Saving is an important habit. I think you could also argue that it’s an important skill as well. And as I’ve developed my own saving habits and skills I’ve found one small action recurring over and over. So much so that I’d say it’s the bedrock of my own strategy and has been effective in saving me lots of money and maybe more importantly, saving me mental energy. The action I’m talking about is my default answer of no when it comes to the question: “Should I buy this?”.
For many, myself included, buying things is fun. It can also be a way to ease anxiety or to reward yourself after doing something taxing. The problem with this is that buying things as a reward or for fun doesn’t make us happier and science backs up this fact. We get the initial rush from the purchase but it quickly fades and we look for the next hit from another purchase. This cycle will continue indefinitely until either we run out of money or realize this is the wrong habit loop to chase.
With a default answer of no to purchases, you’ll find that you keep much more money and can then make purchasing more stocks the fun reward you pursue. Eventually, once your investments build up enough you may find that you get quite a bit of satisfaction from seeing all your hard work (savings) going to work for you and earning you even more money through compound interest. You may also find that saying no makes you feel good because you know it’s a positive habit and that those impulse purchases won’t make you happier and won’t bring you any closer to financial freedom.
Saying no also may also have the added side effect of causing you to look for the best deals. You might become aware that overpaying for goods and services has detrimental effects when it comes to financial independence. It becomes easy once you have no firmly ingrained to make looking for bargains a fun game. And you can pat yourself on the back for each no you dole out.
There is one catch with this. The goal isn’t to say no to everything or so much so that you’re desired quality of life suffers. I’m not telling you that you’ll reach maximum happiness by sleeping in your car because you’re saying no to paying rent or a mortgage to save money(unless that makes you happy). Most people purchase too many needless items that don’t increase their quality of life. If you tend to deny those impulse purchases without thinking you shield yourself and your nest egg from the very corrosive force that is bullshit purchases.
A good way to begin working your no muscle is to ask yourself a few questions. Do you really need the item? Will it make you happier? Will it truly increase your quality of life? Will it make you healthier? Can you delay the purchase? Can you borrow or buy it used? Or maybe you are aware that it’s a potentially frivolous purchase but you just want it anyway. That’s ok too. At times when I’ve found I do want to purchase something I have found many times that buying the item used gives me just as much if not more happiness than if I had bought it new. The reason a used purchase oftentimes bring me more happiness is because I know I got a bargain and I got to use and own the item I wanted but paid a fraction of what it would have cost new.