods or plans individuals use to accumulate money over time. In the video, it emphasizes the importance of having the right strategies to save effectively, such as guideline automation, which helps save more money by automating the savings process, thus reducing the psychological burden of manual savings.

💡Loss Aversion

Loss aversion is a psychological concept where individuals prefer avoiding losses to acquiring equivalent gains. In the context of the video, it is used to explain why saving money can feel more challenging than spending it. The speaker uses this concept to justify the effectiveness of guideline automation, which removes the immediate pile of money and thus reduces the impact of loss aversion.

💡Emergency Fund

An emergency fund is a financial safety net that individuals set aside to cover unexpected expenses or financial hardships. In the video, it is one of the potential destinations for the money saved in the savings account, emphasizing the importance of having a financial cushion for unforeseen events.

💡High Yield Savings Account

A high yield savings account is a type of bank account that offers a higher interest rate than traditional savings accounts. It allows individuals to earn more interest on their savings, thereby growing their wealth more rapidly. The video mentions this as one of the options for where the saved money can be directed for potentially higher returns.

💡Investment Accounts

Investment accounts are financial vehicles used to grow wealth by investing in various assets like stocks, bonds, or mutual funds. The video suggests that part of the savings can be allocated to investment accounts to potentially earn higher returns over time.

💡Present Bias

Present bias is a cognitive bias that causes individuals to prioritize immediate rewards over future benefits. The video addresses this bias as a common obstacle to saving and suggests reframing savings goals by focusing on the larger future outcome rather than immediate sacrifices.

💡Emotional Bank

The term 'emotional bank' metaphorically refers to the psychological and emotional aspects that influence financial decisions. In the video, it is discussed in the context of using one's emotional motivations to improve financial behavior and savings habits.

💡Golden Circle

The Golden Circle is a model developed by Simon Sinek that emphasizes the importance of understanding 'why' as the driving force behind successful actions. It suggests that knowing the purpose or 'why' behind saving money is more influential than the 'how' or 'what'.

💡Financial Baggage

Financial baggage refers to the negative emotional and psychological impacts from past financial experiences that can affect current financial decisions and behaviors. The video discusses the concept of financial baggage and suggests therapy as a means to address and overcome these issues.

💡Dopamine

Dopamine is a neurotransmitter associated with pleasure and reward. In the context of the video, it is used to explain the impulse to make immediate purchases for short-term pleasure. The video suggests strategies to manage this impulse by delaying gratification.

💡Future Value

The future value concept refers to the worth of a sum of money at a specified point in the future, taking into account factors like inflation and potential interest or investment returns. The video emphasizes understanding the future value of money to make informed financial decisions.

💡Ego

In the context of the video, ego refers to the personal desire for material possessions and social status, which can lead to unnecessary spending. The video suggests that reducing ego-driven spending can significantly increase savings.

Highlights

Six proven ways to save $10,000 faster according to science.

Guideline automation can help you save 3.8 times more money effortlessly.

Loss aversion strategy makes saving money less challenging by automating the process.

By setting up guideline automation, you can save close to $7,000 a year with minimal effort.

Saving $10,000 seems more achievable when broken down into smaller, daily goals.

Present bias can be overcome by focusing on the larger yearly savings goal.

Using your emotional bank to fine-tune your saving behavior can increase your savings rate.

Identifying your 'why' can significantly boost your saving motivation.

The Golden Circle model emphasizes the importance of 'why' over 'how' and 'what' in achieving success.

Therapy can provide strategies to work through financial baggage and trauma.

Resisting temptation can be aided by delaying gratification with a 'not now, but later' list.

Understanding the future value formula helps in making better financial decisions.

Savings is not just about income minus expenses, but also about controlling ego-driven spending.

Investing in the S&P 500 Index Fund can significantly grow your savings over time.

Accepting that sometimes you might not save enough despite efforts is part of the process.

After receiving your paycheck, there are immediate actions you can take to increase savings.

