I often find myself saying no to spending money on something because it feels excessive, like no guacamole or the cheaper version of something small or not wanting to eat out. I could easily swipe my (debit) card and wouldn’t really notice the money go out of my account. But in the moment it just feels like I’m wasting money.
I thought for a long time that the opposite of not spending was saving; if “spending = money going out” then “saving = money not going out”. But the real opposite of going out isn’t staying in. The real opposite is going out the other way. For example, the opposite of movement to the left isn’t non-movement, its movement to the right. (Nod to Taleb’s Antifragile for making this clear to me.)
Anyway, the point of all this is that I found that non-movement isn’t rewarding. Not spending money wasn’t any fun and at the end of the month I didn’t know how much I didn’t spend or how much I had kept in my bank account. (After all, how do you measure non-movement?)
So, instead of saving by non-movement, I started saving by movement. Every time I didn’t spend something, I’d go on my banking app and transfer the amount I didn’t spend into an account I’d creating called “Investment Deposit.”
Decided to fill up my water bottle instead of buying an iced tea? Move $4 into the Investment Deposit account.
Skip dessert at dinner? Move $8 in.
Ate at home instead of out? Move $30 in.
As it builds up four, five, ten dollars at a time, I transfer what’s built up each month in my Investment Deposit account into my actual investment accounts.
p.s. I also calculate the future value of a dollar today and try to put things in future dollar terms to myself. The math for stock market investing is simple:
Future value = Current value X (1 + investment return rate) ^ number of years you invest it
With 6% annual return (pretty standard), $1 today equals $3.21 in twenty years. At an 8% return it’s $4.66 in twenty years. A penny saved spent into your investment account is about three or four pennies earned.--- Follow @chriscottrell