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The Psychology of Spending and Saving
How to trick your mind into building better habits + what works for me
Welcome to The Profit Zone, where 12,000+ millionaires, CEO’s and high-performing entrepreneurs read the #1 financial newsletter on Substack, providing you with weekly insights on the stock market and tips you can’t find anywhere else.
Happy Monday!
Let’s kick start this week with a BANG!
The agenda for today:
👉 The S&P hits an all time high
👉 Oil prices continue to rise among supply issues in the Middle East
👉 UBS predicts a soft landing and a rally in 2024
👉 How to think about spending and saving: a guide to bulletproofing your money mindset
GRIT’s TOP STOCKS FOR 2024
As you may know, I’m a partner of GRIT Capital.
One of the best sources for financial information, news and portfolio management tips on the internet.
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Recently, they published their Top Stocks for 2024, which you can get 100% FREE.
I’m an investor in some of the companies mentioned on this list and I’m excited to see what 2024 has in store for them.
If you want to get the full list sent right to your inbox, click here.
Tweet of the Week
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Weekly Market Update 🗒️💡
Indexes
A new all time high for the S&P 500 was hit this past week surpassing it’s high from January 2022.
Congratulations if you stayed invested over the last couple of years.
Following a 19% loss in 2022, the S&P saw a massive run in 2023 rising as much as 24%.
Friday’s all time high confirms that the market is now in a bull run that began in October 2022.
The S&P 500 is up about 35% since that low.
Tech gained 2.35% on Friday alone and more than 4% over the course of the week, making it the S&P 500’s best performing sector.
Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management notes:
“Multiples rise coming out of economic slowdowns, because investors are pricing in a recovery. If that recovery doesn’t materialize, then you do have to question the sustainability of not only holding on to new highs, but making new highs beyond that.”
I’m personally building a large cash position to take advantage of a slight pullback in the market as investors take profits off the table.
Oil
Oil prices fell slightly on Friday despite notching a weekly gain on tension in the Middle East.
U.S. crude saw a weekly gain of 1% as investors are monitoring whether attacks in the Red Sea could lead to a cut in supply distribution.
I have been monitoring that situation closely and believe we could see a rise in prices as it persists.
UBS Says Stocks Have Room to Rally
According to UBS, they think there is more potential for both the equity and bond markets in 2024.
They believe in a soft landing, lower interest rates, positive economic growth and growing corporate earnings.
The consensus is that bond yield’s will also fall further, given long-term real rates are still higher than the Fed’s estimate of the real neutral rate.
Do you think stocks and bonds will continue to rally in 2024?
The Psychology of Spending and Saving
Let me guess, the end of the month comes around and you realize you have no money left in your account…
You look at your credit card bill and wonder how the hell you’re going to pay it off.
Financial stress kicks in and you start to worry about if this cycle will continue for the rest of your life.
Sound familiar?
You’ll notice something in the investing space, especially on the internet.
People love to talk about hyped up stocks, booming sectors, tell you ABC stock will go up 100x in 2024, and try to sell you on an idea that may be completely made up.
Too many people are focused on the buying, rather than the thinking.
What I mean is this:
Wealth is created in your mind far before it shows up in your bank account.
The way we think about money shapes how we earn money, and how much we will earn over the course of our lifetimes.
Those who think like millionaires, usually end up being millionaires.
And that’s something NOBODY is talking about.
How to think about money
Lucky for you, you’re subscribed to The Profit Zone.
And inside this newsletter, we don’t just scream from the rooftops about Stock XYZ that “might” go up 100x.
We don’t create fear hoping for a click.
What we do is present the facts, and let you use that information to form your own opinions and investment decisions.
I want you to be the most well-rounded investor you can be, and a well-rounded investor knows how to THINK about money. Especially when it comes to saving and spending.
In today’s Profit Zone, I’m going to show you how to do exactly that.
Let’s dive in…
How to think about Saving and Spending
You know you should be saving more money, but why can’t you do it?
There are a few reasons why you probably aren’t saving as much as you should be:
You aren’t making enoughIf you’re living pay check to pay check, it can be difficult to even think about saving any money at all.
The cycle of pay check to pay check can weigh you down not only financially, but also mentally.
How to fight back:
ask for a raise at work
switch jobs for a higher paying one
look for things to sell around the house that you don’t need or use anymore
pick up extra shifts
buy and resell items online
start a blog/newsletter and affiliate for other people’s products
learn a new skill and use it as leverage to get people to pay you for a service
There are plenty of ways to make a few extra hundred dollars a month if you find yourself in a cycle of living pay check to pay check.
You just need to put in the time.
I put together an ebook on turning Twitter (X) into a cash flowing asset.
I’ve personally been building a business on that app for the last 4 years and have poured all of my years of experience, tips, tricks and mistakes into this book.
This is the blueprint.
Check it out here.
Spending is addictive: delayed gratificationWhen you see something you want, you don’t think twice about buying it.
Impulse buying is one of the main reasons why most people can’t save as much as they’d like to.
How to control this:
There are two methods I use to control my spending.
If I come across something I want, typically a bigger more expensive purchase, I will wait to buy it for 48 hours. If after those 48 hours pass, it’s still something I want, I will then consider it. The reason this works is because sometimes you’re just in the “I want to spend money mood”. I’ve had it plenty of times while walking through malls. But if you just give yourself a couple of days to think about if you actually need it, you might realize that you were just in one of those moods.
