is it easier to make money or save money?

[Broken Arrow]

From a practical standpoint, I would definitely agree to do both. However, I also have to agree that it is more important to learn to save. Otherwise, even if someone makes more, they'll just find more ways to blow right through that money. I realize that's not the original question, but, I do feel it's important enough to point this out again.

[Ima saver]

Broken arrow, I don't really make him work any more than he wants too. He has so many people wanted him to build houses and he works all alone. It seems like he has to work all the time to stay caught up. I am really not a meany!!

[Bookie]

That depends on where you are in terms of lifestyle and spending habits, doesn't it?

For the average American (whatever that mythic beast might be), I'd say it's easier to save money. There are so many ways to economize that savings come easily and quickly. After a certain point, however, the choices become both fewer and harder. The available economies diminish in magnitude. At that point, earning more, however you elect to go about it, becomes a better option from a cost-effective perspective.

[Broken Arrow]

Don't worry Ima. I'm just teasing because I thought it was funny.

[MairGrif]

Something I read on another forum when I was first learning how to live below my means was a suggestion that one should not depend on overtime for the basics, or one should not use OT income to make one's budget. I understand there are times when it becomes necessary to use supplemental income to make ends meet, but I took that suggestion to heart. I am greedy, I take OT when I can get it, and I'm looking to take a second job. However, my budget, my basic necessities and basic savings, come from my 40hr/wk income. I am currently young, have no children and I have the time to work the extra hours. This money however, is going towards savings, both short term and long term, rather than makings ends meet.

[BCHGRL]

I guess it depends on how much you can make when you work extra in relation to your current rate of pay. For instance, if you normally make $30/hr but you can only find extra work for $6/hr, it might be more beneficial to save (depending on your fixed costs). However, if you make $30/hr but can work overtime and make $45/hr, then working extra will help you to reach your goal sooner.

[PrincessPerky]

Originally Posted by Broken Arrow

From a practical standpoint, I would definitely agree to do both. However, I also have to agree that it is more important to learn to save. Otherwise, even if someone makes more, they'll just find more ways to blow right through that money. I realize that's not the original question, but, I do feel it's important enough to point this out again.

Ditto that

[PrincessPerky]

Originally Posted by MairGrif

Something I read on another forum when I was first learning how to live below my means was a suggestion that one should not depend on overtime for the basics, or one should not use OT income to make one's budget.

ditto that too

[disneysteve]

Originally Posted by Bookie

That depends on where you are in terms of lifestyle and spending habits, doesn't it?

For the average American (whatever that mythic beast might be), I'd say it's easier to save money. There are so many ways to economize that savings come easily and quickly. After a certain point, however, the choices become both fewer and harder.

I agree with this. For someone scraping by on minimum wage, there may be nothing left to cut from spending, so earning more is the only option. On the other hand, for someone earning 50K or 100K or more, there is always some little (or not so little) indulgence that could be sacrificed to sock away more money.

[poundwise]

My initial answer would be that it is easier to make more money than it is to save more money.

However, the real answer is, as many have suggested, it depends.

In my current situation, I have already cut back and employ savings methods to the point that if I needed to gain some substantial ground monetarily, the best routes for me would be to sell something else (I am running out of things though) or to take on an extra job.

For my parents, we recently went over their budget and I was able to 'find' a lot of money for them. Cutting out the 'fancy' phone plan, switching long-distance, utilizing their medical insurance better for Rx, stopping dining out and picking up food out, etc. We found a few hundred overall. For them, the 'easiest' way to obtain more funds was to save money.

[sakigt]

Originally Posted by poundwise

My initial answer would be that it is easier to make more money than it is to save more money.

However, the real answer is, as many have suggested, it depends.

In my current situation, I have already cut back and employ savings methods to the point that if I needed to gain some substantial ground monetarily, the best routes for me would be to sell something else (I am running out of things though) or to take on an extra job.

For my parents, we recently went over their budget and I was able to 'find' a lot of money for them. Cutting out the 'fancy' phone plan, switching long-distance, utilizing their medical insurance better for Rx, stopping dining out and picking up food out, etc. We found a few hundred overall. For them, the 'easiest' way to obtain more funds was to save money.

Agreed.

