Money Management

€3 vs €30.000 decisions

September 23, 2019

One of the great lessons from personal finance guru Ramit Sethi, is that you should not focus on €3 decisions, but instead you should focus on €30K decisions. 

What does Ramit mean by that?

Let’s suppose you really, really love Starbucks coffee. But somehow you decided it’s a great financial decision to save €3 every day one your beloved coffee. This is a BAD idea. Why? Because this €3 decision stresses you out for not enjoying the things you love doing every day (emphasis on: every day). 

So what is a better idea? 

Instead of stressing out on saving €3, you should stress out on MAKING €30K extra without having to think about it. 

Start first by mercilessly cutting costs (yes, this could mean daily €3 savings :) on things you’re either not using, or things you’re not enjoying spending money on. Easy things come to mind: gym pass, electricity bills, etc.

Then the second €30K decision would be to auto-save your way into it. Your best bet would be auto-saving with compound interest. We see a lot of freelancers choose for solid Index funds. 

Tip: make an excel sheet with a column where you put your current €3 savings which are stressing you out on a daily or weekly basis. Then make a column with potential €3 savings which would come easy to you. The third column would be your future €30K savings. 

We LOVE auto-saving. That’s one of the reasons we started Flow. 

Niels Mulder

More reads