The Tao of Saving Money and Living Stingy


Living stingy and saving money starts with a mindset shift. It’s not about quick shortcuts or savings hacks (although we’ll get to that) — it’s about your inner game of spending and saving.

We’ll tackle this topic by answering these three big questions:

  • “What” – what are you spending money on?
  • “Why” – why do you spend and why do you save?
  • “How” – how can you change your spending habits?

After you work through this process, we’ll move on to the more specific tactics of saving.

Misconceptions About Living Stingy

Before we get into the strategy of living stingy, I want to address a few common misconceptions about changing you spending and saving habits.

“Build A Budget”

This starting point is contrary to what you hear from most of the “experts” on finance.  Well … I’m right and they’re wrong.  The reason they are wrong is because spending more money than you can afford is not a financial problem.  It is a behavior problem.  Trying to fit yourself into a budget that you are not yet comfortable with will lead to failure, disappointment and further spending.  

I am not suggesting that no one should build a budget.  But it comes much later in the process (if you choose to use one at all).  If you’re keen to have a budget, we’re going to talk about the best approach.  But before we revisit the topic of budgets remember this:  build a budget AFTER you start to save.  We’ll talk about how to do this in more detail later on.  But for now … forget about building a budget.

“Don’t Buy Yourself Anything”

If you’re reading this, I am assuming that you want to know how to stop spending money.  Just as with trying to jam your behavior into a strict budget, trying to deprive yourself of all the small pleasures that bring you joy is also a bad idea.  This is not what the Tao of Living Stingy is all about.  It’s about actually keeping more of your money and enjoying your life MORE than you did before!  

Depriving yourself will ultimately lead to rebellion and you will end up spending more of your hard-earned money than you did before.  We’ll talk about ways to save money that don’t make you feel like you’re living in a straight-jacket.

“Go Cold Turkey”

This misconception is similar to the previous two but it bears restating in a different way.  Even if you already have a solid plan of action to save, don’t try to change your spending behavior in one day.  The better approach is to do so gradually.  If you make spending changes slowly in your life, you will barely notice the change. 

To reinforce this idea, remember the “frog in boiling water”.  It goes like this:  if you put a frog into a pot of boiling water, he jumps out immediately to save himself.  If you put him in a pot of room-temperature water and then put him on the stove where the water temperature is increasing slowly … he won’t realize what is happening and he eventually dies.

This is you running away from a restrictive budget

Just like the frog in the pot, we don’t notice very small, gradual changes in our lives.  When it comes to the Tao of Living Stingy, we use this phenomenon to our advantage.

Living Stingy Step One:  Pause

Have you ever decided to take a lesson in a new activity that you want to learn and then on the first day of lessons, the instructor spends the whole time talking about safety?  I can’t stand that.

Well, I’m afraid we’re going to be taking things slow so take a deep breath and relax.  Imagine this is your first day going to the gym with a personal trainer.  He or she will take it easy on you the first few times. He doesn’t want you to dread going to the gym so much that you never come back.  We’re approaching this behavior change of living stingy slowly.  We are in pursuit of lasting changes to your behavior so be patient.

“What” of Living Stingy

Ok let’s start with finding out where all your money is going.

Spending Autopsy 

Uh oh … “autopsy” sounds like a scary word.  Maybe it is, but I like the word because means you’re looking backwards and determining the cause of death.  In this case, it’s the death of your hard-earned money.  

You’re going to start by going through your checking account, debit card, credit cards and any other avenue that you spend money (paypal, venmo, etc.). Log on to your accounts one by one and download your spending activity for the last 90-180 days.  If you suspect that you’re spending really fluctuates from month to month, then it’s a good idea to go back the last 180 days.

When you have your spending history at your fingertips, go through each card and account and sort the data.  First sort by the size of the transaction, descending biggest to smallest.  Write down some of the transactions that jump out as very large expenses.  Jot them down on a piece of paper for now.  You don’t have to record the exact amount spent.  We’ll do that later.  Just write down what the big items are that you’re spending on.

Next, do the same thing except sort your spending history by the name of the vendor.  The goal here is to find smaller items that are adding up to a lot of money over time.  For example, if you’re spending a lot of money on lunch every day from your favorite lunch spot, it can add up to a lot of money over the course of the month and year.  Jot down if there are any expenses here that add up to a significant amount of money.

Lastly, sort your spending history again but this time by category.  Most accounts have a “category” for each transaction that you can sort by.  I find this one to be the least useful because they often don’t categorize things the right way.  But check just in case.  See if there are any categories that you are spending an unusual amount on.  You may not find anything that jumps out at you.  Use your gut if any of these spending categories seem too large and jot it down if so.

