Can saving more money actually bring you closer to financial freedom? We think so! On the quest for financial freedom, many people are chasing a rate of return in high risk environments, they’re locking money away, or they’re succumbing to lifestyle creep. While all of these things may contribute to a sense of security, they’re not built on certainty. To reach financial freedom, it’s important to redefine what it IS, so you can take the appropriate actions on your path to Prosperity.

What is Financial Freedom?

What comes to your mind when you think of financial freedom? Maybe you think about where you might travel, how you might spend your time, or even what you might purchase. At the root of these answers, there’s a yearning for the ability to spend your time and money how you want. 

So how do you measure financial freedom? 

The answer is, you can’t… at least not in the typical way. There’s no magic number that will make you “free” one day. The answer isn’t a million dollars or even ten million dollars. Otherwise, many people wouldn’t get there, and we believe that everyone is capable of obtaining financial freedom.

Real financial freedom isn’t a number. It comes when you are able to live a life you don’t need to take a break from. Some of the trademarks of this lifestyle include living with purpose, saving more money, and having an ample emergency and opportunity fund. Having these things allow you to live a life that is prosperous and fulfilling. And it begins with your mindset, by shifting your focus from what you lack to a mindset of possibility.

Save Money to Make Money

You’ve likely heard that you have to “spend money to make money.” And while there is some truth to this statement, we think there’s an important step missing. That step is saving money. You have to save money to make money. 

Most people have no problem spending money. The problem is that those same people don’t often spend that money on things that will make them money. Instead, people unconsciously spend money on little luxuries. This isn’t to say people shouldn’t have little luxuries. However, when you make these purchases unconsciously, you’re sapping your own wealth. Then, when it comes time to capitalize on opportunities to increase cash flow, they lack the funds.

You have to have money in order for the equation of “spend money = make money” to work. By saving your money first, you can have an emergency fund and an opportunity fund that give you the freedom to make more conscious choices with your spending.

Digital Marketing and Unconscious Consumption

Part of the saving problem in this country is thanks to the age of digital marketing. The internet provides many wonderful attributes to modern life. However, the cost of being connected is near-constant advertisement. No matter what website you’re on, digital marketing is doing a good job of sending you targeted ads. While you may resist these ads for a while, data shows that many people eventually succumb to the temptation. 

In fact, 37% of social media users eventually buy products from ads that were specifically targeted at them. The digital marketing industry is worth over $500 billion and is only continuing to grow. This is a massive industry that isn’t going anywhere and is seriously harming people’s chances of reaching financial freedom. 

Unconscious consumption occurs because we’ve become numb to just how much advertising occurs in our lives. We don’t even think about how custom-tailored our ads are, and it’s easier than ever to drop $50 here and $100 there on products that aren’t really necessary. And while it’s more than okay to buy something you want, it’s critical that you do it with intention… not when you’re on autopilot. 

Unconscious consumption is just one obstacle to a save-first mentality, the other being lifestyle creep. 

Lifestyle Creep

One of the setbacks people face when saving money is that they feel like no matter how hard they work, they can’t get ahead. This is thanks to something called lifestyle creep, also called lifestyle inflation. And as the name suggests, it’s a subtle occurrence that happens over time. 

Lifestyle creep is a vicious cycle that illustrates how your expenses rise to meet your income. You work hard to get a raise, and finally, you start making more money. Yet because you have more money and don’t have a habit of saving, you spend more money. When you spend more money, you run out of it, so once again you find yourself working harder to get another raise. 

If this sounds familiar, just know that you don’t have to be caught in this cycle forever. It starts by choosing to save money first. And no, you don’t have to budget. 

This is where the Currence app comes in. Currence allows you to establish a reservoir account that you route your income through. With your strategist, you determine how much of that income goes to your checking account. Like a net, the reservoir captures your savings before your money ever hits your checking account. You go from unconscious spending to unconscious savings. 

Personal Cash Flow: Why Pay Yourself First?

Currence is all about paying yourself first. Paying yourself first means choosing to put aside savings before you pay any bills, even if it’s just a little bit. By paying yourself first, you’re contributing to your future. And as your reservoir account fills, you’re going to feel better and better. And you’re going to have more opportunities, too. 

With Currence, you and your strategist work together to define your target. Your target should be a number high enough to be a comfortable emergency fund. Once you reach your target, you can use some of that money to improve your personal cash flow. This could be investing in your business or making some other cash-flowing investment, with the goal of increasing your passive income. 

When you pay yourself first (i.e. save money first), you give your future self opportunities to expand your personal cash flow. And anytime you can create passive income for yourself, you come that much closer to financial freedom.

Average Savings in America

If you struggle with savings, you’re not alone. In fact, thanks to digital marketing and the environment we live in, spending money is unconscious. People of ALL income brackets are spending money on things that are frankly unnecessary. In fact, on average, Americans spend $5,400 on impulse purchases, while the median American savings account is only $5,300. What if you could capture that spending and double your annual savings, without feeling like you’re missing out on something? That’s what Currence aims to help you accomplish. 

This isn’t said to shame or make you feel bad. Instant gratification is wired in the human DNA. Companies know this, and capitalize on it. Just know that you’re in good company… and that you have to power to make positive change. 

The Psychology of Saving Money

Understanding a bit about psychology can help you make that positive change when it comes to your money. Saving money can be so difficult because our minds crave the sensation of novelty, which is over as quickly as it’s experienced. Have you ever ordered something online, and waited faithfully for the package to arrive? And then as soon as you’re done opening the package and admiring your new thing, those feelings of excitement evaporate? This is a normal response, yet one that can quickly lead to habits that have you spending more and more money to chase that shopping “high”.

The Currence app recognizes the human desire for instant gratification and uses it to encourage saving instead. Over time, using Currence should give you those same feelings of excitement as you see your reservoir inch closer and closer to your target. It helps you to create the habit of saving painlessly, and in a way that’s even exciting. 

And you can do it without any detriment to your lifestyle. You have complete control over your cash flows. That means you can determine how much money passes through your reservoir and into your checking account. You can choose to take enough to cover your expenses, or you can take a bit more to account for some spending. The idea is not to deprive yourself or give yourself a budget. You’re simply capturing savings and creating intention around the money that you DO spend. 

Personal Cash Flow: How to Avoid Lifestyle Creep

Avoiding lifestyle creep can take work, yet the Currence app is a good aid in the journey. By setting your personal cash flows to a certain dollar amount, you can allow your reservoir to capture any additional money you earn. This keeps you from feeling like you’ve got extra money to blow through. That way, you avoid making the mistakes many people make when they have more money—taking on additional expenses. 

This doesn’t mean you have to live a lean lifestyle either. Say you get a raise and start making an additional $1,000 a month. Rather than capturing it all in your reservoir, maybe you increase your personal cash flow by $300. That way you have a little extra money to spend each month, and you’re saving an additional $700. It’s a win-win!
If you’re ready to avoid lifestyle creep for good and improve your personal cash flow, we encourage you to consider Currence. Right now, Currence is only available by invite. If you’re interested in taming your lifestyle creep, send an email to the Prosperity Thinkers team at welcome@prosperitythinkers.com and include “Currence” in the subject.