Frugality- Penny Pinching vs Big Picture Thinking

What's the first thing that comes to mind when you think about saving money? Going out less? Less Starbucks?

I think that cutting down on silly spending and budgeting are great things, however, I often see friends quickly throw these things to the wayside just like their latest fad diet. You lose 10 pounds over a couple of months through a torturous diet and exercise routine, but the rest of the variables in your life remain the same, and 6 months later you're right back where you started. Why is this? 

I recently read a great book called Atomic Habits by James Clear. James tells us that "True behavior change is identity change." He says that we stick with our habits when they become part of our identity, and if we want to shift our behavior, we must shift our belief behind said behavior. 

So if we really want to start saving some money, I would argue that we ought not start with questions about where from or how many pennies we can pinch. Instead, we should ask ourselves, "what do I want my life to look like in 5 years, 10 years, 20 years?" And I'm not talking about some number in your bank account, I'm talking about a very specific picture that you have dreamed up for yourself. Where will you live? How comfortable do you want to be? How many kids? How many hours will you be working per week 10 years from now? What will your life feel like?

I believe that the more clearly we are able to illustrate this picture for ourselves, the better chance that we will have in making the sacrifices necessary to get there. Life is not all about money, but when I overhear the conversations of people who don't have much of it.. let me tell you it sure seems to be on the top of their minds! Each of us will find a different level of financial comfort necessary to fuel the life that we picture for ourselves. Some of us will want kids, some of us will not. Some of us will see ourselves living in Beverly Hills, some out of the back of our truck. 

The earlier that we are able to begin this process of committing ourselves to the future that we've dreamt, the easier it will be to make that future into a reality. Another point that Clear talks about in Atomic habits is the compound interest of our actions. Getting 1% better each week or month puts us in a whole other stratosphere as opposed to heading in the opposite direction. And the easiest way for us to change our habits is to change our environment. 

I always loved the quote by Jim Rohn: "You're the average of the five people you spend the most time with." I couldn't find this to be more true. What friends and family do you spend the most time with? Are all of them a positive influence on you? Or do you feel like some of them weigh you down?

I think that one of the most effective ways to positively impact your environment is to change the people who are in it. This is not easy. This often involves taking a look at close friends that you may have hung out with for a long time and deciding that you need to all but kick them out of your life. Maybe this goes for a whole group of friends! Once these strong ties that have been holding you down are removed, you will not experience nearly as much friction in making the sacrifices necessary to obtain the life that you want. 

I guess what I am saying here is that when we want to start making strides toward saving money and building passive income, it is best to start from the inside out, rather than vise versa. Changing how many times you visit Starbucks is an easy little adjustment that won't make a serious difference in your life. Instead, let's create a very clear vision of where we want to go, take a look at our life, and decide what needs to be changed in order to create a clear path to get there. Once we create a clear vision and commit to the path necessary to get there, $30 lunches and $5 coffees will become painful experiences.