One of my favorite types of articles to write is what I call “the financial feat story.”
As collected in the new Forbes e-book, “Money Hacks: Forbes Stories Of Superstar Savers,” which I cowrote with reporter Lauren Gensler, these are tales of people who took on and accomplished impressive, if not seemingly impossible, financial challenges.
One pair of roommates embarked on a project they titled the Buy Nothing Year. One couple minimized their housing, transportation and grocery expenses and bought little else until they were able to retire in their 30s. One man gave up a salary of $150,000 and now travels the world on less than $30,000 a year.
While the stories always astound from a sheer practical perspective, one thing that always strikes me is how the changes first began on a psychological level. While many of them employed the same tactics — cycling instead of driving, cooking at home rather than eating out, choosing inexpensive investments and minimizing taxes — what set them down on this path and kept them there tends to be more individual and unique.
Here are some mental tips you can pick up from these everyday financial superstars, who haven’t done anything more special than you or me except to think differently about their money.
1. Stop thinking of saving money as depriving yourself.
As blogger Mr. Money Mustache, who retired at 30, says, “You’re actually buying yourself the most valuable thing you can: your freedom. So if you change your paradigm and say, ‘I like spending my money — on my freedom,’ it gets you excited about saving again, especially because freedom is such a cherished American value.”
But even Canadians feel the same way. “Now, I would rather not just bring my paycheck down to $0 but to save half of it, because with that money comes freedom and opportunities,” says Geoffrey Szuszkiewicz, one half of the Calgary roommate pair that embarked on the Buy Nothing Year, in which he and his roommate Julie Phillips stopped spending on consumer items such as clothing and electronics, as well as on services such as haircuts, dining out and even gas.
2. Get clear on your goals.
Don’t embark on new financial habits just because you know you should. They won’t stick.
“Saying ‘I want to save 20%’ doesn’t mean anything. Why do you want to save money? Make sure your entire budget is wrapped around your goals, not just what you think you should be doing,” says Cait Flanders, Blonde on a Budget blogger, who lived on just 51% of her income for a year.
3. Live by guidelines, not by rigid rules.
“Geoff has a background in psychology, so we used a model called acceptance and commitment therapy where you commit to something but accept that you’re human and you’ll make mistakes,” says Phillips, of the Buy Nothing Year. “So Geoff and I allowed for conscious cheats. There were days when it was below 40 and I had a sh*tty day, so I would just order a pizza.”
4. Don’t be afraid to suggest cheaper alternatives for social activities to friends.
“I didn’t have a problem saying to people, ‘Let’s do something at your house instead,’ or ‘Let’s have a barbecue.’ Once you suggest it, it’s surprising how many people will agree with you because, honestly, most people can’t go out as much as they think they can. They’re also thinking, yes, it would cost $5 or $10 instead of $30 to go out,” says Flanders.
5. Think of recurring expenses on a 10-year time frame.
“So a couple who each have a 20-mile commute is not spending ‘a few bucks on gas,’ but rather about $150,000in car-related costs every ten years,” says Mr. Money Mustache. And when you factor in the value of the time wasted in a car commute, he said it actually costs at least $300,000 every 10 years.
6. Value time as much money.
Colin Wright seemed to be living the life: he was running a branding studio in LA, living in a nice apartment and earning $150,000 a year. But he was also working 100-hour weeks. On his first trip outside the country, he remembered that he’d always wanted to travel. Although he was soon offered a much more lucrative job, he declined it and decided to live on the road. “I was 24 at the time, looking at the rest of my 20s, thinking,‘I can always make more money, but I can’t get my 20s back. I cannot get more time, no matter how much money I have,’” he says. Now he travels the world onless than$30,000 a year.
7. Find friends with your values.
For some of these super savers, their choices did not much affect their social lives. For others, it had a big impact. For instance, Mr. Money Mustache says, “We generally did the same things as our friends — hosting parties, camping and mountain bike rides, snowboarding, and working a lot. The difference was mainly in hidden wastes — I would keep my older car instead of upgrading to a new one bought on credit. Maybe light up the fireplace at home on Friday night and pour some wine rather than going downtown for expensive drinks. Cut my own lawn instead of hiring a service company.”
But Phillips and Szuszkiewiczof the Buy Nothing Year went through a period of adjustment. “Not all of our peers signed up for it and so they’re trying to interact with us in the typical consumer way and inviting us to things that cost money and slightly guilting us too — ‘It sucks, I haven’t seen you in so long.’ So there were times when I felt out of sync with my own life, and lonely,” says Szuszkiewicz. Eventually, their new lifestyle also made them new friends in the arts and downshifting community and people involved with food security and urban farming.
Depending on your current lifestyle choices, tackling your own financial feat could entail some of these bigger psychological challenges. But the rewards seem great.
“I feel like the best version of myself right now,” says Flanders, who also got rid of 70% of her stuff.“In getting rid of stuff and not being able to buy more, I’ve come to grips with who I am as a person. I’m very comfortable with myself. I don’t need to buy or own anything that will make me look or will make people think of me a certain way. I live a very good life with what I have.”
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