Saving Money vs Making Money

[briandownie]

I have a friend that, in my opinion, obsesses over finding ways to save money.
I like saving money but I like putting my energy into making more money.

My question is... what's better, finding ways to save money or finding ways to make extra money?

Brian

[nick__45]

It is better to find way to make more money because if you're busy, chances are that you won't have time to spend the money you make. There are things you can't do if you're busy and that will cost money have have someone else do it. For example, cutting grass is a pain if you have a average size yard in a suburb. But that should cost about 50 bucks to get it cut and you can make that 50 bucks back if you can do overtime at whatever good paying job you have. The same can be said about oil change and car maintenance. However, everyone needs to have some hobby or activities to take their mind of the stress of life as well as work and maintaining my cars is my way of reducing stress and keeping me from going crazy. I have 2 other hobbies, neither of you are political correct so I keep them off here.

[comaryp]

Saving money is very important than making money, if you don't know how to save then there is no meaning of making money.

[kork13]

thinking basically about it, if you have the option of either saving $1000 in expenses or making $1000 in additional income, saving the $1000 is better. First, you're learning to control your expenses, which is a valuable skill as it is. But more simply, if you make an extra $1000, you still owe taxes on it, which makes it $750-$850. Thus, saving a certain amount is better than earning the same amount.

[marvholly]

I am on anumber of financial discussion boards. The main thing I do NOT understand is WHY everything has to be black and white: ie all of A OR all of B.

Yes, it is important to make as much money as you REASONABLY can w/o sacrificing mind, body, friends & family plus the too busy to spend aspect.

It is JUST as important to save money so if the proverbial 'stuff' hits the fan you are somewhat prepared plus the non-taxable aspect.

[jpg7n16]

I have a friend that, in my opinion, obsesses over finding ways to save money.
I like saving money but I like putting my energy into making more money.

My question is... what's better, finding ways to save money or finding ways to make extra money?

Brian

If you can only do one, it literally does not matter.

It's best to do both if you can.


Increasing your wealth isn't rocket science, it's very basic math. There is no secret mathematical reason why saving is better than earning, or vice versa.

10-5 = 5
9-4 = 5

So if you make 9, and would like to keep 5 of it: either spend 4, or try to make 10.

[disneysteve]

If I had to pick just one option, it would have to be saving. The vast majority of people do not have an income problem - they have a spending problem. We are spoiled. We want our cell phones and cable tv and new cars and vacations and nice clothes and dining out and lawn service and gadgets and every other place we find to spend our money. Learn to live on 80% of what you earn and life will be much easier and your future will be more secure.

All that typically happens when people find a way to earn more is that they simultaneously find a way to spend more. Folks think that all of their financial problems would go away if they just earned more money. Then they start earning more and discover that their money problems aren't any better than they were because they haven't fixed the spending problem.

[MonkeyMama]

I'd answer that more income is more important. I think the reason is because there is only so much expenses that you can cut, but income is rather limitless. (For example, my spouse currently does not work. So, making an extra $60k per year, say, is VERY in the cards. BUT, I couldn't cut my spending by $60k because I don't spend that much to begin with. IF he worked, we'd probably clip less coupons, and still be miles ahead).

I also come across a lot of penny-wise/pound-foolish types. I've seen people let the pennies go, focus on their jobs, and come WAY out ahead.

That said, I think BOTH are important. I've seen diet used as an analogy in these discussions. You can work out or just eat better, but doing both will yield far better results than just focusing on one over the other. Penny-wise AND pound-wise, so to speak.

[cypher1]

I agree that not everything has to be black and white for this topic. But I'm going to have to agree that saving in the long run is the way to go overall. For the majority of people, increase in income typically equals increase in spending or larger living standards (I'm guilty of this too). However, I'm with the OP on finding ways to make money with what you like to do, while taking into consideration of time, capital/risk/overhead, and enjoyment of work. I will say, it's better to make money, than spend it, in terms of working more vs going out.

[jIM_Ohio]

I am on anumber of financial discussion boards. The main thing I do NOT understand is WHY everything has to be black and white: ie all of A OR all of B.

Yes, it is important to make as much money as you REASONABLY can w/o sacrificing mind, body, friends & family plus the too busy to spend aspect.

