Higher Income Alone Won’t Solve All Your Money Problems.
To save money and grow your net worth, you must spend less than you earn . Making more money will move you further than just saving and spending less money, but frugality is still an important part of the equation .
Many people think of frugality as a waste of time . Instead of saving money, they say, you should focus on making more money. The only problem is, a lot of people make more money and they still don’t build wealth because they never learn to be frugal.
In the Complete Tightwad Gazette, author Amy Dachichn makes an informed point:
… regardless of income, many families seem to have enough to live on. Telling you to make more money instead of saving more is like saying, “Don’t eat less, exercise more.”
Of course, you can also argue that you can go too far: you cut everything and never get anything. Both sides should be talking about it, but writer J.E. Miller summarizes the decision pretty well in Article 20 of Something Finance:
Here’s the thing – to build wealth, you must challenge the status quo . This means that you must focus on your spending behavior, no matter how much you make. In fact, it would be prudent to separate them entirely. There should be no direct relationship between how much you earn and how much you spend. If so, then you will be in trouble. Going even further, why not work hard to be successful both ways? … Then things can really take off for you.
In other words, you can focus strictly on one side of the equation, or you can optimize both and use them to your advantage. To see the full version of the message, follow the link below.
Earning no longer heals | 20 Something Finance