Identify “Spending Leaks”

After you finish doing this, you should have about 5-10 things that you see as big leaks in your spending.  Spend some time to think about these expenses.  Are you really spending too much on these things?  Some of these expenses may be avoidable and some may not.  For example, spending money on groceries is a little difficult to avoid.  But maybe you ARE spending more than is reasonable.  

Another example is your rent or mortgage payment.  You need somewhere to live but maybe you have gotten in over your head and you’re spending too much on housing.  Try to determine in your best judgement right now if you believe you’re spending too much on these items that you have identified.  For your housing, a good starting point is 30% of your after tax income. You can also use this tool from Intuit/Mint to figure out if you might be spending too much.  If you’re spending too much …. don’t worry.  Just write it down.

Determine the “Why”

After you have identified the big leaks in your spending.  It’s time to figure out why you are spending this money.  Go down the list and write down why it’s important to you to spend this money, and why it’s important to your personal happiness.

Here are some examples:

Housing: “it’s important for me to live in a home that brings me comfort and makes me feel secure.  I wake up happier when I am in a home that I love and enjoy.” ** Note: This assumes you have determined that you spend too much on housing based on your level income.  If you have determined that you’re not spending too much on your housing because of the 30% rule or any other rule of thumb, then don’t list it as a “spending leak”.

Clothes: “new clothes give me a rush of joy and I like dressing well because it gives me confidence and makes me feel good.”

Dining out: “I hate cooking and I don’t want to spend the little free time I have grocery shopping and in the kitchen.  I like going out to eat with my friends because it’s a fun and gives me time to hang out with the people that I like and care about.”

Expensive car: “I spend a lot of time in my car and I want it to be in a vehicle that I feel comfortable in.”   Or , “when I arrive somewhere, I like people seeing me in a nice car rather than a beat up old clunker.”

Look For Weaknesses

Now you should have a list of 5-10 spending leaks and the reasons why these things make you happy.  You have identified the “why’s”.  The next thing  to do is review your list of “why’s” and see if you find any weaknesses in them.  Chances are there are a few “why’s” on your list that aren’t convincing.  In other words, there are probably some luxuries that you could either live without or find a way to have your cake and eat it too.

For example, if you’re spending a lot of money on clothes, maybe you realize that it’s actually not that important to you.  Or maybe you realize that you could get the same happiness from buying fewer clothes and focusing on the ones that you REALLY like.

Or … if you think you are spending too much money on going out, maybe you can think of a way to get the same happiness through spending time with your friends or family but by doing other things with them besides eating out.

The lowest hanging fruit is when you discover spending leaks that you are mindlessly spending on that you don’t even care about.  These will be first on the chopping block.

However, you don’t need to come up with solutions yet for how to save on these spending leaks.  Simply identify the “why’s” that are not as strong or don’t seem to be adding much to your life.

Take Inventory

One great way to find out what material things in your life are or aren’t important to you is to take an inventory of what you have now in your possession.  Go through your closet, under your bed, your garage, basement and everywhere else in your house or apartment where you have “stuff”.

Take some time to go through that stuff and write down which of those things bring you joy and which do not.  

Personally … I HATE clutter.  When I go through my condo I always find a bunch of things that I no longer want.  These things not only fail to contribute any happiness to my life but actually take away from it!  You may even find that your house itself is not bringing you much happiness.  Sometimes an out-sized house, with all the upkeep and maintenance needed is actually a source of stress and weighs you down.

This exercise is harder to do with less tangible spending like going out or taking vacations.  But going through your physical possessions can be a worthwhile exercise.  If you do it, write down the things you itemize and write down next to each one how you feel about it.

“Why?” of Living Stingy

Now that we have figured out why you like to spend money on these things, now let’s determine what your reasons for saving are.  Why do you want to save money? 

Here are examples of reasons why you may want to save:

  • I don’t want to worry about running out of money
  • I want to retire early
  • I want to have money for my kids education when the time comes
  • I want to afford a down payment so I can own my own home
  • I want more financial security
  • I want to be able to quit my job and take a lower-paying, lower-stress job.

Notice how every reason begins with “I want” or “I don’t want”?  This is important because it teases out YOUR wants and preferences for living and ultimately for saving.  A lot of people set a goal of saving money simply because they think they “should”.

Saving money because you think you “should” is not a good reason. This is an external reason (as opposed to something coming from your own wants) and it won’t be strong enough to change your behavior.

