An important aspect to becoming financially free is by saving money. Saving money by decreasing needless expenses within your current income right now is one part of it. Ensuring that your expenses don’t grow along while increasing your income is even more important. Both things require one common thing: a money conscious mindset.
Many adults suffer from what is often called lifestyle inflation. It is imbedded into our cultures to compare our lives, our wealth and our standard of living with other people. Many people derive their social status from displaying their wealth. They spend all their money on oversized houses, boats and fancy cars to impress their friends, neighbors and co-workers.
From this point on, people get sucked into a social treadmill. They engage in a game of keep-up with their social circle where big cars are followed by even bigger cars and boats. They spend all their money on luxuries and depreciating assets that drain their monthly income. They simply lose their money conscious mindset and shift towards a social status mindset.
If you want to become financially independent you’ll need to avoid getting sucked into this social rat race at all costs. If you feel like you are already in this rat race, get out as fast as you can!
If we look at the expenses of people who are engaged in the social treadmill we see four main characteristics in the things they buy:
- They buy expensive things such as houses, boats, fancy cars and swimming pools
- The things they buy depreciate in value faster than you can blink.
- The things they buy eventually end up costing them even more money due to maintenance, insurance and so on.
- The things they buy often don't bring true happiness
Saving money on your expenses leaves you with more money that you can save or invest in assets that generate money for you. This is the first step to acquiring financial freedom.
Decreasing your expenses is not that easy. It requires self-honesty, will power and a change in mindset.
Below you can find tons of articles with practical tips and strategies for saving money.