Without savings there is no investing. Savings are where your journey towards financial freedom begins.

Some people are natural born savers, and others find it excruciating.

Which type are you?

I think I am a little bit of both.

As a child, I enjoyed counting my coins and imagining what I could spend them on.

But as a young adult, saving money rhymed with retirement and retirement rhymed with death and nothing was more important than being young, wearing stilettos and having fun. 

But then I woke up and realized I had two credit cards with debt, and I decided to change it all. I put my saving plan into a system that was automated and as the years passed by, I was surprised to see how it grew. Now I love counting my big mamma coins in my big mamma pants.

You better learn to enjoy saving too, if you want to reach a life of abundance.

Here are five easy steps to getting the hang of saving money – and enjoying it too.    

1. Prioritize it

You can’t just wait for savings to appear in your bank account at the end of the month. Most people have a tendency to use all the money in their bank account each month. 

You have to prioritize saving money the way you prioritize paying your bills. My system – back when I was working for a paycheck – was to transfer about half to a savings account. 

I suggest setting up an automatic transfer of the amount you want to save as soon as the paycheck arrives in your account. The principle is to pay yourself first – even before you pay the bills.

You and your future are your first priority. That is how you make it happen.  

2. Hide Your Money From You  

As the story goes, granny hid all the money under her mattress, or maybe even in it.

You should too.

Well, maybe not in your mattress – but hide it in a bank account where you won’t see it every day.

I transferred my monthly savings to an account in a different bank. And because the password was a little bit complicated, I didn’t check up on it very often. When I did, I was very surprised how much money it had turned into over the years.

Setting up an automatic transfer and forgetting about it created the foundation for my financial freedom. 

3. Have a Clear Goal   

You should know why you are investing and exactly what your goals are by a certain date.

Not just in terms of something vague like “becoming wealthy” or “becoming financially free”. How much is wealthy? What do you need to be financially independent? 

You have to be precise and use specific target numbers. How much do you need to save this year? How much in five years? Write it down and look forward. Know in your heart that it will happen and be joyful about it already.   

4. Monitor Your Success and Celebrate

When you reach a milestone, you must celebrate it, and you should know in advance, how you will celebrate it.

The celebration should be something that you look forward to. Like a special treat, a day in the spa, a trip to a special place or an activity that you don’t do very often – or maybe never tried before.

What about flying a helicopter the day you reach your first million? Oh, yes, I wrote first million. 

5. Turn it into a Game

How can you turn saving money into a fun activity?

What about competing with some friends?

You could use an app where you can see how much the other person saves. You could say that the person who reaches a specific goal first, wins a prize from the others. And the prize should be something really fun. 

But Saving is not Enough – Invest

If you only save and do nothing else, it will not be enough to make you financially independent. You must invest it so your money can grow and accumulate with the power of compound interest.

If you only save, the purchasing power of your money will slowly erode over time due to inflation. Then you are no better than granny who stuck it in the mattress and slept on it her whole life.  

You can learn how to invest like the famous investor Warren Buffett by reading my e-book Free Yourself. You can download it for free here. 

The recipe for creating true freedom in your life is simple.

The first step is to make sure that your expenses are lower than your income. You can either adjust your expenses or increase your income. Then you can invest the difference in assets. 

What are assets? An asset is something that will give you an income. You can think of assets like money machine.

I like the term money machine because it takes all confusion away from the concept. If it does not make money for you, it is not an asset. If it is costing you money, it is the opposite of an asset and that is called a liability. An asset can be stocks, bonds, real estate that you rent out or a firm that you own. Your car, your house and all the loans attached are liabilities.

Vending and pinball machines 

It is almost only your imagination that set the limit of what an asset can be.

It could, for example, be a vending machine in your local gym. Before you laugh at this idea, please remember that the famous investor Warren Buffett began his adventure as a business man with chewing gum and pinball machines. He bought his first pinball machine for 25 dollars and placed it at the local barber shop.

On the first day, it earned him four dollars. Gradually, the coins trickled in and he invested in more machines, placing them in other hair dressers and barber shops.

The local shop keeper received half of the revenue from the machines which motivated them to take good care of the machine, but it also made them eager to have more installed since they had no investment or maintenance costs. They only enjoyed benefits. 

Warren Buffett pretended to be a local errand boy, employed to take care of the machines. When the barber asked him to install yet another money-making machine, Warren Buffett simply answered that he would ask his manager.

Little did the barber know that the skinny kid was the CEO himself.

By the next visit, Warren Buffett would politely explain that the big boss had said no.

The machines created a passive income for Warren Buffett and became his first asset. Before he was 17, he had mad 53.000 dollar mainly on candy and pinball machines.

No. Your home is not an asset

A lot of people think that their home is an asset. 

“We will invest in property” people say when they buy a home. But your own private house is not an asset unless you rent it out and live somewhere else.

If you live in it, it’s a liability. It’s a drain on your finances.

Consider this: Does your home provide you with an income? Some people try to justify it, explaining that the price of real estate in that exact area has doubled and will continue to double. 

Maybe, maybe not.

There are such things as real estate bubbles, and who knows what the value of your home will be when you are ready to downsize. How much did your home cost you in maintenance, taxes, electricity, heating, insurance and interest on loans last year? Unless you have exceptionally high Airbnb rates that surpass the cost of all your costs, your home is a liability.

If you want it to become an asset, move out and rent it out.