We need reasons they are important to YOU.  If they don’t begin with “I want” then they probably aren’t personal to you and it’s more of a “should” reason.  The goal here is to find your “why’s” for saving that are actually stronger than your “why’s” for spending.  This is what the Tao of Living Stingy is all about … finding out what motivates you enough to change.

One of the challenges that people have with spending less is that they view it as a temporary change.   They can’t wait for the sacrifice and discomfort of not buying what they want to be over.  For them, saving money is like holding their breath.  They’re waiting for the moment they’re allowed to breath in again.

However, if you change your mindset and realize that many of these things that you’re cutting back on are not very important to you, then it doesn’t feel like a sacrifice at all.  It actually becomes enjoyable because you’re eliminating the dead weight from your life.

Now that you have a list of spending leaks and the reasons why these expenses are important to you (or not).  You also have a list of reasons why you want to save. Put both aside for now and we’ll come back to them later.

Your Target Savings

We’re starting to move into the last phase of the tao of living Stingy and that is the “how” stage.  How will you save and what is your plan?  Before we take the next step, we need to figure out what the spending goal is so we know what to strive for.

Your saving’s goal is personal to you and will depend on your reasons for saving that you listed before.  If you’re saving for early retirement, let that be a guide to help you set your savings goal.  If you’re saving for a down payment, then you have a clear target to aim for.

It’s important to not make your savings goal vague.  Don’t let your goal be to “save more”.  Fix a dollar amount to it.  For example, if you want to retire early, then write that you need $X dollars in saving in order to retire.

Sometimes a more powerful way to set savings goals is to figure out how much you need to reduce your spending rather than how much savings you need to build.  In other words, you may write “If I can cut my annual expenses to $X per year, then I can afford to retire.”

This way of setting savings goals won’t always apply depending on your reasons for saving but sometimes it’s more helpful to phrase it this way. 

“How?” of Living Stingy

Now that you have your savings goal and you know what you’re aiming for, it’s time to create a plan of how you’re going to bring your goal to reality.  The first part of the plan is how to handle the mental side of saving and changing your behavior.  The second part is actual tips to reduce or eliminate the money leaks you have in your spending.


As I have already written in the misconceptions, budgets are not always necessary.  It depends on who you are and your personality.  For some people, following a budget is like living in a straight jacket.  For these personality types, budgets are counterproductive because it’s only a matter of time before they rebel against their budget that they view as restricting their lives.  Because you already know what your big money leaks are, a budget is not absolutely required to start saving.

However, other personality types really enjoy following a budget and it makes them feel organized and secure.  You need to figure out what your personality type is and what is the best for you.  If you do decide to build a budget, make sure you view it as an on-going process.  Build your budget AFTER you start saving money and after you figure out what you can and cannot live with.  You’re budget will be a lot more successful if you follow this rule.


Are you married or living with someone?  Is there anyone else in your life that has a direct impact on your spending and saving habits?  If so, now’s the time to get them involved.  If you have a partner who is not on the same page as you, it will be next to impossible to make a significant change in your spending and thus your saving.

How you approach this conversation is beyond the scope of this post.  However, a good place to start is to tell them what you’d like to do and ask them what they think about it.  Then take it from there and start getting buy-in on your spending plan going forward.

Kaizen: Smart Small With Living Stingy

After you get your partner involved, now it’s time to start taking some actionable steps at saving money.  Rather than try to make a broad sweeping change to your spending patterns, it’s far easier and more productive long-term to start small.  

Remember the “frog in boiling water”? If you make a change in your spending behavior that’s too drastic, you may fall into the trap of simply waiting for it to be over so you can start spending again.

Follow the Kaizen principle of starting small and gradually change your spending so you won’t even notice the discomfort.  Maybe you start by identifying an expense to save that doesn’t even require a sacrifice.  Like searching for a lower auto insurance or getting a round-up card.  Really challenge yourself to start with small changes rather than alterations to your behavior that will feel too uncomfortable at first.

These are small changes that you won’t notice and but it gets the ball rolling and let you build some momentum towards saving money.

Give Yourself Rewards

After you have identified some small changes to make in your spending habits, now pair these changes with rewards.  Actually write down what the spending change will be and then also write down what you’ll give yourself as a reward every time to you follow through on this change.

The best way to get a change in behavior and to reinforce that change into a habit is to give yourself rewards.  This is an important step not to be overlooked if you want lasting change in your spending habits and you want to save money.

