Do You Want To Support My Work?
I’ve always saved a lot of money.
But not only money. I remember as a kid I didn’t want to eat all my candy Saturday night, instead I saved most of it until later.
I remember the feeling of watching my candy lying in the cupboard.
To know that the candy was there was equally good as eating it.
When I buy new clothes I often tend to postpone using them. Saving my clothes for the best opportunities. Saving them for the holidays, celebrations, parties etc.
The keyword is self-control.
My eating pattern is also dominated by a strong sense of control. I rarely allow myself to over-eat, I eat healthy and I eat with the thought that my body shall last for 100 years. Therefore I don’t want to destroy it with lots of junk food.
Self-Control And Delayed Consumption
A child sits alone in a room, staring at a plate piled with delicious-looking marshmallows.
The girl has been told that she has two options: eat one now, or wait 15 minutes and have two of the sugary treats.
Tantalised, the child reaches across, hand hovering over the plate.
Will she be able to resist temptation and hold out for the greater reward?
We’ve all heard the story about the marshmallow-test.
The importance of being able to delay gratification – whether in expectation of more money later (investing) or marshmallows – has its roots in the physiology of the brain.
Studies show that people’s ability to save, invest, delay choices and plan for their future is much greater within people that has a high level of self-control.
Those with greater self-control as children were more successful in their careers, less likely to suffer from obesity or alcoholism or to use drugs.
As you’ve probably understood, I was one of those kids who were able to delay eating the marhmallow.
This has indeed helped me tremendously in a lot of situations:
-It’s the reason I’m able to focus on tasks all day long without getting bored
-It’s the reason I see no problem at all by saving and invest as much money as I can every month.
-It’s the reason why I’m crushing most goals I set for my self.
If I’m given the option to delay something if it’s making me stronger, healthier and wealthier in the future, I have no problem at all to postpone a desire in the now in exchange for something better in the future.
I don’t know many people in my real life that feel the way I do about delayed decisions, but in the blogosphere and on Twitter we’re all goal-driven and focused.
I think that’s why I thrive so immensely online talking to these people. We’re pushing each other to reach new hights and are enjoying our own and others success equally much.
How Do I Save 70-75% Of My Income Every Month?
I’m sorry to disappoint you, there’s no magic formula.
My income for the last 6 months have been around $5,000 per month after taxes on average.
70% of $5,0000 = $3,500
75% of $5,000 = 3,750
In other words I usally spend aprox. $1,250 – $1,500 every month (only me).
You can see the stats on the figure below.
I’ve been saving as much as I can for some years now, and basically that’s the reason why I’ve got $300,000 invested in the stock market.
My principles are so simple, that anyone could do it.
I agree that it’s way harder on a lower salary, but yet it’s possible. How do I know? I talk to them every day on Twitter.
What if you’re income is $3,000 per month? Is 70% still possible? Yes!
$3,000 x 0,70 = $2,100.
In other words; to save 70% of your income every month you have to live off $900/month.
It won’t be easy, but it should absolutely be possible.
When I was a student my budget was $650. The rent was $450 and I lived on $200 every month. The funny thing is that I allowed myself to do all the fun things even on a low budget. I guess the difference back then was that everybody had a tight budget, therefore everybody thrived on less. Now my friends have an higher income, therefore they spend more as well (lifestyle inflation).
My secret trick is that I’ve never upgraded my lifestyle since I was a student.
The only difference between my budget of $650 back then and my spending today of $1,250-$1,500, is that I’m also paying down on my mortgage. The rent is 1,30% at the moment, so I try to pay down as little as possible every month + the mandatory rent.
How Do I Keep My Expenses So Low?
-I don’t splurge. I only buy things that I need. If I want something I think about it for 3 days before I eventually decide to buy it. Often I’ve forgot the item after one day, so often I end up not buying anything at all.
-I typically spend $200 – $250 on groceries every month (only me). We have a monthly budget that we most often follow.
-I always think of alternative cost before I decide to buy something. $1,000 today is worth aprox. $20,000 in 30 years due to compound interest. Hopefully you’ll delay that new iPhone you wanted to buy now?!
What Am I Doing To Earn More Money?
-I’m actively looking for ways to raise my 9-5 salary. Recently I got a new job. I’m getting a 16,2% salary increase compared to my last job. That’s way more than the mandatory 3-4% you get every year if you stay in your job.
-I lower my income tax rate from aprox. 28% to 18%. This is not free money, but it’s a free loan. This has two effects: 1) I can invest more. 2) I pay zero interest rate. It works like this: From 1th of January 2020 I’ve lowered my tax from 28% to 18%. The consequences is that I recieve a higher salary in 2020, and I’m able to invest more. The extra money I get to invest doesn’t have to be paid back until 31th of May 2021, which means I’m loaning money to 0% interest rate. As I said, this is not free money, but leverage is the key to compound money quickly.
-I invest as much as possible every month in index funds. My investments will keep earning money for me even while I’m asleep.
-I’m doing some coaching and earning a little bit of money from ads (negligible amounts).
Well, I guess that’s pretty much it. Feel free to ask me questions about how I’m doing it.
It’s not always easy to explain things. Sometimes you just do it. It’s like Roger Federer playing tennis or Tiger Woods playing golf.
If they were to explain to you exactly how they make the perfect shot, they will fail to explain it to you. You can learn more about the concept of not knowing in the latest Naval-podcast which I found highly interesting.
How much are you saving every month?
Which steps are you taking to reach financial independence faster?
Comment below, mail me or send me a DM on Twitter
Have questions, comments or suggestions? I would love to help you with your FI-journey.
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Having a goal written down with a set date for accomplishment gives you something to plan and work for.
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