It’s Not What You Earn, It’s What You Spend.
The first 30 years of my life I was convinced it was the other way around. I believed that in order to be successful you had to make a lot of money, at any price, even if it meant that you hated what you did for a living. After all, what was more important than making a lot of money? However, that all changed a few years back when I all of a sudden realized that money wasn’t all that important to me. All I really needed, I decided, was enough to live comfortably – no more, no less. I looked back with disdain at all those years I spent working at jobs I didn’t even care for just for the paycheck. It was then that I decided to work for me and what I need rather than A. what others thought I needed or B. what my younger self had been telling me that I needed.
And then I took a big pay cut to strike out on my own…and nothing bad happened.
See, I had already started to adjust for making less money and had changed how I spent the money I did have. It wasn’t how much I was making, but rather how I was spending it that was dictating how much money I had to bring home on a monthly basis. As soon as I got rid of that mindset, the picture became much clearer – I should be doing what I want to do for a living. Something I enjoy. Something that benefits others in some way, shape or form. And something that still pays the bills. I mean, just how important is stockpiling cash? Is it worth trading my soul or being miserable for 40+ hours a week? No way.
You can be comfortable and “successful” on almost any salary. You may have to move to a cheaper town, buy an older car, cut off the cable TV, or get a Pay As You Go cell phone to do so, but for most people it can be done if the desire is strong enough. Those on welfare with 5 kids are a different story and not really who I am talking about in this post. (Will save that for another post in the future) I am speaking about the average Joe, The Joneses, the normal American Family or Individual. It’s not about making a ton of money – it’s about using what you do earn, wisely.
I think that if most people took the time to really reflect on how their life is going, most would prefer to be at a job they enjoy rather than one they hate, right? However, a lot of them cannot leave said job because they are unwilling to adjust their lifestyle to enable them to do so.
Are you one of them?
It took me until my 30th birthday to start understanding that what was truly important to me was way more valuable than how anyone else perceived me and my lifestyle. If I only get about 75 years on this floating blue globe, I want to enjoy it rather than toil away doing things I have no interest in doing. Don’t you?
Photo from Shutterstock
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You have to spend less but if you make a lower salary it will be very difficult for you to live a lifestyle you may want in an area you want regardless of your frugal spending patterns.
You know I agree wholeheartedly
I would also say that it’s not what you save, it’s what you spend. I’m not talking about saving money in the bank, because that’s important. What I’m referring to is people who use a lot of coupons or buy on clearance or find good sales, then try to justify what they spend by saying, “But I saved $10 dollars.” or “But I saved 35%.”
Don’t get me wrong…I love a sale and I’m all for using coupons, but the true story is the bottom line…what you actually spent and not just what you saved.
Great read. The best advice I ever got was save your overtime and bonus money.
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This was a turning point in getting myself out of my personal financial mess. For the longest time, my main focus was working on increasing my income.
Once I realized that I could have a larger impact on my finances by focusing on my spending, did I begin to make progress in leaps and bounds.
Fantastic post
I wish someone had told me sooner that you “save” to get ahead in life. I spent instead. We make mistakes when we think earn more so we can spend more. Life can be simpler if we just takej the time to make it that way. Like the DARE people say, JUST SAY NO to debt.
Thanks for your sincere advice on what really matters in life. It’s so easy to get the idea on one’s head that making a lot of money is the only thing that matters.
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[...] at My Two Dollars has a jewel of a post ““ It’s not what you earn, it’s what you spend. Understanding that one tiny fact is why people can retire wealthy while only making a modest [...]
Nothing could me more true. The only insurance to stay out of debt is to live within or preferably well below your means. We have been overwhelmed with expenses lately but we are trying to pick up extra jobs, etc. so we can cover it without going into debt. We know that getting into leads to trouble for us so we avoid it like the plague.
i still think that having a lot of money makes life easier and truthfully speaking i want a lot of it. but the thing is that i like working and so i prefer to do something that i enjoy and not have to do it only for the cash. imagine such a combination(making a truckload of cash for something that you would very easily do for free)?
I think that one of the biggest problems is that people usually work the job they don’t really like. People care too much what others will think about the kind of a job they do and are also afraid of taking the direction they would really want to live. This way we all end up doing what is more acceptable to our community and not to our genuine interest.
I like this topic.
