Pick one: earning lots of money or better money management

[sv2007]

If you can only pick one, which would you pick?

If you think about your friends, which ones seem more successful later in life?

Now that that's out of the way. How do you rate yourself in the money management department? What does "money management" mean to you?

[bjl584]

Ideally I'd like to have both.

I have good money management skills. My portfolio is my proof of that.

I earn an average to above average income. Of course I'd like to earn more, and am always seeking out more and better opportunities.

At the end of the day, I'd argue that having superior money management skills will probably get you further than simply earning lots of money.

[Fishindude77]

Money management is much more important. You see people at very high income levels in horrible situations all the time due to poor finance decisions. Also see some people at very average income levels that do quite well.

[DaveInPgh]

[disneysteve]

It isn't how much you earn. It's how much you keep.

Better money management is far more important.

You can try to out-earn stupidity but that only works for so long.

[feh]

It isn't how much you earn. It's how much you keep.

Better money management is far more important.

You can try to out-earn stupidity but that only works for so long.

On the other hand - you can't save what you don't have. If all your income goes toward covering basic expenses, it's all but impossible to invest for the future.

I imagine peoples' answer to this question would be highly correlated with their income. High eaners will say "money management" and low earners will say "make money".

[DaveInPgh]

low earners will say "make money".

[reimaru]

One could flow into the other:

1. Make lots of money...
Bad: ...but you waste it all.
Good: ...and you invest it into financial education and excellent investments to make even MORE money.

2. You manage money well...
Bad: ...but you earn so little (think carpenter in a third-world country province) that you need to use it all on your family's survival.
Good: ...and you use it to slowly make more money over time.

On the other hand - you can't save what you don't have. If all your income goes toward covering basic expenses, it's all but impossible to invest for the future.

I imagine peoples' answer to this question would be highly correlated with their income. High eaners will say "money management" and low earners will say "make money".

Best point.

[disneysteve]

low earners will say "make money".

Correct, because they believe more money will fix their problems. It won't, of course, but they think it will.

[GoodSteward]

It only takes saving approx 150$ a month over your working life time (45 years) to get 1 million dollars in the right fund. I heard on Dave Ramsey where a plumber called into the millionaire hour. He made an avg income, but saved and invested his money the way everybody always says. Good money management can make an poor man rich, and bad management can make a rich man poor.

[feh]

Correct, because they believe more money will fix their problems. It won't, of course, but they think it will.

Making more money would help fix the problems of some low earners. You seem to be making the assumption that all low earners are also poor money managers.

[GoodSteward]

Making more money would help fix the problems of some low earners. You seem to be making the assumption that all low earners are also poor money managers.

From my experience, sadly, that is the case. People who make less often turn to debt to have better things. It is rare I see a low income family not using credit all the time to do things. I know this is higher earners too, but low income people will have a much harder time recovering so this is more dangerous. Either way, low income people often have a mindset that they are poor, and there is no need to budget if you don't have much to budget. My family has been in the low middle class to poor category depending on the family, so it's this and all the people i work with in ministry that gives me this impression. I've yet to find a poor family that is managing well by our standards. They may pay all their bills, but their savings is a credit card.

[disneysteve]

Making more money would help fix the problems of some low earners.

Sure. There are some who truly don't earn enough to cover basic needs like food, shelter, clothing, medicine, etc. I wasn't referring to that group. I was thinking more of those who are "poor" by their own hand.

I work in a poor area and I see this every single day. Most of these folks could be doing so much better if they could just learn to better manage what they have.

[DaveInPgh]

Sure. There are some who truly don't earn enough to cover basic needs like food, shelter, clothing, medicine, etc. I wasn't referring to that group. I was thinking more of those who are "poor" by their own hand.

I work in a poor area and I see this every single day. Most of these folks could be doing so much better if they could just learn to better manage what they have.

I work with several people that fit into that category. Smoke like a chimney and eat lunch out every day. Then complain about struggling to pay the bills. Stop smoking and pack a lunch!!!

[MonkeyMama]

In general, I would not pick one over the other. Both are important.

But if I have to choose one over the other, it's a no brainer that "better money management" would win. There are wealthy people in my family who never made more than minimum wage. & I don't mean like one person, but several extreme savers who did very well.

Along the same lines, we could easily make an additional $50k and be no better off. & I am just thinking of taxes and housing expenses (& how most people we know pay more for less house). I am not even meaning any wasteful habits or extravagant spending, and the endless other expenses that add up.