It is JUST as important to save money so if the proverbial 'stuff' hits the fan you are somewhat prepared plus the non-taxable aspect.

If I had to pick just one option, it would have to be saving. The vast majority of people do not have an income problem - they have a spending problem. We are spoiled. We want our cell phones and cable tv and new cars and vacations and nice clothes and dining out and lawn service and gadgets and every other place we find to spend our money. Learn to live on 80% of what you earn and life will be much easier and your future will be more secure.

All that typically happens when people find a way to earn more is that they simultaneously find a way to spend more. Folks think that all of their financial problems would go away if they just earned more money. Then they start earning more and discover that their money problems aren't any better than they were because they haven't fixed the spending problem.

I'd answer that more income is more important. I think the reason is because there is only so much expenses that you can cut, but income is rather limitless. (For example, my spouse currently does not work. So, making an extra $60k per year, say, is VERY in the cards. BUT, I couldn't cut my spending by $60k because I don't spend that much to begin with. IF he worked, we'd probably clip less coupons, and still be miles ahead).

I also come across a lot of penny-wise/pound-foolish types. I've seen people let the pennies go, focus on their jobs, and come WAY out ahead.

That said, I think BOTH are important. I've seen diet used as an analogy in these discussions. You can work out or just eat better, but doing both will yield far better results than just focusing on one over the other. Penny-wise AND pound-wise, so to speak.

I agreed with the direction of the 3 posts above.

Money you earn is based on a rate (R) and the amount of time you can earn money at that rate (T).

So the money you make is M, M=R*T.

Time has its limits- no more than 24 hours in a day, and even 16 hours making money is tough to do (you need to eat and sleep and digress some). So the best thing you can do is for the time you spend working, to maximize the rate at which your paid.

If you make $50/hour doing something for 8 hours a day, that is about a yearly salary of about 104k. If you can increase that rate to $60/hour your yearly pay is about $125k (profit of 21k for doing same work).

The single best thing you can do if you already make a certain rate is to either
a) increase the rate you are paid
or
b) save money/spend less.

In order for saving to work, you need to have some income to begin with though.

If you already work one job which pays you a rate of about $20/hour (40k per year), and you want more money, its possible you can find some things which earn you a higher rate (like $40/hour) but it is possible that rate is locked in for only short periods of time (I can think of about 10 ways to make $40-$60/hour but the windows to make that money are only 3-5 hours per day or 15 hours per week), so that has to enter into the equation too- even if you find a job with a high markup on the rate, there is little guarantee you can lock in that rate for 40-100 hours per week.

[cjscully]

Saving vs. Making Money should not be an either/or proposition ever.

You should always try to increase income whenever possible. You should always try to keep your expenses as low as possible. It's also not a "one and done" kind of thing. You do a budget. You implement it. You review it. You look for other ways to reduce expenses. You look for more ways to increase income. You revise your budget whenever income and expenses change.

Rinse and repeat.

[disneysteve]

You should always try to increase income whenever possible.

I disagree. There is a lot more to life than earning more money. I work about 35 hours/week. I could very easily work more hours. All I have to do is say the word and my partner would be more than happy to extend my hours. There are also other things I could be doing to earn additional income outside of my job. But I have no desire to work any more than I already do. My job is mentally draining most days and I'm exhausted by the time I come home. I want time to relax. I want time to spend with my family. I want time to volunteer at my synagogue. I want time to travel. Sure, I could be earning more money but it wouldn't be worth the sacrifice at all.

[GREENBACK]

I know people that work ridicoulus hours and are always chasing the next dollar. I was sort of in that position at one time. I find it far easier and probably more profitable to save and invest. People tend to spend up to their income anyway so the net result is usually not much different between the two.

[disneysteve]

I know people that work ridicoulus hours and are always chasing the next dollar.

I know those types of people, too. And most of them have high end cell phones, full cable packages, DVRs, newer cars (often leased) and a bunch of other wants that could easily be eliminated and avoid the self-imposed need to work all of those hours. I'd rather live more modestly and not kill myself working to afford all of that stuff.

[GREENBACK]

I'd rather live more modestly and not kill myself working to afford all of that stuff.

1000% agree with that.