{"id":59740,"date":"2022-02-04T06:23:20","date_gmt":"2022-02-04T10:23:20","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=59740"},"modified":"2022-02-18T12:10:50","modified_gmt":"2022-02-18T16:10:50","slug":"how-to-start-saving-money","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/how-to-start-saving-money\/","title":{"rendered":"How to Start Saving Money Regardless of Your Income"},"content":{"rendered":"\n<p>Do you regularly put money aside in a savings account? <a href=\"https:\/\/www.shortform.com\/blog\/benefits-of-saving-money\/\">Why is it important to save money<\/a>? <\/p>\n\n\n\n<p>We&#8217;re told from a young age that having a savings account is important, but many people don&#8217;t have savings because they feel like they don&#8217;t make enough money to save. According to Morgan Housel, the author of <em>The Psychology of Money<\/em>, this way of thinking is incorrect and harmful\u2014everyone should save money even if they don&#8217;t have a high income.<\/p>\n\n\n\n<p>Here&#8217;s how to start saving money even if you don&#8217;t have a high income.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-prioritize-saving-money\"><strong>Prioritize Saving Money<\/strong><\/h2>\n\n\n\n<p>Many people don&#8217;t save because they think saving is either unnecessary or impossible, or they don&#8217;t know how to start saving money.&nbsp;<\/p>\n\n\n\n<p>(Shortform note: A 2019 survey shed further light on why people don\u2019t save: When asked why they didn\u2019t save money, <a href=\"https:\/\/www.cnbc.com\/2019\/03\/15\/the-no-1-reason-why-americans-struggle-to-save-money-isnt-debt.html\">Americans most frequently said they couldn\u2019t afford to save due to their expenses<\/a>\u2014and if you can\u2019t afford your day-to-day life, you won\u2019t save. To help prioritize saving money, <a href=\"https:\/\/shortform.com\/app\/book\/the-automatic-millionaire\/part-1\">consider reducing your expenses first with strategies like eliminating unnecessary expenses from your life<\/a>.)<\/p>\n\n\n\n<p>Housel argues that people who avoid saving are wrong for the following reasons:<\/p>\n\n\n\n<p>First,<strong> saving is essential to <a href=\"https:\/\/www.shortform.com\/blog\/building-wealth\/\">building wealth<\/a> due to the nature of wealth<\/strong>. As we&#8217;ve seen, wealth is the money you don&#8217;t use\u2014in other words, it&#8217;s the money you save. Therefore, it&#8217;s impossible to build wealth unless you save money.<\/p>\n\n\n\n<p>Second, <strong>saving is the most reliable way to build wealth because it&#8217;s totally in your control<\/strong>. Both of the other methods of building wealth\u2014increasing your income and profiting off your investments\u2014are full of uncertainty: For example, an investment strategy that works today might not work tomorrow depending on how the market goes. Saving money doesn&#8217;t involve such risks: You always control how much you save, and saving will be just as effective tomorrow as it is today.&nbsp;&nbsp;<\/p>\n\n\n\n<p>(Shortform note: Not all thought leaders distinguish between saving and investing the way that Housel does. For example, in <a href=\"https:\/\/shortform.com\/app\/book\/the-success-principles\"><em>The Success Principles<\/em><\/a>, Jack Canfield states that <a href=\"https:\/\/shortform.com\/app\/book\/the-success-principles\/principle-58\">you should maximize your savings by investing them<\/a> so that they can accumulate the maximum compound interest; he never suggests leaving some money in the bank. But by Housel\u2019s definition, your investments don\u2019t necessarily count as savings: If you\u2019re not using them, they might be part of your wealth\u2014but you can\u2019t rely on them because you could lose them at any moment.)<\/p>\n\n\n\n<p>Finally, <strong>saving is a comparatively easy way to build wealth<\/strong>. If Kei and Nick have the same net worth but Nick requires half as much as Kei to be happy, Nick can save twice as much as Kei and thus build his wealth twice as fast. This is a far easier task than Nick trying to increase his income or investment returns. (Shortform note: Saving can be so easy you only have to think about it once: Behavioral scientists recommend <a href=\"https:\/\/www.ted.com\/talks\/wendy_de_la_rosa_a_simple_2_step_plan_for_saving_more_money\/#t-161030\">setting up a system that automatically saves a portion of your income every time you receive any<\/a>.)&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-save-money\"><strong>How to Save Money<\/strong><\/h2>\n\n\n\n<p>So how, exactly, can you ensure you save money? Housel recommends that you <strong>stop caring about others&#8217; opinions.<\/strong><\/p>\n\n\n\n<p>Housel suggests that we overspend because we care too much about others\u2019 opinions of us. He posits that there are three different levels of spending: The lowest level covers your necessities, the middle buys you comfort, and the highest allows you to purchase luxurious basics. But once you have enough income to cover the third level, Housel argues, you\u2019re not spending for yourself. Instead, you\u2019re spending for your ego\u2014to prove to others how much money you have.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>How Do You Know When You\u2019re Spending Too Much?<\/strong><br><br>Housel argues that you should only spend enough to purchase luxurious basics, which are \u201ccomfortable, entertaining and enlightening\u201d\u2014but since this is subjective, it\u2019s hard to know when you\u2019re spending too much: you might think an apartment that\u2019s 25 square feet is comfortable for one person, but someone else may disagree. On the one hand, it makes sense that Housel doesn\u2019t define his levels of spending: As we learned in Lesson #1, what\u2019s basic to you isn\u2019t necessarily basic to someone else. On the other hand, his lack of definition makes it difficult to determine when you\u2019ve gone too far: How can you know when you\u2019re spending for <a href=\"https:\/\/www.shortform.com\/blog\/your-ego\/\">your ego<\/a>? The answer may be to determine what counts as enough, as we saw in Lesson #6. But since Housel states in the introduction that each chapter is meant to stand on its own, this isn\u2019t clear.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>By learning to be humble and ignore others\u2019 opinions, you\u2019ll naturally want less. When you want less, you\u2019ll spend less, and you\u2019ll save more.&nbsp;<\/p>\n\n\n\n<p>(Shortform note: How can you learn to ignore others\u2019 opinions? In <a href=\"https:\/\/shortform.com\/app\/book\/how-to-stop-worrying-and-start-living\"><em>How to Stop Worrying and Start Living<\/em><\/a>, Dale Carnegie <a href=\"https:\/\/shortform.com\/app\/book\/how-to-stop-worrying-and-start-living\/part-6\">recommends several strategies to help you handle criticism from others<\/a>, like becoming your own worst critic.)&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Do you regularly put money aside in a savings account? Why is it important to save money? We&#8217;re told from a young age that having a savings account is important, but many people don&#8217;t have savings because they feel like they don&#8217;t make enough money to save. According to Morgan Housel, the author of The Psychology of Money, this way of thinking is incorrect and harmful\u2014everyone should save money even if they don&#8217;t have a high income. Here&#8217;s how to start saving money even if you don&#8217;t have a high income.<\/p>\n","protected":false},"author":8,"featured_media":60136,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7,31],"tags":[577],"class_list":["post-59740","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lifestyle","category-money","tag-the-psychology-of-money","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Start Saving Money Regardless of Your Income - Shortform Books<\/title>\n<meta name=\"description\" content=\"Many people don&#039;t save because they think saving is unnecessary or impossible. Here&#039;s how to start saving money regardless of your income.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/how-to-start-saving-money\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Start Saving Money Regardless of Your Income\" \/>\n<meta property=\"og:description\" content=\"Many people don&#039;t save because they think saving is unnecessary or impossible. 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