What are some examples of how you might reward yourself after you follow through each time on a spending change?  Here are a few:

  • watch a movie
  • go for a walk with your spouse or significant other
  • go do your favorite activity (like working on your car, playing the guitar, or whatever)
  • have a beer or dessert
  • call or go hang out with a friend

Fill The Spending Void 

A big mistake that people often make when trying to save money is they make a big cutback on a particular expense and then they don’t fill the void left by that item with something else.

This is a mistake because it lets the mind dwell on the loss of that particular thing and it increases the chance that you will crack and start spending money on that missing item or something else.  The way to work around this is to replace the loss with something that brings you an equal amount of joy … or at least distracts you from noticing the void.

For example, if you decide that you are spending too much money going out and drinking at the bars, then you need to figure out what you’re going to do instead.  You’ll drive yourself crazy and crack if you plan on simply abstaining and staying at home on a Friday or Saturday night. 

Maybe your replacement is to pick up a hobby like playing the guitar or joining a band.  Maybe it’s going camping on the weekends or some other cheap activity that is enjoyable for you and takes your mind off the loss. 

If you’re really a party animal, then maybe you start a side hustle of being a party promoter for bars and venues in your area.  Then you can have your cake and eat it too.  You get to save money, earn money and have some fun!

You can find a replacement for almost any spending sacrifice you make in your life.  Just make sure you have a plan of how you’re going to fill the void.

Avoiding Temptation

There will inevitably come a time where you are really tempted to spend money on one of your money leaks.  The best way to handle this is to take out a piece of paper and write down the all advantages AND disadvantages to spending money on that thing.  For example your list for buying a new car might look as follows:

After you take the time to write the advantages and disadvantages, you will usually realize that this splurge is not as important to you as you might initially think.  If not, then maybe it’s time to adjust your budget and sacrifice on something else.

Either way, writing an Advantages and Disadvantages list is stunningly effective.  The only catch is that you have to write them down.  You can’t do it in your head.  Your mind needs to see all of the pros and cons weighed out right in front of your eyes.  This tactic works well not only for resisting urges to spend but most other habits that don’t contribute to your goals (procrastinating, over-eating, quitting smoking, etc.).

Spend Some of Your Windfalls

If you’re lucky, there will be a couple times during the year where you fall into some money that wasn’t part of your normal monthly income.  This could be a bonus from work, selling an old car, inheriting some money from a lost uncle … whatever.  

The point is that if you are trying to save money, you may think you need to squirrel it away and not spend a dime of it.  This is not the Tao of Living Stingy.  A better way to handle these windfalls is to spend some of it and treat yourself to something that you have wanted for a while that is important for you.

If you don’t release some of your spending urge, the pressure will erupt in a spending splurge

If you don’t and save all the money instead, it increases the likelihood that you will splurge in the future.  You’re mind will get frustrated and feel like you haven’t done anything nice for yourself and you’ll end up spending on something impulsive that costs even more.  

Like a pipe that’s building up pressure, your spending impulse will burst if not given an outlet to release some of that pressure.  That’s why you spend some of your windfalls.

Many money advisors recommend that you spend some of this money (around 10%).  This is ultimately your decision but I think 10% is too little.  I recommend 30-40% of your windfall goes to something important to you that you want to indulge on now.

Forgive Yourself For Splurging

No matter how much you plan and much will power you have, you ARE going to slip up occasionally and spend on something that is not a part of your plan.  It’s VERY IMPORTANT to not beat yourself up over this mistake and think that all is lost.  

If you expect perfection, you will be disappointed because no one is perfect at anything.  If you’re too hard on yourself, you’ll think that there’s no point in this saving plan and revert to your old ways.    This way of thinking ignores all of the positives and times you DID stick to your plan.  You could save for 29 days of the month but if you slip up on the 30th day, you see the whole thing as a failure.

This is false. You still were mostly successful at following your plan and you saved a lot of money that you wouldn’t have otherwise.  The only thing you failed at is not being perfect.

“How” Of Living Stingy – Action

Now that we have covered how to approach living stingy from a mental standpoint, it’s time to talk about specific action items you can take to reduce your money leaks.  This post is already too long so I separated out into the Tao of Living Sting Part 2.

Before you move on to part two.  There are two resources that recommend you check out to help shore up your mental approach to living stingy

  1. minimalist movie
  2. The Marshmallow Test Book

If you disagree with any part of this plan, please comment below.  If you know someone who would benefit by reading this guide to living stingy, please send it to them or share it on social media by clicking the social buttons below.

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