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New to the world of mastering your money? Never fear.

Here’s everything you need to know about money, in three words:

Mind the Gap 

You earn $X. You spend $Y. The remainder is called the “gap.”

Your job is to grow and invest the gap. That’s it. Money management is nothing more than the daily habit of minding the gap.

At the risk of sounding like Captain Obvious, there are only two ways to achieve this: earn more, spend less. Let’s look at both options.

Spending less is the quick win, the low-hanging fruit. There are two surefire ways to spend less:

#1: Adopt the Anti-Budget.

Don’t waste your time scrutinizing a line-item budget. Just skim your savings off the top and live on the rest.

This is called the “anti-budget,” because you’re not detailing the amount you spend on groceries vs. electricity vs. toothpaste. Your job is simple: automatically divert savings from every paycheck. Stash this in a separate account, which you use for debt payoff, investing, or storing cash reserves. Relax about the rest.

#2: Boost Savings in One Percent Increments.

Feel like you can’t save anything? Start with one percent of your income, which is $10 for every $1,000 that you earn.

Siphon this into savings (anti-budget style), and live on the rest. Next month, increase this by another one percent. The following month, repeat.

These one percent improvements — known as the “aggregation of marginal gains” — make a massive impact on your financial life. Within a year, you’ll be saving 12 percent; within two years, you’re saving a quarter of your income.

I’m using “save” as a generic term for any net worth improvement: investments, retirement contributions, down payments on a rental property, aggressive debt payoff, or literal cash reserves.

Don’t get stuck on this step. Obsessing about saving money is a mistake for three reasons:

  • Mentality: In the beginning, saving money boosts your resourcefulness. Beyond that point, though, an obsession with saving money pushes you into a penny-pinching scarcity mentality. Frugal is good; cheap is not.
  • Limitations: There’s a limit to the amount you can save. Your income, however, holds unlimited upside potential. Focus on finding opportunities.
  • Consumption vs. Creation: A savings-and-deals focus means that you’re thinking about consumer consumption. Sure, you’re trying to buy things for less, but you’re still thinking about consumption. An earnings-and-investment focus means that you’re thinking about how to create, build and offer something valuable to the world. That’s a far better legacy.

You don’t want to spend the rest of your life pinching pennies. (What kind of a life is that?) Implement the anti-budget; boost your savings with one percent tweaks, and then turn your attention towards the more lucrative side of the equation: earning more.

Create a “side hustle,” a microbusiness you run for roughly 5 to 10+ hours per week. This holds two benefits:

  • You hold multiple streams of income. Don’t rely on your boss for 100% of your income. That’s risky.
  • You can harness every dime of this extra income into boosting your net worth. After all, you don’t “need” this money. You’re already living without it.

You can read hundreds of articles about earning more on this website, including:

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The Relationship Between Money & Freedom

Afford Anything is a movement against the standard advice that you should shackle yourself to a desk for 40 years, buy crap on credit, and pat yourself on the back if you save 10 percent for retirement. Ugh.

This movement is based on one radical idea: You can afford anything just not everything. Every dollar is a trade-off.

Here are a few more ideals this community shares:

  • It’s insane to trade time for money, only to trade that money for crap.
  • An adult should never need to “submit a request” to human resources to spend a day as they please.
  • Your money should work for you — not the other way around.

If this intrigues you, check out a few of my favorite posts:

New to the world of mastering your money? No problem. Here's the simple guide on everything you need to know about money mastery summed up in 3 words.
Discover how to master your money so you can live a life of freedom - without a budget, and with more fun. A financial plan doesn't have to be hard or tedious to implement.