Im to the point now that saving extra money would net me about $50 a month but drastically cut down on my lifestyle. ie: Yes, I could skip my $10 Thursday night Trivia nights at the bar with my best friend, but thats the only time we have to hang out and Id really miss the fun we have.

Id rather work OT to make that $40 a month.

[Ima saver]

Wow, who makes $30 or $45 an hour?? If saving money were easier, it seems like everyone would do it.

[MairGrif]

Originally Posted by Ima saver

Wow, who makes $30 or $45 an hour?? If saving money were easier, it seems like everyone would do it.

I can make that much tutoring. In my area, depending on what I'm tutoring, I can get up to $50/hr.

[disneysteve]

Originally Posted by Ima saver

Wow, who makes $30 or $45 an hour??

I make $70/hour. Occasionally, for some side jobs, I make more than that.

[Dido]

One factor that no one has brought up is the effect of taxes. The appropriate comparison is not really, is it easier to make $2000 or to save $2000, but is it easier to earn $2970* or to save $2000?

The $2970 includes much (but not necessarily all) of the effects of taxes. I've assumed a 25% marginal federal income tax rate (which will apply to you if your taxable income is between $30,650 and $74, 200 (2006 tax rates); if your taxable income is lower but not poverty level, then use 15% and if it's higher but not more than $154.8K, use 28%). Marginal rather than average income tax would be the appropriate rate to use since you are looking at additional income. In addition to federal income taxes, earned income will be subject to Social Security and Medicare taxes (6.2% and 1.45%, respectively). That's a total of 32.65% tax on that additional income that you need to compensate for if you really want to have $2000 more in your pocket. If you are subject to state and local income taxes, you'll want to add those in as well (those would add an additional 4.07% for me). To figure out how much you'd have to earn to have $2000 more actually in your pocket, divide $2000 by (1-tax rate expressed in decimals), ie. 2000/(1-.3625) = $2970 for just the federal and social security/medicare taxes (it'd be $3161 for me adding in the state and local taxes as well). Using the "round" figure of $3000, that's 60 extra hours of work if you earn $50/hour, and 100 hours work if you earn $30/hour.

For someone who makes minimum wage, the tax calculation probably won't be relevant as in all likelihood they'll be getting money back, especially if they remember to file for the Earned Income Tax Credit. But at our current national travesty of a minimum wage of $5.15/hour, that poor person would have to work 388 extra hours--nearly 10 full-time weeks extra--to have the extra $2000 in his/her pocket.

And if you want to have that $2000 to buy something rather than to invest, you should add in the effects of sales tax as well! Using my own information based on my state (PA) with its income and sales taxes, I find that I'd have to earn $3350 additional in order to be able to afford something that cost $2000, in order to compensate for the effects of both sales and income taxes.

[Lemony]

Making money is easy. Saving money is smart.

[flash]

If you don't save your money, or manage it properly, it doesn't really matter if you make more, does it? Making $2K that you immediately spend doesn't have any impact overall.

As a manager, I'd say if you aren't saving money, you are costing money, and shouldn't be making money

[lrjohnson]

It depends on how frugal you'be been up to now. For me, since I'm living on $1073 a month right now, I don't know that I could save too easily. However, If I was living on my "real" income and spending %90 of my net, it would be very easy for me to save 2k a year.

So how much do you buy and spend? That's the indicator.

[Ima saver]

My husband risks his life building houses and he charges $25 an hour, so it is hard for me to imagine that someone is making $70 an hour. Of course I have never made much more than minimum wage, so that is probably why it is hard to understand. I do try and save all I can, but not nearly as much as I wish I could.

[Homebody]

Hourly rates for jobs differ greatly across the US. I am self-employed as a medical transcriptionist and get paid by the line produced. I can, with some clients, make as much as $40.00 an hour if the docs are easy dictators. My daughter makes even more than I do since she transcribes faster than I do.

I can't sustain that speed over an 8 hour day, but I can for at least 4 hours.

So for me it is probably easier to make money than save, since I don't spend that much money anyway, working at home, no gas or clothes for work. We don't eat out much and try to use our leftovers up. I don't have a cell phone and have flat rate land line.

Our one indulgence, cable TV and high speed internet.... well the internet is a business deduction since I use it for work.