Transcripts

if you ever try to get your savings in

order chances are you failed a lot but

the truth is it's not your fault you

just didn't have the right strategies so

here are six proven ways to save $10,000

faster according to science first

there's guideline automation a 2004

research study found there's a way to

easily save 3.8 times more money but the

best part is you can still buy things

you love pineapple pizza Mr Magic lambs

and broccoli but you got to do it in a

specific way implementing guideline

automation does take a bit of work to

get started but it saves so much more

time and headache in the long run this

strategy plays on the idea of loss

aversion basically it's when you losing

$100 feels significantly worse than you

finding $100 naturally anything you do

that takes away from your immediate pile

of money like saving money will become

just a bit harder for me guideline

automation makes it so I never have to

worry about saving money it completely

eliminates any form of loss aversion but

before I show you how my flow is set up

let's say you earn $67,000 a year if you

apply guideline automation to just 10%

of your income you'd have saved close to

$7,000 by the end of the year not bad

considering you didn't have to lift a

finger after setting it up once think of

it as sort of a self tax where your

future self is charging you a 10% tax of

all your earnings so that your future

self can be financially free here's how

I set mine up step one my paychecks are

deposited into my checking account step

two on the same payday my bank account

then automatically moves my paycheck

into one of two accounts one is called

my spending account which includes my

fixed monthly bills typical living

expenses like groceries gas Etc and by

knowing how much that I typically spend

in a month based on historical averages

I can set up spending targets for other

stuff like restaurants entertainment

travel and shopping the second account

is my savings account basically where

all my savings go step three at the end

of the month I automatically know what I

didn't use up in my spending account and

I can automatically move the leftover

money into my savings account then the

money for my savings account can do one

of three things be a part of my

emergency fund go into a high yield

savings account or go into my investment

accounts I also use this savings School

tracker to save money a lot faster

basically I'll just put in how much I

want to save and then I can track my

progress and Visually see where I'm at

for a limited time I'm giving away my

ultimate saving Gold Tracker for free

get it with the link below next don't

save $10,000 the problem with setting

such a large goal from day one is that

it's not realistic instead I want you to

think about how You' eat 10,000 slices

of pineapple pizza if you don't believe

in pineapple and pizza I already know

what your answer is but the only right

answer is one slice at a time so just

like the slices of pizza break down that

$10 , goal what you need to save every

month is

$833 which still sounds like a lot of

money but then you want to keep on

breaking it down $10,000 in a year is

just

$27.30 a day and when you break that

down even more it look like this cooking

meals instead of eating out there's $10

to $15 a day bringing your own coffee

instead of getting latte with oat milk

$5 a day cutting out subscriptions you

don't use anymore Netflix GQ Hulu about

30 bucks a month taking public

transportation instead of uber $50 a

week playing Katon with friends instead

of going to the bar $100 a week but

there's just one more problem there's a

psychological phenomenon called present

bias basically people tend to put more

value in priority on immediate rewards

over future benefits now thankfully

there is an easy way to get around this

instead of thinking you're only saving

$7.39 every day you got to switch it

back around think about it as you're

saving $10,000

at the end of the year by doing this

Jedi Mind Tricks and switching your

mindset into the bigger number when you

need it you become more conditioned to

fight off present bias suddenly saving

$27. 39 a day seems pretty doable and by

the end of the year you're going to have

$10,000 saved up all for making a few

little decisions that the person next to

you didn't next taking back control of

your emotional bank companies like

Amazon Coca-Cola and Nike invest

billions of dollars to try and figure

you out they hire teams of psychologists

behavioral economists and marketing

experts to understand how your emotional

Bank Works what gets you to tick why you

crave things and how to convince you to

click by but what if instead of letting

multi-billion dollar companies exploit

and manipulate our emotional banks for

the worst what if we were able to do the

same thing to it but for the better a

2019 research study found that you were

3.3 three times more likely to save if

you were able to use your emotional

advantage to fine-tune your behavior and

it all starts with a single question but

what surprised me the most from this

study is that you don't need to obsess

over all the data the statistics and

information about the benefits of saving

for most people it doesn't really help

to constantly hear about how unprepared

some families are for emergencies or how

baby boomers are struggling to

financially retire the truth is none of

this is as effective as asking yourself

this one question why for me my why is

my parents my parents left their friends

their entire family and everything they

knew to come to the US they worked in

factories every single day from morning

to evening to give their future children

a better life when they got paid they

didn't use the money to buy new clothes

for themselves or designer bags or

anything lavish instead they decided to

tuck most of it away in hopes to give

their future children a better Financial

start when I was born I never grew up

with much money in fact I grew up

witnessing all the little things that my

parents did to save I remember how we

would get these little coupons in the

mail and my mom would clip them out one

by one how instead of Nikes and Jordans

we had to get brandless shoes from Pals

or how we intentionally bought clothes

that were way too big for me because my

mom said that I would still be able to

wear it when I got older my why is to be

able to give my parents a life they

never had a life where they never have

to worry about money that's why I have

pictures of my family throughout my

apartment to constantly remind myself

why I'm doing what I'm doing and to

always hold me accountable and motivated

to keep on pushing author Simon s calls

this the Golden Circle basically it's a

model that explains how some people

achieve success While others don't it

consists of three concentric circles

representing three different layers s

says it's not enough to know how to save

money or what you can do to save money

these things are important but they come

secondary after you have a genuine

answer to why you want to save money

your why creates a Sentimental

connection between your core values and

why you want to save it builds a

personal reason to save not just because

you should or are told to but because

you have a deeper meaning to achieve and

speaking of deeper meaning I've come to

realize that when you grow up without

money you tend to build up a lot of

Financial baggage and Trauma that

negatively impacts you later in life

what I think is really helpful is

therapy which can give you the

strategies to work through this that's

why I'm excited to talk about today's

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Vincent Chan thanks again to betterhelp

