This is a self-improvement post.  See all here:

We had previously talked about investing money, we should take some time to specifically cover savings.  A very interesting book that pops up on the personal finances reading lists is “The Millionaire Next Door”.  It’s a little dated, but still valuable info.  Basically some researchers tried to figure out what the average millionaire looked like as far as spending habits, in an attempt to better market luxury goods.  What the researchers found though, was that the average millionaire looked pretty, well, average.  They didn’t live lavish lifestyles or buy exotic items.  They were frugal, and saved what they earned.  In fact, people with the expensive cars and homes were more often at a much lower net worth than appearances would have indicated.  Why?  When you are worried about social status, you tend to spend a lot of money, often all the money you earn.  A plumber who makes $100K a year from running their own business is much more likely to end up a millionaire than a lawyer who makes $100K.  Lawyers tend to have other lawyer friends they feel pressured to keep up with.  The book was eye opening, and frankly just made me feel guilty about quite a bit of the money I squandered in my 20s.

There’s another interesting psychology concept called hedonic adaptation, which basically says that we eventually balance out to the same level of happiness regardless of our life circumstances.  Lottery winners are initially elated, but after about a month they are right back to the same level of happiness they were before.  So basically all that money we are spending on status isn’t making us happier in the long run.

Given the above, I’ve chosen to start a much thriftier lifestyle.  Ideally I can save enough money to be secure and have career flexibility down the road.  Some people take this particularly hardcore, I suggest checking out Mr. Money Mustache’s blog: (

As far as myself goes, some of the steps I’ve taken are:

-Prioritize what’s important to me on housing, and compromise on the others.  I live in a 1 bedroom, but nice location.  Smaller place also means you buy less stuff.

-Avoid large purchases when possible.  I drive my car longer, and also buy used vehicles

-Generally get out of the habit of buying stuff, and make an effort to reduce unneeded items.  Paying for storage of old stuff is a waste.  A trick I use when going for an impulse buy is to think, “do I really need to buy this right now or can I wait a week?”  If I can wait, then I do, and typically the impulse is gone by then.

-Seriously commit to making food.  I’ve recently found the joys of cooking quinoa in a rice cooker, pretty cheap and healthy.  Eating out needs to be avoided.  If you develop the habit of making cost effective food then you always have it on hand and the temptation to eat out is reduced.

-Cut back on costly habits.  I conveniently don’t drink alcohol any more.  There was a time where I was easily spending over a $1k a month on that, so that can be a big difference.  I’m in the process of cutting back on caffeine drinks (diet soda) and sweets also now.  Caffeine drinks can be deceptively expensive, especially if they become a crutch to get through a long work day.

-I generally travel enough for work that I don’t feel like I need to take exotic vacations.  When I do take off I’m traveling to visit family or friends, so I have a place to stay.

-I’ve set defined reach goals to stretch for on my savings.  Overall I’m trying to achieve a savings rate of close to 50%.  Right now I’m at 42%.  And not overly cheap if you can tell by some of my other posts, but just try to cut back where I can.

Just some thoughts on habits that have helped me, any other good ideas?



My other post on investing:


2 thoughts on “Saving

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