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Introduction

Our Financial Mindset

Why do people spend down their savings?

People are comfortable with predictability, and have a hard time getting used to new situations. So, if they grew up in an environment where there was never enough, and suddenly have a lot, no matter how painful, people will spend themselves down to the level that they are most comfortable with. If you never had more than $500 in your checking account, and all of a sudden are given a bonus of $1,000, people without financial goals will find a way to spend that $1,000 down to zero, because they are more familiar with having $500 at the most in their checking accounts. A person committed to attaining a financial goal will get the money, and put it away in a safe place, and pretend as if it didn’t exist, and not change his/her spending behavior at all. Goal-oriented people will change the way they view their checking account, and decide that having $1,500 is the minimum to keep for a balance than the previous $500. While the spender is spending all of the excess, the saver has changed his minimum view to $10,000 and is setting aside this extra income to reach that new goal.



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