Who is Saving’s Worst Enemy?
Once you have a stable income (stable income being enough money coming in to cover your cost of living), you should have the ability to save. Makes sense, right? But there always seems to be something that derails us from doing it. Sometimes it is the price of oil that goes up, or the wrong political party is in control or that pesky inflation that is always trying to eat up our hard-earned money. The reality is, we will always be able to find something to blame it on, but the biggest threat to our ability to save is Ego.
What do we mean by Ego? The definition of Ego, as understood by psychoanalysis theorists, is the part of our personality that is experienced as our self and that acts and reacts to the physical and social world through perception—What? Ok, Ego is basically that eternal nagging conversation that happens in your mind about how you are perceived by the world, who you are now and how you want to be perceived in the in the future. It is an identity that we constructed for ourselves and it is false.
But why is Ego so relevant to your savings? Isn’t the stock market more important? How about Bitcoin fluctuations? That’s definitely more important. What about those rental prices going up and now you cannot afford that great apartment in Sunny Isles? How about the rising prices of BMW leases? It’s impossible to save like that! Exactly. That’s the problem, you keep moving the goal post. Your ego keeps moving it.
Don’t get us wrong. We are not advocating to stop going out to enjoy a nice dinner, to stop getting some Tulum sun in the winter or stop yourself from buying those shoes you have been eyeing. What we are really talking about here is: go to dinner at a place that you enjoy, not a place that will cost you a week’s salary, just so you can post on Instagram the $50 pasta plate; you don’t have to stay in the Four Seasons to have a good experience escaping cold on a winter vaycay, and the shoes–Do you really need to have the same pair in four different colors?
Trying to keep up with the Joneses, i.e. spending more than what we have, what we can afford or what we really need, reduces our ability to save. Spending money to show people how much money you have is a sure recipe for financial regret and guess what, most likely, whoever it is you are trying to impress probably does not care. That’s your ego right there sabotaging your future. Our ego thinks that certain status or position will make us happy, and money is what will get us there. Ego thinks more luxurious car, more happiness; bigger house, bigger amount of happiness; expensive shoes, status; expensive trip, more status. What seemed like a stable income is no longer enough—at least not for the life your ego is demanding. If you are truly unhappy because you cannot afford the things that you think you want, then perhaps that requires further self-exploration rather than a trip to Saks.
Unfortunately, if we don’t work on it, by the time we become aware of ego we are close to retirement and it is too late. So, you don’t have to thank us for the life hack, just think when you are in spending mode, if you are doing it for you or for your ego. Maybe the following questions can be of help:
1. Why am I buying this? Will I be happier after I spend the money on this? When responding, don’t think on the instant gratification of the smell of leather in your new Audi (and yes it does smell great). But instead, think about the happiness the Audi will give you after you drove it for 60 days, if that image is not making you smile, then maybe you should reconsider.
2. After asking yourself whether you should buy it or not, did you end up telling yourself “Because I deserve it”? If that’s the MVP of your arguments, you should know that’s your ego talking!
3. Perhaps the most telling of these questions: If no one had what you are thinking of buying, would you still buy it?
Stop moving the goal post. Get off the hamster wheel. Trust us you will be a lot happier and will be able to afford lots of those things that you may need and want in the future.