How To Save $10K Effortlessly: 6 Saving Tips
Summary
TLDRThis 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
🚀 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.
💡 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.
🌱 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.
Mindmap
Keywords
💡Saving Strategies
💡Loss Aversion
💡Emergency Fund
💡High Yield Savings Account
💡Investment Accounts
💡Present Bias
💡Emotional Bank
💡Golden Circle
💡Financial Baggage
💡Dopamine
💡Future Value
💡Ego
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
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