for supporting this video Oscar wild

said I can resist everything except

Temptation I personally have a super

addicting personality all the way since

middle school I've been obsessed with

video games Left 4 Dead Team fores 2 Age

of Mythology in fact my biggest brag is

that I finished a main quest in Skyrim

in Just 2 Days in Psychology they call

this gratification most people tend to

give into their impulses is because of

dopamine basically it's the pleasure

chemical in our brains that gets

released when we give in but the problem

is we're all misunderstanding the timing

and sequence which dopamine affects us

typically we think the dopamine process

goes like this you want to buy a Mr

magic lamp you buy it you get a huge hit

of dopamine but did you ever notice that

after you buy something you've wanted

for a while you sort of forget about it

that positive feeling stops existing but

studies found that the dopamine process

actually goes like this you want to buy

Mr magic lamp you get a hit of dopamine

anticipating the purchase and then you

buy it and companies know all about this

order they spend billions of dollars to

exploit this deep-seated weakness of

ours they use tricks like the classic on

sale signs where they make you feel like

you're actually saving money or setting

up thresholds making you spend $100 more

just so you can save $5 on shipping but

how do you stop falling for this author

bow Meister knows a thing or two about

this bow meister and his colleagues

study people who are obsessed with

chocolate cake but instead of giving the

participants the cake right away they

were told they could have it later and

it worked their urge to eat the cake

significantly subsided the trick is

instead of stating that you'll never

make an unnecessary purchase again which

is an unrealistic goal give yourself

permission to get that dopamine hit by

creating a not now but lat lat list

whenever I see something that I really

want to buy I add it to my not now but

later list I let my dopamine get its

fill and then I wait 30 days before I

buy it if by the end of the 30 days I

still want to buy the thing then I'll

get it but what happens about

92.7% of the time is that after an item

has been on the list for 2 weeks I

realized that I actually didn't wanted

in the first place and it was just an

Impulse decision for me what changed my

financial life is understanding the

future value formula basically this

helps me determine how much my money is

worth in the future without needing to

become a time traveler here's how you

can easily think about it if I said I

can give you $100 today or $100 next

year which would you rather have chances

are you'd want the $100 right now

because you can actually do something

with it today buying 50 cheeseburgers a

nice Casio watch or Mr magic lamp

instead of waiting a year to do it

naturally we'd say that $100 today is

worth more than $100 next week which is

worth more than $100 next year that's

the basic idea of the future value of

money but if $100 next year is worth

less than $100 today how much less is it

worth and this is where it gets really

interesting if I ask whether you wanted

$100 a day or $105 in a year you might

have to think about it and that's where

this formula really shines by being able

to understand understand the future

value of something you can make better

financial decisions based on your future

needs if you can invest $100 into

something that generates a 10% return

annually then you should take the $100

now because the future value of the $100

in a year is

$110 but if you don't expect to make

more than $105 or be able to invest your

$100 in something that generates more

than 5% return in a year then you you be

better off accepting the $105 in a year

since the $105 will be more than the

present value of

$100 start thinking about the present

value of money like this however much

money you save today if you put it into

the S&P 500 Index Fund how much would it

be worth in let's say 15 years assuming

a 10% annualized average return let's

say instead of buying this Mr magic lamp

for $5,000 and instead actually put that

money into the S&P 500 for 10 years then

the future value of today's $55,000 is

almost 13,000 but if I invested it for

20 years let's say then that'll be worth

over

$33,000 so the question is now is this

Mr Magic lamb worth the future value of

$33,000 next most people think that

savings is your income minus expenses

but that's wrong author Morgan household

believes that savings is equal to your

income

minus your ego look around your room are

there any items you bought on impulse

because you wanted to one up a friend or

family member did you buy a new TV or a

new car because your friend David just

got a new one too howel believes that

spending beyond the minimum need of

materialism is mostly just a reflection

of ego a way to show people that you

have or had money meaning the quickest

way to increase your savings isn't about

raising your income but rather raising

in your humility you can spend less if

you desire less and you will desire less

if you care less about what others think

of you and that leads me to something

you've got to start accepting and it's

that even if you're trying your absolute

hardest to save sometimes you still

might feel like you're not saving enough

and that might be because you aren't

doing these things immediately after you

get paid click here for the eight things

you need to start doing with your

paycheck today