Many times this question arises in our mind that which is good, saving more money or, earning more money? First of all, this is not a competition between the two. In-fact to reach financial independence, you need to practice both efficiently.
The problem comes when you are choosing one over the other (or, giving priority on one over the other) due to limited time at hand. Let’s see what are the main time-taking tasks involve in a typical saving money venture.
- Creating budget
- Tracking every penny
- Analyzing spending pattern to figure out cost saving opportunity
- Family education and encouragement
- Having a lot of manual labor to cut cost
Its true there are certain money-saving activities that can be performed without spending much time, for example, buying a generic store brand instead of name brands does not take any extra time, but saves some money. Still, th overall money-saving exercise is in-deed time taking.
Now let’s see what are the various tasks involved in earning more money which take time to accomplish.
- Gather skills, take training, educate yourself
- Involve in side income venture
- Take a second job
- Working perhaps longer hours at work for a raise/over-time.
But, your situation could be different. Let’s consider a few points before deciding which way to go in specific situation when it comes to choosing between earning more money vs Saving more money.
- You can earn more always as per your potential. As everyone knows that money can not be earned if you do not have potential to earn more money.
- If you do not have potential to earn more money then saving is good option available to you. Because saving can help you in future.
- Also if you are not earning good and you need lot of money in short time span then your previous saving can help you in overcoming your financial problem.
If you’re in my situation, earning more can be better option, in fact it can be the best option. Because more earning brings more money. And you can re invest your extra money in various investment options like stocks, bonds, real estate etc.
Some techniques for earning more money really doesn’t take much time and effort. Negotiating salary with your boss to get a raise is one of them. Asking for over-time is another example.
I would try to state my philosophy here (may not be suitable for your situation). I try to save 50% of my income, if you can do that you are meeting saving threshold. I am not saying that as your income go up, so should be your expenses to maintain 50% saving, you can certainly save more. Saving 50% with $50,000 income is not same as saving 50% with $100,000 a year.
I try to achieve this saving target with minimum effort. I set up automatic investments from my checking accounts. With no effort I invest money every month after each pay check. thus I can spend time on blogging, a money earning venture for me. I use automated tool like Yodlee Money center to track my expenses in least time possible.
Since I save money automatically before spending them, I don’t need to create budget to keep spending in check. Every time I get a raise or a bonus, I increase automatic saving.
Spend Less Vs. Earn More
No doubt, both are complementary to each other. But, due to lack of time we can mostly go seriously in to one of them. Off-course there are some money-earning activities and some money-saving activities that can be done together, in parallel. But the most important tasks are time-consuming. One has to get priority over the other.
If you have just started with your financial journey, you can follow these guidelines I once established for us.
- Step 1 – Analyze your spending habit and track every penny
- Step 2 – Set up saving goals to achieve.
- Step 3 – Track and check spending to meet saving goal, if you are weak (honestly for lack of better word) cancel all credit cards to keep spending in check.
- Step 4- Start saving time by automating your saving.
- Step 5 – Research and create a plan to increase earning.
- Step 6 – Work relentlessly for up-skilling yourself to increase potential for earning more.
Depending on which stage of maturity you are in you may start from any of the steps above. I would like to stress on one thing. As a human being who work to earn a living, we should not leave any opportunity to earn extra money (even when you are in saving-money steps)
Some of us may work on both together, getting over-time at work and tracking pennies can go together for them. Or working as a dog walker and creating budget can go together. As i said numerous times before, you are the ultimate judge of your situation. Analyze and take judicious decision, this post was just a guide to help you think.
Earning proportionate your ability and human beings are capable of achieving way more than we could ever imagine. If situation demand, we do wonders. I am sure you have done quiet a few wonders already. So, have faith in yourself and your earning power. Work towards the goal of earning more money and your financial life would be in order. But, do not ignore saving money part either.
Readers, what do you think, can the tasks of earning more and saving more be performed together. What would be your preference when you have to choose one over the other due to lack of time and resources.