A financial guru has advised individuals to stash away their savings before they have the opportunity to spend, as a means of combating today’s “consumption culture”.
Scott Galloway, a serial entrepreneur, has encouraged savers to rethink their spending and saving habits in order to accumulate genuine wealth.
The multimillionaire shared his own path to prosperity during an appearance on Mayim Bialik’s Breakdown podcast.
The best-selling author pointed out that many people are unwittingly battling against an age-old habit without any tools to assist them.
He elaborated that it’s not just contemporary consumer culture that prompts people to splurge their disposable income as soon as it hits their account – they’re also pitting themselves against hundreds of thousands of years of instinct.
He stated: “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 businessman confessed that he too has succumbed to this instinct in the past, 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.”
In a bid to equip people with the right tools for success, Scott urged them to seek out “forced savings vehicles” such as equity or contributions that can be deducted from their income before it even reaches their account, like workplace pensions.
He said: “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.”
The millionaire additionally recommended downloading banking or budgeting apps that offer the feature to round up purchases, and to then invest those pennies wisely into “a low-cost index fund”. Yet, bear in mind that all investments come with risk and it’s wise not to invest anything beyond what you can afford to lose.
Regarding the wider philosophical aspect of resisting consumerist urges, Scott dismissed the typical objections to capitalism, stating: “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.”
In imparting final words of advice after years of accumulating his wealth, Scott underlined an important message for the younger generation of 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.”