If I decide to go through with the purchase, I will invest the equivalent amount into an index fund or any other asset of my choice. For example, if you want to buy the newest iPhone and it costs $1,000, the purchase will actually cost you $2,000 because you’ll be forced to invest $1,000 once you buy it. This method helps me control my spending because now anything I want is actually 2x the price. It really makes you think about if you can afford what you’re buying.
Rewarding yourself“Rewarding yourself” is contradictory to the previous section about delayed gratification, but giving yourself small rewards on your saving journey can help keep you accountable and on track.
I personally do this with hitting dividend income goals.
Every $1,000 increase in my Projected Annual Dividend Income (PADI) I treat myself to a nice dinner at one of my favourite restaurants.
Thinking about saving like this is a good way to keep you looking forward to something and can help you stay consistent over time.
Just make sure your “reward” doesn’t set you back financially.
Create a visual representation of your goalsThere’s a saying that goes “out of sight, out of mind”.
However, the reverse can also be true.
Having a visual representation of your goals can help prevent you from slipping back into old, unhealthy spending habits.
For example, every January I make a vision board.
I don’t believe in New Year’s resolutions but I do believe in specifically outlining what you want to achieve that year.
Resolutions are for getting rid of bad habits. Vision boards are for achieving new goals. Different way of thinking.
One of my goals in 2024 is to buy my first property, so on my vision board I have a picture of a house.
I keep it in my bedroom as a daily reminder of what I’m working towards and it helps me stay on track with my goals.
I would recommend making a vision board for yourself and it doesn’t have to be artistic or a masterpiece.
Just list a couple of things you want to achieve that year.
Print out images, write headlines and keep it somewhere you can see it every day.
AutomationIf you find yourself spending more when you have access to money, consider setting up automatic transfers with your banking app.
Most apps will allow you to set up weekly/monthly recurring transfers so your money gets put aside without you even having to think about it.
Now every time you get paid, you’ll know that you’ve already saved some money and it will help you resist the urge of spending it on things you don’t need.
You become who surrounds youWe all have that one friend who spends like he won’t wake up tomorrow.
I personally have a few…
Constantly throwing down credit cards and making purchases that seem absurd to the average person.
These people will trick you into thinking that’s normal behaviour, when in reality, they’re probably looking at their credit card bills at the end of the month wondering how they’re going to come up with the money to pay it off.
Surround yourself with people who have the same mindset as you do.
And I’m not saying cut off your good friends.
Anyone who tells you to get rid of a friend because they don’t think the same way as you is a FOOL.
Keep your friends, but limit your time with them in places where spending gets out of control.
Thinking of dollars like employeesOne of the biggest shifts in my money mindset came when I started thinking of my dollars as my employees.
Every dollar you earn should have a specific role.
Whether it’s paying rent, covering your gas bill, your phone bill, investing, or basic living expenses.
You should have a plan for every dollar BEFORE it hits your account.
Being a human being is expensive. And every day bills can eat up the money you earn.
But having a plan for your dollars is a good way to ensure some of what you earn is working FOR you, instead of 100% of it working AGAINST you.
Final Notes…
How we think about spending and saving shapes our financial futures.
There’s a reason why 49% of 6 figure earners are living paycheck to pay check, as per CNBC.
To me, that is a TERRIFYING stat.
If you’re earning 6 figures, there’s no reason you should be living pay check to pay check UNLESS you have a lot of people you’re financially supporting, like elderly parents or kids.
Spending habits have gotten out of control.
Social media, ads and new ways to finance purchases have made consumers lose common sense.
It’s too easy to spend hundreds of dollars at the click of a button.
However, if you have a budget in place and you practice some of the methods mentioned in this post, you’ll find that your savings rate will skyrocket and you’ll have more money left over to buy assets and secure your financial future.
Transform your future and way of living
Dividend investing has changed lives all over the world.
And you're next!
If you’re like most people, you’re juggling work, hobbies, spending time with friends and family, and basking in your free time.
This leaves little time for your investing journey.
Almost as if your dreams and desires have been put on pause while you enjoy this temporary pleasure.
It’s no secret that reaching your dreams requires sacrifice.
Those who are living the life you want to live took that step.
Investing is your path toward turning those distant intangible dreams into a tangible reality.
And investing isn’t easy, otherwise, everyone would be millionaires.
That’s why I started The Profit Zone.
To amplify ordinary investors to another level in their financial journey.
Guiding investors into maximizing their wealth, gaining access to the underground secrets of millionaire investors and giving you the tools to form the mindset of one.
Enabling you to embrace a lifestyle of your money working for you, not against you.
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Alex (The Dividend Dominator)Founder and CEO of Dividend Domination Inc.
Some resources to help you make more money:
My Website - a one-stop shop for all things dividend investing.
Ca$hing in on Twitter - start building a following on Twitter and learn how to monetize it. Turn Twitter into your own personal cash-flowing asset that will pay you while you sleep.
My Full Stock Portfolio - get access to all of my positions and get updates every time I buy or sell.
Money Mastermind - the “Money Bible”. Myself and 29 other expert creators teamed up to create the most all-inclusive 280-page finance book on the market. Over 100 topics about money including real estate, crypto, budgeting, dividend stocks, online business, and more.
The Complete Investors Accelerator Pack - everything you need to build a dividend portfolio that grows on itself. Learn more about dividend investing, how to analyze dividend stocks, what to do with your dividends and how to build a stream of passive income through the stock market.
TweetHunter - let the software do the tweeting for you. The only scheduler you’ll ever need. This tool makes me money in my sleep. Give it a try for free.
Hipster Budget Guide - having trouble saving money? Learning how to budget is your solution. This book will show you ways to save money you never even thought of. Worth every penny.
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