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One of the best financial hacks is to save your raise. It’s difficult to increase saving today because more savings means cutting something that you have grown used to consuming. But if you commit today to save a large fraction of your raise, say 50%, you can increase consumption and savings at the same time.
For example, I tell my students that after they get their first job their income will increase by a lot. But instead of buying a new car I tell them to continue to live like a student for another year or two and put the money they save into a 401k! Living like a student for another year or two isn’t that hard—they are used to it! And it’s much easier to live like a student for another year or two today than it is to cut consumption 10 years from now when kids and mortgages become pressing.
In short, it’s painful to cut consumption but it’s often easy to delay consuming more so hack your willpower by delaying consumption rather than cutting consumption.
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