Thursday, January 25, 2007

Success Master Skills - Saving Money

What is a Success Master Skill? I am going to define a Success Master Skill as a skill that:

Is so crucial that, if it is omitted from your life, it creates a void so large that the possession of other skills will not make up for this lack .

Leads to and generates other skills which “fan out” and have further positive effects on your life

The First Success Master Skill is:

Saving Money

Saving money…that is, setting aside a portion of your income for use in the distant future, is so crucial that even those with high incomes can become virtual paupers, even if they have incomes in the millions of dollars. Don’t believe me? I’ve linked to a few such stories here.

Saving money leads to security, while spending money (and here I mean on expensive consumer items such as clothes,cars, etc) can lead to disaster.

Saving money is such a key skill that you may not need to have a whole lot of other skills and yet you will still have an extremely comfortable life. Teachers, telephone linemen, policemen, cleaning persons, etc have become millionaires, not because they were movie stars or corporate titans, but because they acquired this one, simple Success Master Skill.

A “positive addiction” to saving money leads to enjoying an increasing net worth, drastically lower stress levels, and a penchant for staying out of debt, whereas an addiction to spending money can lead to a restless search for ever more flashy “toys”, a penchant for debt, and many sleepless nights.

But there are other reasons to learn to save money besides the prospect of security and comfort.

If you can save money, you have begun to master the art of “abstraction”. As you learn to take a percentage of your income and put it away, you see money as an abstract concept, not just as a means to a momentary “high”. What percent should you save? What return will you get? What will it look like 20, 30, 50 years from now? These kind of abstract questions broaden your mind. They help you think “long term”: not just in your financial life, but about your business, your career, your family.

Saving money also creates a bias toward mental gratification rather than material or physical gratification. If you can be gratified by a concept rather than an object, this moves you higher on the “food chain” of human thought. If you can get to the point where you understand that income can buy income rather than just flashy silvery things, you have made it to the “next level”. This kind of level is a “virtuous spiral” where results compound favorably without end.

Saving money improves your self-management or self-deployment. It means you know how to do what you deem to be important, rather than to do what your temporary urges tell you to do. This buildup of inner strength can absolutely translate to becoming a more reliable, dependable person. It means you will “show up”, finish projects, come through with “outcomes” rather than excuses.

And what about your own view of your own future? Let’s say you’re halfway to retirement and you’ve saved and invested a considerable amount of money. Would you be more likely to be optimistic and forward-looking than someone who was already fielding calls from collection agencies? Would you take better care of yourself because your “future focus” meant you actually wanted to be around to enjoy the results of saving and investing? I think so.

Like many Success Master Skills, saving money takes an almost microscopically small amount of time and effort, but the results are vastly larger, and the implications vastly more significant than the few moments it takes to get started. They could be the most important few moments of your next 50 years.


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