The following is a guest post with a compelling argument for focusing on growing your income rather than on cutting costs. I think balance is always helpful but I do think that Kayla raises some great points. After you read through this post, let us both know what you think please.
When it comes to the personal finance community and building wealth, there seems to be two separate groups and each have their own opinion. On one side of the issue there’s those who maintain that cutting expenses and being more frugal is the best way to build wealth. While cutting your expenses and living more frugally will help you reach your financial goals, I think there is a better way to go about building wealth – earning more money.
Yes, I’m solidly planted in the earning more money camp rather than the spending less camp. There are several reasons why I think it’s better to earn more instead of spending less to reach your financial goals. Here are some of them.
Lifestyle Deflation is Hard
I don’t know about you, but I like my current lifestyle. I don’t think that my spending is too over-the-top the way it is right now and I’m not eager to cut it back much more. To me having a sustainable lifestyle, with a few built-in splurges now and then, that doesn’t leave me feeling deprived is the key to avoiding burnout as I pursue my financial goals. Plus lifestyle deflation from cutting back on your spend can be hard to cope with emotionally.
Earning Potential is Unlimited
Sometimes we make the mistake of thinking that there’s no way for us to earn more money. But that simply isn’t true. Although there are only so many hours you can work each week and maintain your sanity, there are still lots of ways you can earn more money.
To being with, you can ask for a raise for work you are already doing. If you try this method, make sure you’ve thought of several ways you are an asset to your company and things you do that are above and beyond the call of duty. These are great things to point out to your supervisor when you are asking for a raise.
Another way to start earning more is to take on additional work. This might be something that you do at a job you already have, thus moving you up the career ladder, or it might mean taking on a part-time job or starting your own business. Even something as simple as doing yardwork for your neighbors, babysitting, or walking dogs should be treated as a business since you can use that money to help you reach your financial goals.
Your earning potential is only limited by your own creativity and worth ethic, while on the flip-side you can only cut your expenses so far. You still have to pay your rent or mortgage and have money for utilities, groceries, etc.
One Down-Side of the “Earn More” Approach to Personal Finance
While I’m solidly planted on the “earn more” side of the equation, it wouldn’t be fair to not mention the one potential down-side of this approach. If you are in a desperate financial situation, cutting your expenses is something you can do right away to help your bottom line. Again, there’s only so much you can comfortably cut from your monthly budget, but the impact will be immediate.
Earning more money is a great way to help you maintain your lifestyle and reach your financial goals, but takes a little more time and effort to see results. It might take a couple of weeks for you to get a raise from your boss or to find a side hustle to help you earn more money. In that span of time you will not be making an additional progress with your financial goals if you don’t cut some of your expenses.
Even with this down-side in mind, I still think the best way to reach your financial goals is to find creative ways to earn more money instead of spending less.
Kayla is the blog manager for www.BudgetBlonde.com, a blog devoted to helping people focus on family, finances, and freedom. When she’s not blogging, Kayla enjoys spending time with her dogs and catching up on 90’s sitcoms on Hulu.