How to Save and Why it's Hard | Personal Finance

hey everyone david here so i've been thinking a lot of people out there struggle with money right why is that well it's partially due to the fact that littleo you is up against millions of hours of study by companies on how to get you to spend that money you work so hard for it's also partially due to the fact that people don't have goals or a plan before we start if you don't have a brokerage account yet make sure to use my referral link to weeble in the description so you can get two free stocks valued up to two thousand dollars when you open an account and deposit your first one hundred dollars now let's jump into the video first thing i want to briefly touch on is setting a savings goal and then breaking it down into more manageable goals let's say you want to save thirty thousand dollars as an example maybe for a down payment on your first home well instead of looking at the whole number break it down into smaller goals determine how long before you need the money and divide that by how many weeks or days you have if you had three years you would need to save around 190 dollars per week 192 bucks sounds more manageable to me than just saying i need 30k for a house having savings goal like this ensures that you have something to focus on there's a reason that studies show that people with goals tend to do better in general remember a job is trading your time for money and without a goal for that money you are likely to fall for the traps out there set by people trying to get you to spend that money now let's take a look at friction right sorry enough of that there is a thing in business that is referred to as friction though friction is the resistance felt by a potential customer while making a purchase think of a time where you went to purchase something and you had to verify your new account first by going to your email or something similar or their checkout page had like four different screens before you could get to the last one where you actually placed your order this is friction barriers to completing a transaction will inherently make people think twice about completing the purchase especially when it comes to impulse purchases so now that you have an idea of what friction is can you think of how amazon has created the least amount of friction possible when making a purchase well to be honest there are a few for them but i'm talking about the one click buy now button in particular also if you love two-day prime shipping smash that like button these kind of features were not added out of the kindness of amazon's hearts this was implemented to reduce friction to the point where you can see an item click buy now then hit place order on the next screen and boom it's on your door the next morning sometimes there's a reason amazon makes so much money uber is another great example once your profile is set up you can do everything from their app you don't have to exchange money or even swipe a card you just get in ride get out and you can even tip your driver while you're walking away straight from the app there is as little friction involved in the process on purpose customers like this and are likely to come back more often after a good experience don't get me wrong either i love this kind of stuff it's super convenient and i still hate clunky websites that aren't streamlined or buying experiences that don't feel smooth but just because i like it doesn't mean that they might be hurting my financial goals in the long run so how do you guard against this tactic well some of the battle is understanding what they are doing and having enough self-awareness to take a step back and wait a day or two on those discretionary spending items this sounds simple but it may be too hard for some of you you might find yourself scrolling on prime day and see something and go oh that's cool bye now your brain didn't even have time to say hold up how much money do we have your finger already completed the transaction because the little kid inside your brain wanted it so you bought it companies are always going to do their best to make it as easy as possible to complete a transaction well if they're smart they will but if the company isn't going to make it hard to complete the transaction for you that only leaves one solution you have to make it hard for yourself if you're constantly finding amazon packages on your doorstep and have absolutely no idea what's in them you should probably disconnect your card from amazon so you can't use the buy now button if you always go to the mall to just look and end up coming home with more clothes you should probably leave your cards at home or just not go in the first place most of the time deciding to wait a day or two when it comes to buying discretionary items is all it takes to come to the conclusion that you really don't need another thing and that beefing up your savings house fund or investments is probably a better idea in the long run another trick i use in general for discretionary purchases is starting to think of things not by their dollar price but how many hours of work the item equals if you make twenty dollars an hour and something costs eighty dollars you might look at that thing and think to yourself is that really worth half a day of work maybe it is maybe it isn't time literally equals money for most people and that's why using your money to create income streams for you by investing instead of being sucked into the trap that is consumerism is so important the sooner you can start making your money work for you the sooner you can allocate more of your time to things that you find enjoyable i personally hold the belief that working is important for your mental health in general but you may not like what you do for work but feel like you have to because you need the money when you have enough money working for you in the markets it gives you the ability to take a job you find much more fulfilling and enjoyable that pays less since your finances are already taken care of now let's look at a few savings tips the most effective way to make sure you don't spend money when it hits your account is to not let it hit your account in other words set up an automatic transfer from your account that your paycheck is deposited into to a different account i personally have money being taken out by my employer and going towards 401k and then more of my money being pulled out and put into my roth ira and brokerage accounts that i set up myself all this happens automatically when you do this kind of thing you don't even give yourself a chance to spend the money from your paycheck when it hits your account you can even set up auto deposit into a savings account if you want and keep the debit card at home so you don't end up dipping into your savings on impulse purchases just something to think about everyone is going to have their own strategies when it comes to fighting off the urge for impulse spending these are just a few of mine and how i divert that discretionary spending towards more important things like investments the most important one for me is having a goal if you don't have one take some time and think about where you are and where you want to be and then break it down into smaller more obtainable goals and please don't forget to reward yourself when you reach those smaller milestones when you're on a grind 24 7 you need to celebrate your wins so you don't run out of steam that's all i have for this video please like and subscribe if you haven't already check out the links in the description to our website where you can sign up to beta test our social investing app and follow along with people on trades they are making in the market you can also sign up for our newsletter that goes out twice a week with the personify team stock marketplace and if you aren't a part of our facebook group yet make sure to join it's one of the only investing groups on facebook that i found that isn't overrun with spammers at this point thanks for tuning in everyone i'll see you all in the next video you

Channel: PersonaFi

Views: 128

Rating: 4.7647057 out of 5

Keywords: how to save money, how to save money with low income, how to save money as a teenager, how to save money fast, money saving tricks, how to save money on a low income budget, budget tips, how to save more each month, financial freedom, how to save, how companies make you spend money, save money fast, how to save money for a car, personal finance, personal finance management, personal finance basics, personal finance for high school students, how to save money fast on low income

Id: gxABNVmZ4vM

Length: 7min 47sec (467 seconds)

Published: Tue Jun 29 2021