I don’t usually write about money, but there’s a trend that I couldn’t help but disagree with.
If you want to save money, you’ve got to spend less.
It makes sense. It’s clever, it’s helpful, and it’s the kind of counterproductive advice that has the potential to make a lot of people miserable.
The principle is simple: if you earn more than you spend, you’ve found financial freedom. If you have at least 6 months worth of income in the bank, you’re on your path towards financial independence.
It makes sense that if you live cheaply, freedom is priced differently.
Or is it?
What About Mental Energy?
In the self-help arena there’s a lot of talk about decision fatigue. It takes mental energy to make a decision.
Well, the truth is that we want what we want. This is a bit of science, a bit of art, a lot of mystery. While it’s good to develop the discipline to say “no” to what we want to buy, spending all our precious mental energy on saying “no” to almost everything we want to spend our money on is going to hinder our ability to find creative ways to increase our income.
And this is why financial frugality is a double-edged sword.
If you focus on spending less and less, you develop a scarcity mindset. Spending 24 hours a day in survival mode means that you never use your time and energy on finding new opportunities to increase your income.
This is the second rule of financial freedom: if you earn more than you spend, you’re financially free.
Being overly obsessed with living frugally will not make you rich. Instead, it will only drain you of your mental energy.
There’s an obvious benefit to everything we buy if only to make us feel good. An expensive suit makes us boosts our confidence levels, makes us more sociable, makes us feel we’re better equipped to upgrade our lives.
This is a trick I often did, putting on my best clothes when I had no money. It’s a mental trick.
But if you wear clothes until they begin to fall apart, cheap clothes that they don’t even fit anymore, what does that do to your sense of self-worth?
Not only do you spend a lot of mental energy trying not to spend your money, but you’re not using up that precious resource in trying to brainwash yourself every single day that it’s somehow worth it.
You’re not free. You’re a slave to your compulsion to spend as little money as possible, you’re fueled by your fear of running out of money.
If you live like there’s not enough money to go around, sooner or later, it will become a self-fulfilling prophecy.
Besides, being cheap is often more expensive than we assume. Quality products last longer, need fewer repairs and maintenance.
Focus on Earning More
The trick that helped me was focusing my time and energy on acquiring the skills I need to earn more.
There’s also a hidden benefit to this: while I focus on work, on self-improvement, I am not aimlessly wandering the web in search of places to spend my money.
I work some 12–14 hours every day. I focus on the hustle, and this gets rid of desire.
Also, the way I set my goals, I set them in such a way as to gamify my process: I set goals of earning more, not goals of earning more in order to buy this or that.
I am not, by any means, encouraging people to be frivolous with their money. I am saying there’s going to be a balance.
You don’t become financially wealthy by being frugal, but rather by prudently investing most of your time, energy, and money into developing additional sources of income.
The more you earn, the easier it is to save.
After all, the point of being financially free is that you’re free to do what you want. Sometimes, this means that you spend money in a more frivolous manner.
It’s all about balance, and it’s all about spending that mental energy in ever more productive and creative ways.
Rather than focusing on spending less, focus on earning more.