I saved 45% of my income for 8 years, here's what I learned

Summary

In this video, the creator shares their 8-year journey of saving money and provides five key lessons learned along the way. These lessons include the importance of saving smart without sacrificing a fulfilling life, avoiding the stress of strict budgeting, focusing on earning more instead of cutting costs, maintaining financial transparency with a partner, and setting up automated savings systems to make saving effortless. The video emphasizes that financial success comes from balance, smart planning, and aligning financial goals with lifestyle choices.

Takeaways

• 😀 Saving money doesn't mean living like you're broke. It's about finding a balance between saving and living a well-lived life.
• 😀 You don’t need to sacrifice everything for early retirement. Sometimes, a more balanced approach, like saving less but living better, can work just as well.
• 😀 Penny pinching and budgeting down to the last dollar can be incredibly stressful. A simpler, more sustainable approach to saving can bring greater peace of mind.
• 😀 It's important to align your financial identity with your lived identity, ensuring that your lifestyle matches your income and spending habits.
• 😀 Lifestyle inflation is inevitable as life changes (like marriage and children), but you can still save by earning more rather than cutting back every dollar.
• 😀 Earning more money, while maintaining a steady lifestyle, is a key strategy for effective savings and long-term wealth accumulation.
• 😀 Transparency with your spouse about finances is crucial for building wealth together. Lack of transparency can cause relationship strain and financial setbacks.
• 😀 Shared financial goals with your spouse are essential. You need alignment between both of your financial identities and how you live your lives.
• 😀 Saving money should eventually become automatic. With the right system in place, saving and investing can happen without constantly thinking about it.
• 😀 Setting up a system where your income is automatically split between spending and savings accounts makes saving effortless and part of your routine.

Q & A

What was the key moment that sparked the speaker's serious approach to saving money?

The key moment occurred in 2016 when the speaker refused to pay for internet in China, even though it would cost about $200 a year. This decision marked the beginning of the speaker's focused approach to saving money.

What was the initial financial goal that the speaker discussed with his wife?

The speaker initially proposed that they could save 80% of their income to retire in 10-15 years. However, his wife questioned whether this would lead to a fulfilling lifestyle, as it would require them to live like they were broke now, just to retire and live the same way.

How did the speaker's wife challenge his approach to saving money?

The speaker's wife challenged the idea by pointing out that saving excessively for the future meant sacrificing a comfortable lifestyle now, which might lead to living in a constant state of scarcity. She questioned whether it was worth it to live frugally now only to retire and continue living in a similar way.

What realization did the speaker come to after discussing finances with his wife?

The speaker realized that financial freedom isn't just about sacrificing for the future; it’s about finding a balance. Saving money shouldn’t mean living like you’re broke, and it's important to plan for a fulfilling life while also securing your financial future.

What lesson did the speaker learn about financial planning after coaching a client?

The speaker learned that penny-pinching and obsessing over every dollar can be stressful. Instead, he realized that living a humble but content lifestyle is much more freeing, and it's better to focus on making intentional decisions about money rather than constantly trying to cut every expense.

How did the speaker help his client prioritize her financial goals?

The speaker helped his client prioritize by encouraging her to consider her immediate family’s needs, like saving for a down payment for her daughter’s future, over her desire to visit extended family for Christmas. This led her to rethink her spending and align her actions with her long-term financial goals.

What is meant by 'financial identity' and 'lived identity' in the context of the speaker’s lessons?

Financial identity refers to an individual's financial situation, including income, savings, and debt. Lived identity is the lifestyle they choose to live. The speaker emphasizes the importance of aligning these two so that one's lifestyle doesn't demand an income higher than their financial reality, thus avoiding lifestyle inflation.

How did the speaker increase his income to meet his financial goals?

The speaker focused on earning more rather than cutting expenses. By switching jobs and keeping his lifestyle the same, he gradually increased his income and eventually tripled it. This approach allowed him to save more money and meet his financial goals without constantly stressing over every dollar spent.

Why is financial transparency between spouses important in wealth-building?

Financial transparency is crucial because it ensures both partners are on the same page with their financial goals and responsibilities. If one partner is unaware of the other’s financial situation or spending habits, it can create tension and hinder progress toward shared financial goals.

What is the ultimate goal of saving money according to the speaker?

The ultimate goal of saving money is to make it feel automatic. By creating systems where savings are automatically deducted and not requiring constant attention, individuals can gradually build an emergency fund, invest, and eventually retire comfortably without actively thinking about saving every month.