To save money and grow your net worth, you have to spend less than you earn. Earning more money will get you further than simply being frugal and spending less of it, but frugality is still a crucial part of the equation.


Many people consider frugality a waste of time. Instead of saving money, you should focus on earning more of it, they say. The only problem is, many people do earn more, and they still don’t build wealth because they never learn to be frugal.


In the Complete Tightwad Gazette, author Amy Daczyczn makes a valid point:

...regardless of their incomes, many families seem to have exactly enough to get by. Telling you to earn more instead of saving more is like saying “Don’t eat less, exercise more.”

Of course, you could also argue that it’s possible to take saving money too far: you cut back on everything and never enjoy anything. There’s a point to be made on both sides, but writer G.E. Miller sums the solution up pretty nicely over at 20 Something Finance:

Here’s the thing – to build wealth, you must defy status quo. This means you must focus on your spend behaviors, no matter how much income you make. In fact, it would be wise to completely separate the two. There should not be a direct correlation between how much you earn and how much you spend. If there is, that’s when you get in trouble. Taking it even further, why not work really hard to be good at both? ...That’s when things can really take off for you.


In other words, you could focus strictly on one part of the equation, or you could optimize both factors and use them to your advantage. For the full post, head to the link below.

Earning More Does Not Cure All | 20 Something Finance

Photo by Tony .