My thoughts are that both what you spend and what you earn are part of the overall equation. Now, having said that, I think the key is to be able to live on what you need (with some wants mixed in), and not let your income dictate your spending, if possible. Take the overage, then save & invest. Don’t look at a 10% increase in take-home pay, and decide to spend 10% more. Just save that increase in income…or maybe take increase spending by 1% and save the rest:)
What it comes down to is discipline, and learning to enjoy many of the great things life has to offer without feeling that money has to be source of happiness. It helps, but your health and quality of your relationships impact your life as well.
Thanks for this post – I have been preaching this message to family and friends for years! I don’t understand why some folks will work more hours just to waste the money. I know people who work seconds jobs (and complain about it) but think they have no time to practice a little frugality.
David,
Thank you for the brilliant article. It seems so simple, yet impossible for people “to get.” You need to get this out to a more wider distribution.
Cheers
Thanks, appreciate the kind words.
That’s right it’s not really what we earn but it is what we spend, including all the expenses we incur for things outside of our selves (families, friends, etc.,). I can also say that uur lifestyle depends on what we spend and not on what we earn.
I used to be a financial consultant and this is what I would always tell people:
“You could make 30k a year and spend 50k, or you could make 70k and spend 90k……BROKE IS BROKE!!!”
It is seldom that making more money is the solution. In fact, quite often making more money leads to more problems.
You have to work on proper cash flow management before you worry about making more.
Cheers!
Brandon
Hi – this is great advice! I linked this post to my blog today. Cheers – Tightwad
Staying within your means is something we need to learn as a society and live our lives according to what we are able to produce.
Hi your article really helped me a lot to take my self out of financial problem! Thanks for sharing this wonderful article!
Good work and best of luck!
What a refreshing way to look at the bigger picture.
This is so true. I know people who are earning huge wages, relatively speaking, and yet who complain about tight finances. Then on the other hand I know people on comparitively tiny salaries who never seem to have a problem.
Providing there’s a degree of sensibility, I think it’s possible to just adjust yuor living standards according to your income in order to ensure you don’t find yourself feeling the pinch month in, month out.
I think in some cases it’s both.. if you make $12/hour and you are broke or struggling, you need to make more money for starters, in addition to cutting costs and paying down debt.
Anyone in the same position would be doing themselves a favor by getting some advice here.
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A lot of us in the blogosphere would be inclined to disagree with the philosophy of saving a lot of money over spending it. And the frugality a lot of people express here does make a thunderdrake smile.
Though saving fiat currency in this world of inflation isn’t something I’d do. Financially, I tell people to put their money into income producing assets. But they either hang onto paper money or spend it on a luxury or indebt themselves one way or another.
Hopefully you’re ’spending’ your money wisely, eh? I know I try to!
The first 30 years of my life I was convinced it was the other way around. I believed that in order to be successful you had to make a lot of money, at any price, even if it meant that you hated what you did for a living. After all, what was more important than making a lot of money? However, that all changed a few years back when I all of a sudden realized that money wasn’t all that important to me. All I really needed, I decided, was enough to live comfortably – no more, no less. I looked back with disdain at all those years I spent working at jobs I didn’t even care for just for the paycheck. It was then that I decided to work for me and what I need rather than A. what others thought I needed or B. what my younger self had been telling me that I needed.
+1
There is a great saying:
Living an earning, instead of earning a living.
The theory behind it, find something that you love to do and then live within your means. There truly is much more happiness to be found when you have a ‘free’ life. Free to make choices & changes when you find something is no longer working.
Someone saddled in debt and a ’slave’ to the working world will never be able to know that freedom. You are very lucky to have discovered that while still relatively young.
It is really not only about what you spend, and how much you save, but how wise you invest what’s left (your savings). And by investing I mean also investing in yourself…
And to add up. You can invest in yourself by improving your knowledge for example.
This is so true. After cutting out several expensive luxuries from my life, I realized that I didn’t miss them at all. In fact, I think I am much happier now because the financial security I received in return has given me great peace of mind.
-Evan
what you make matters too. if you make min wage, you are not going to be able to go far with your finances. a good paying job does matter.
I agree and I love the post! You have a great writing style. Keep it up
No matter how high the earning is, it still not guaranty a financial growth unless you can manage to deal with your expenses and keep it on the limit according to what you earn.