This week, we’ll look at how to earn more, how to spend less, and which of the two is better.
How to earn more
- Make the most of your current job. Show up rested, presentable, and alert. Be a leader by taking on additional challenges and doing all tasks to the best of your ability. Find useful things to do in your spare time instead of waiting to be assigned work. Improve your knowledge and get educated by taking classes or reading books so you never stop learning new things. Most importantly, don’t waste time with negative people or office politics. Instead, build relationships with positive people so their guidance and mentoring can help you get ahead too. It won’t be long before you’re prepared to stand up for yourself and negotiate some perks or ask for a raise.
- Find more income streams. Keep your eyes open for ways you can earn more money from different sources. This isn’t about splitting your loyalty. As Hamm writes: “Having more income streams merely means that losing one of them (like your job) is less devastating in your life and it also means your overall income for now will go up.” There are a lot of ways to do this so it’s best to follow your passions. Just don’t expect to strike it rich without effort. As JD Roth writes: “The folks who make the most money are often those who work the longest hours. Hard work doesn’t guarantee a high income… but it’s tough to master the art of earning without hard work.”
- Don’t burn bridges. If you eventually decide to quit your job, make sure it’s on good terms. NEVER spread negative remarks about your previous employer or backstab former colleagues. Instead, make sure you keep in touch. All it takes is an email or phone call every now and then to see how they’re doing.
How to spend less
- Maximise every dollar (or rand, or euro, or pound). The book gives 100 ideas to live frugal: some old (brown bag your lunch), some new (clean your car’s air filter), and some totally out there (keep your hands clean). But it all comes down to one thing: stop and think whenever it’s time to spend. Always ask if there’s a way to get more for what you’re spending or get what you want by spending less. Don’t get sucked into subconscious habits (almost everything we buy is simply based on what we bought last time) because small routines and recurring expenses can add up to big costs. But remember to be smart. It doesn’t make sense to drive halfway across town to save a few cents on detergent.
- Don’t make yourself miserable. While it’s easy to cut back on things you clearly don’t need and can easily do without, frugality can leave you feeling low. If you’re giving up things you enjoy, it might be useful to reconsider. As Hamm writes: “Saving money doesn’t have to equate to misery; it just means that you cut down on the unnecessary.” Get Rich Slowly seems to agree based on their recent confessions of a shopaholic: “I believe that smart spending is about making choices. Frugality isn’t about pinching pennies on everything; it’s about cutting costs on the things that don’t matter to you so that you can spend on the things that do matter.” So feel free to spend money on what you love (I go to the movies two or three times a week) and cut back on what you don’t. As long as you’re still spending less than you earn, that’s all that counts.
Is it better to earn more or spend less?
“Industry, perseverance, and frugality make fortune yield.” – Benjamin Franklin
Now that we’ve seen what both sides involve, it’s hard to know where to start. It’s an issue Hamm recently discussed: “Personal finance bloggers are either wholeheartedly about frugality or they’re all about entrepreneurship and earning more money…Frankly, I find this completely silly. There are times when frugality is the best option. There are times when focusing on increasing earnings is the best option. Most of the time, there’s no reason not to try and do both.” It’s much like the best way to lose weight is to eat less AND exercise more. Working on just one will only get you so far.
Still, spending less is the best place to start because the changes you see are immediate. “When you make a choice to not buy something or to find a less expensive way of doing something, you start reaping the rewards from that choice immediately,” Hamm writes. “That money goes from being spent to residing in your pocket right now. Thus, if you need immediate relief, frugality is the superior tactic.”
But once you reach the limits of frugality (probably when you start separating two-ply toilet paper), it’s best to focus on earning more. “As vital as it is to cut your spending, there’s only so much you can trim from your budget,” Roth explains. “Your income, on the other hand, is theoretically unlimited.” Building skills or starting your own business won’t pay off immediately but can eventually provide rewards far greater than those you’d ever get from frugality.
Ultimately, learning to spend less is something that will benefit you throughout your life. “Your earning power might bring you wealth; frugality and thrift will help you keep it,” Roth continues. “By cutting your spending while you increase your income, you’ll develop a cash surplus – a surplus that can be used for saving.” Stay tuned for more!
If you enjoyed this post, please remember to Like, Tweet, and Share it using the links at the top or bottom of the page. And remember to subscribe to free alerts or follow me on Twitter to be notified when the next instalment is released. For more on the subject, read The Death and Life of Bling.