The Boring Newsletter, 12/3/2023🏋️‍♀️

Hi Friendos,

I remember reading years ago about a person who wanted to exercise more. I’m hazy on the details but it went something like this: The first week their entire fitness routine consisted of nothing but getting in their car, driving to the gym, sitting in the parking lot for 5 minutes, and then going home. The next week they started to go inside the gym and stay there for a few minutes, and then go home. Then they added a little bit of actual exercise when they were inside the gym, and built up from there. They were not “doing nothing” those initial weeks – they were solving lots of little problems like figuring out the route to take to get to the gym, making sure they had clothes to wear at the gym, figuring out where to put those clothes in their closet so they could find them when needed. Each problem on its own was little but each one needed attention and care. By patiently working through things, this person ensured they did not give up on the project entirely.

I recently read a fabulous article outlining why living below your means (aka, not spending everything you earn) is the single most important factor in determining financial success. It walks through some scenarios with someone saving 10% of their income vs. not saving anything vs. saving an impressive 50% of their income. For each of these scenarios, it discusses building an emergency fund, insurance, investing, tax reduction, and general life and retirement options.

This is a great time of year to sit with this because in the U.S., our dominant culture pushes hard in the opposite direction. Intentionality can help you spend less and make the most of what you have saved. Here are some techniques to help with saving. Think of this as a menu of options where you can choose just one item or have everything on the menu:

• Pay yourself first: Use saving mechanisms to automatically put aside money for your future self and do not let the money sit around in your regular bank account. If you approach saving as the thing you do last, with whatever happens to be leftover, you are unlikely to save much if at all. If you make saving the thing you do first (401k payroll deduction, auto transfer into your saving/investing account, extra automatic payment to reduce debt faster) you will save more.
• Bank your raise: If you get a raise at the end of the year, consider allocating 90% of it to financial security and wealth building and only let yourself spend 10% of it. This may feel quite stingy: if your raise means your paycheck will go up by $150 (after-tax), I am suggesting you save $135 and only spend $15 more than before you got the raise. That is not much! Adjust this dial as you will to make this technique work for you.
• Bank your windfalls: If you get a year-end bonus, a tax refund next spring, or a cash gift anytime, same thing: allocate nearly all of it to saving. You were living ok without this extra $, so you should be ok to continue as you were.
• Track your spending: Tracking alone often results in spending less simply because you bring your attention to it. After you have some numbers in hand, focus on one area at a time and go step by step to think about how you might make changes. Some categories are harder to change (e.g., you might need to move to save on housing costs) but others can be changed right away. It might require some experimentation and skill building, like if you want to bring down your food spending by cooking more, so be patient with yourself and don’t give up if the first experiment doesn’t work.
• Have a saving plan: have a plan for what you will do with your savings. It could be you want to allocate each chunk of money saved in the same way (e.g., 50% to paying off debt, 25% invested inside a retirement account, 25% to save for a house down payment) or you might want to allocate all savings in the same way (100% to paying off debt, 100% to investing in a retirement account). Your plan will be customized to your own situation, but you’ll do better with a plan than without one.

New Year’s resolutions are bunk, but goals are awesome. For next year, consider some saving goals if you’d like to build your financial security.

-Stephanie