By Matt Becker

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Even financial planners can sometimes be pretty stupid when it comes to money.

Ever since I decided to skip getting a “real job” and start this business instead, I’ve run a monthly calculation that I euphemistically call my Self-Employment Financial Projection.

What it should really be called is my how long until we run out of money and I have to go get a job? projection.

Basically, I calculate the difference between what we’re earning in our businesses (my wife is self-employed too) and what we typically spend in a given month. Then I divide our total savings by that difference to get the number of months we have until our savings is gone.

And while at this point we’re almost earning enough to completely cover our expenses, we’re still not quite there. So I’m always looking for ways to extend that runway and eventually get us to the point where we’re adding to our savings instead of taking from it.

And really, there are only two ways to do that:

Spend less Earn more

Both have their place, and we’ve been working on both ever since we started this journey.

But as I was running this projection again recently, I realized that I’ve personally been WAY too focused on spending less when there were actually a few easy steps I could take to earn more that would have a MUCH bigger impact.

Maybe you’re in a similar spot. Maybe switching your focus from cutting back to earning more could make it a lot easier to reach your financial goals.

Here’s why it helped me.

Spending less helps…

As soon as we made the decision to start this business, my wife and I knew we had to cut back.

It was going to take a while for the business to start earning enough on a regular basis to support our family, and in the meantime we had to live on savings.

And the more we could reduce our monthly expenses, the longer our savings would last and the longer we’d have to actually make this business work.

So we cut back…

We paused our retirement savings.

We paused all our other savings too, like our emergency fund and house down payment fund.

We cut way back on eating out and other entertainment.

We cut cable and found cheaper cell phone plans.

All of that cutting back has been really helpful. It’s extended our runway and given us more time to build the life we want.

…but there’s a limit

We ran into two big problems when it came to cutting back.

First, after we made those big initial cuts, there really wasn’t that much more we could do. Sure we could try to figure out a way to save another $50 per month on groceries, but that really wouldn’t do much to move the needle.

Second, trying to make those smaller, more difficult cuts stressed us out and caused fights between me and my wife.

For example, I had it in my head that we should be spending less on groceries and I got frustrated when we didn’t. That inevitably led to some form of finger-pointing, which as you can guess didn’t go over very well.

In other words, we got to a point where there just weren’t many more cuts to make, and those that could potentially be made were causing stress in our relationship.

Not good.

The light bulb moment

As I was running our most recent how long until we run out of money projection, I realized that even if we hit my “goal” and found a way to spend $50 less per month on groceries, it really wouldn’t make much of a difference.

Even over the long term, it would only add about a 1/2 month to our runway. Helpful, sure, but not a game-changer.

On the other hand, if I picked up one more freelance writing gig (one of my side hustles) at my regular rate, it would increase our runway by about 2.5 months. Add a second gig and the increase would be about 7 months.

Now THAT’S a game-changer! When you’re starting a small business, 7 months can be the difference between success and failure.

So what did I do? I emailed my contact at a website I used to write for to see if they were looking for people. And they were! I signed on for two articles per month and just like that our runway was 7 months longer.

And just to be clear, these aren’t super high-paying gigs. It’s just that the amount I earn from writing those 2 articles per month is more than the amount we could save by micromanaging our grocery spending or making other small spending cuts.

So in this case, the impact of earning just a little bit more money was MUCH bigger than the impact we could have gotten from cutting our spending. And it came without any stress on our relationship.

The lesson

I am absolutely NOT saying that you shouldn’t find ways to spend less. There are a lot of advantages to cutting back, and honestly it’s where most people should start since it’s the easiest way to make quick progress.

It’s where we started and it helped us a lot.

But there’s only so much cutting back you can do. And if you never allow yourself to go the other way and think about how you can earn more, there’s only so much improvement you can make.

I was stuck in the cutting back mindset and it was hurting both my ability to make financial progress and my relationship with my wife.

What about you?