Starting with Saving
Why not income or investments?
This post is going to be shorter because I want to move from principles to practical advice. Still, I wanted to explain why I’m starting with saving and not investing or growing your income.
The Only Three Ways to Reach FI Faster
I mentioned this briefly in our post about what financial independence actually means, but now it’s time to dive deeper. There are exactly three ways to accelerate your path to financial independence:
Earn more money
Reduce your expenses
Invest the difference wisely
That's it. Every strategy, hack, tip, or "secret" you'll ever read about falls into one of these three buckets. Want to achieve FI faster? You need to get better at one, two, or ideally all three of these areas.
But here's what might surprise you: they're not equally powerful.
Why Most People Focus on the Wrong Pillar
When people first learn about financial independence, they usually get excited about investing. They want to know about the best stocks, the hottest sectors, the perfect asset allocation. They think the secret is finding investments that return 12% instead of 7%. (Last post we explained why savings rate is more important than rate of return.)
Others focus on increasing their income. They want side hustles, career advancement strategies, ways to make an extra $500 or $1,000 per month. (Last post we also explained why income increases backfire for some people!)
Both approaches can help, but they're missing the most powerful lever: reducing expenses.
Why Expense Reduction Gets a Bad Rap
People resist focusing on expenses because they think it means living like a monk. They picture eating ramen every night and never having fun. Is anyone surprised that people are less excited about cutting spending versus making more money? Our entire culture celebrates making (and spending) more money.
That's not what smart expense reduction looks like. It's about:
Getting better value for the same spending (switching car insurance, refinancing your mortgage)
Eliminating waste you don't actually enjoy (subscriptions you forgot about, food that goes bad)
Optimizing big purchases (buying used cars, choosing housing strategically)
Being intentional about what you spend on versus spending mindlessly
The goal isn't to spend as little as possible. It's to spend consciously on things that actually improve your life while eliminating everything else.
The Expense Reduction Hierarchy
Max, I’m with you. I’ll cut out my daily latte.
Nope! Most financial advice starts with the little things because they’re easy. We’re not starting with easy. We’re starting with meaningful!
Let’s create a few buckets:
Tier 1 - The Big Three (Massive Impact)
Housing (rent/mortgage, utilities)
Transportation (car payments, insurance, gas)
Food (groceries, restaurants)
These typically represent 60-70% of most people's spending. (source) Small percentage improvements here create huge dollar savings.
Tier 2 - Recurring Expenses (Moderate Impact)
Insurance (health, life, disability)
Phone and internet
Subscriptions and memberships
Tier 3 - Small Stuff (Minor Impact)
Coffee, entertainment, hobbies
Clothing
Most financial advice focuses on Tier 3 ("skip the latte!"), but that's backwards. A 10% reduction in housing costs usually saves more than eliminating coffee entirely. (That’s not an invitation to buy frivolous things just because they are small!)
Next Time: Housing - Your Biggest Expense (And Biggest Opportunity)
For most people, housing represents 25-40% of their total spending.
I'll show you specific strategies for optimizing housing costs that don't require living in a van or moving back in with your parents (though we'll discuss those options too!).
Here's to making every dollar count,
Max