Earn more or $ave more?


#22

It depends on what stage of live we are in. We need to earn more, save the excess money and let it grow
Start with retirement plan options from day 1 that I have discussed in detail


#23

I lean towards the earn more camp. I’m all for saving money, but you can only cut so many costs from your budget before your quality of life starts to go down.


#24

It is going to be the combination of the two. If you earn more and save more, it will accelerate your journey to wealth creation


#25

If I have to choose one, then I choose to earn more.

We already have pretty frugal habits. If we earn more then we save more of the incremental dollar than we currently are because most of our costs are fixed.


#26

Depends on your personality.

Aggressive career types = earn more, but need watch how much they spend because they believe in the spend money to make money mentality. \

Laid back career types will opt for saving more because they value time outside of work more.

Finding the middle ground is a big challenge eg a person who keeps saving more even when they earn more and minimizing lifestyle inflation even when your top line is going gang busters definitely takes a rare personality in the overall population.

Just think of your personal finances like a company: growing top line aggressively while keeping your expenses low. I talk about expense ratios here: http://financialorchid.com/2018/01/23/expense-ratios/


#27

Why does it have to be an either/or dichotomy? Do both. You want the gap between income and expenses to be as large as possible.
#WidenTheGap


#28

How about both? :grinning:


#29

Both is definitely the best option, but in reality it takes a lot longer to build a substantial amount of additional income than it does to cut expenses. Although, as was mentioned above, there is a floor to cutting expenses. If I had to choose, I would choose earn more but for an immediate change I think the better option is spend less.


#30

Team both.


#31

I definitely believe in earn more than I do save more but to me the real question is what am I sacrificing to do either.

There are some costs I am open to cutting and there are things to earn more money that I am willing to do. On the flip side there are also trade offs for each that I have zero interest in. I tend to lean towards earn more because I have no intention to inflate my lifestyle with money coming in. At the same time I am not looking for cutting pieces of my lifestyle either.

To each their own but if you disagree with me you’re wrong and I hate you haha. Great question!


#32

Both. Ten percent of peanuts is still peanuts. But I’ve watched many a soul making 100s of thousands living paycheck to paycheck. I guess it’s situational specific. If you are fifty and make 200k a year but spend 150k I might have one answer for you. If you are 25 and living off 25k a year the answer is different.


#33

Do you watch Workaholics? Hah.


#34

I’m glad you got that haha. Worried I was going to come off like a jerk.


#35

My goals are to earn more. It’s important to be prudent about your expenses, but the upside is unlimited.

Concept of abundance vs. scarcity mindset!


#36

If you find yourself in a paycheck to paycheck situation, even though you might have a budget and have cut back on a lot of costs/expenses, then I highly recommend for the individual to find another stream of income OR a higher paying job. While also being wary of where their extra income goes and not letting lifestyle inflation get the best of them. Saving, in retrospect, is hard if you don’t make a certain amount of money on a monthly basis.

Now, saving is appropriate if you’re content with the amount of money you spend on a monthly basis and find room to save excess cash for future expenses, down payments, investments, etc.

Either way, both options are cool and necessary to reach FIRE


#37

One of my favorite blog authors - brave new life addressed this having tried both approaches and realized mutliple advantages in the lowering costs approach - which he details.

Please be aware he hasn’t posted to the site in over 3 years because (on his twitter handle) he writes he is retired and he will do whatever he likes to do.

A hoard of the faithful congregate around his last post (where he reports that he bought a farm) and prod him for an update - of which he does not respond (that is part of the fun).


#38

Millionaire Next Door has a nice section on Prodigious Accumulators of Wealth.


#39

Both is the ideal option, but I think there is more room for growth in income through improving yourself and your skills, especially earlier on in life before your income tends to stagnate. But then you still need to watch your lifestyle.


#40

It’s simple - earn more than you save, no matter how much you earn. You could earn a million dollars each year but if you save none, it’ll eventually run out


#41

I’m on the earn more side. Earning potential doesn’t have a limit while you can only cut costs to zero