Expert issues warning on how to stop spending your money on pay day

Person saving money
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Serial entrepreneur Scott Galloway urged savers to take a different approach to both their spending and saving habits in order to build true wealth as the multimillionaire detailed his own journey to riches. Speaking on Mayim Bialik’s Breakdown podcast, the best-selling author revealed that many people are unknowingly fighting against an ancient habit without any tools to help them.

He explained that it’s not just modern consumer culture encouraging people to spend their disposable income as soon as it lands in their account, but they’re also putting themselves up against hundreds of thousands of years of instinct too. He explained: “You need to understand the concept of forced savings, how difficult it is to resist 300,000 years of instinct and set yourself up for victory by setting a series of forced savings mechanisms.”

The entrepreneur admitted he’s also fallen victim to this instinct before saying: “Every dollar I had access to I spent…Assume you’re like 90% of the West and you will spend any money you can.” Encouraging people to give themselves the right tools for success, Scott urged them to find “forced savings vehicles” like equity or contributions that can get taken out of their income before it even lands in their account such as workplace pensions.

He explained: “Equity in a company is forced savings, you can’t spend your options. A house is actually forced savings, most people are afraid of losing shelter so they will figure out a way to make their mortgage payment which is a form of forced savings. There are all sorts of vehicles of forced savings.”

The millionaire also advised getting banking or budgeting apps that allow you to round up on purchases and encouraged people to put that money towards investments in “a low-cost index fund”. However, it should be noted that in an investment all capital is at risk and investors are generally advised not to invest more than they can afford to lose.

As for the philosophical side of fighting off that instinct, Scott argued against the common criticisms of capitalism saying: “There’s beautiful things everywhere that would be so much fun to own. Capitalism does produce beautiful furniture, there’s so many wonderful things capitalism does provide.”

However, after a lifetime of building up his own wealth, Scott shared some parting wisdom for younger savers: “Put yourself in a position where you realise, hopefully at an earlier age, that money is a means to an end and the ends are meaningful relationships. You do need a certain level of economic security but just be mindful of the fact that at some point, more stuff is not going to make you happier.”