How to Save $10K So Fast It Feels Illegal

Summary

This video offers science-backed strategies to save $10,000 faster. Key tactics include using commitment devices (like freezing credit cards), automating finances to avoid willpower fatigue, and applying the 30-day rule for impulse purchases. The speaker shares methods like habit stacking, doing quarterly financial audits, and creating a personalized 'money map' to track and optimize spending. The importance of adding internal and external friction to limit unnecessary spending is also highlighted. The goal is to make money-saving as effortless and automatic as possible, turning financial management into a seamless routine.

Takeaways

• 😀 Implement a Ulysses contract to create barriers between your present self and future temptations, such as freezing credit cards or giving someone a check that they can cash if you fail to follow through with your savings goals.
• 😀 Automate your money system so that saving becomes effortless. Set up automatic transfers to retirement and savings accounts to reduce reliance on willpower.
• 😀 Use the 30-day rule to avoid impulse buys: wait 30 days before purchasing an item, which often reveals whether you truly need it or just wanted it on impulse.
• 😀 Follow the 'One Rule' for buying things: only buy something new when replacing something that’s broken, worn out, or too small. If possible, buy secondhand for better quality and lower cost.
• 😀 Create a 'money map' by focusing on four key financial categories: capital (income), core needs (necessary expenses), choice bucket (discretionary spending), and compound number (wealth-building).
• 😀 Perform quarterly audits on your spending, particularly subscriptions, to avoid overpaying for services you no longer use or forgot about.
• 😀 Habit stack by pairing a new habit, like checking your spending, with an existing brainless habit, such as making coffee, to make money management automatic.
• 😀 Understand that motivation and willpower alone are often insufficient for saving money, which is why a system of financial automations is essential for long-term success.
• 😀 Make your financial system easy to manage and less overwhelming by breaking it down into simple, automated processes that take minimal time each month.
• 😀 Recognize that instant gratification and dopamine from purchases often fade quickly, so learning to delay gratification can help curb impulse buying and unnecessary spending.

Q & A

What is a 'Ulysses contract' and how can it help in saving money?

A Ulysses contract is a commitment device designed to prevent future temptations by setting up restrictions or challenges for future actions. For example, freezing your credit card in ice or giving a friend a signed check that can be cashed if you fail to stick to your goals can make it harder to impulsively spend money, thereby helping you save more.

Why is automation important for saving money?

Automation helps save money by eliminating the need for constant decision-making. The brain uses mental energy throughout the day, and by automating money transfers to savings and investments, you reduce the mental load, making it easier to stick to saving goals without relying on willpower.

How does the 30-day rule help in controlling impulse purchases?

The 30-day rule involves waiting 30 days before buying an item you desire. During this time, you add it to a 'Not Now but Later' list. This waiting period gives your brain time to realize that the purchase might have been an impulsive decision, often leading to the desire to buy fading away over time.

What is the 'one rule' for making necessary purchases and how does it help save money?

The 'one rule' is a strategy where you only buy something new if it is replacing something that is broken or worn out. It also encourages buying secondhand when possible, as vintage items often offer better quality at a lower cost. This approach prevents unnecessary purchases and promotes more sustainable spending.

How can creating a money map help in managing finances?

A money map helps you visualize and categorize your finances into key areas: capital (take-home pay), core needs (essential expenses like housing and food), choice bucket (discretionary spending), and compound number (wealth-building savings). This breakdown allows you to assess your financial situation and make improvements.

Why should people do quarterly audits of their financial subscriptions?

Quarterly audits help identify forgotten subscriptions or unrecognized charges. Studies show that many people unknowingly spend on subscriptions they no longer use. By reviewing financial statements every few months, you can cancel unnecessary subscriptions, request refunds, and optimize your ongoing expenses.

What is habit stacking and how can it be used to improve financial habits?

Habit stacking involves pairing a new habit (such as checking your bank account) with an existing one (like making coffee). By attaching money management actions to daily routines, you make them easier to adopt and stick to over time without much extra effort.

How can someone set up an automated money system?

To set up an automated money system, you can have a portion of your paycheck automatically directed to savings, retirement accounts, and sub-accounts based on specific goals. Automating bill payments and transfers reduces the need for manual oversight, making it easier to save money consistently.

What are the four C's in creating a money map, and how do they help in saving money?

The four C's are Capital (take-home pay), Core Needs (essential expenses), Choice Bucket (discretionary spending), and Compound Number (wealth-building savings). These categories help track and optimize where your money is going, guiding you toward better budgeting and saving strategies.

What common mistake do people make when they first try to save money, according to the script?

A common mistake is relying too much on willpower or motivation to save money. Motivation fades over time, and without a system in place, people often fall back into old habits. The script emphasizes the need for automation and commitment devices to create lasting change.