"Endless money forms the sinews of war." - Cicero

Why You Should Focus on Spending Less Over Earning More

By , June 3rd, 2008 | 28 Comments »

spend less, give more

Several readers have commented recently that they would like to hear more about how to earn more and less about how to spend less. While earning more is a worthy goal — after all, you can never save more than you earn — I acknowledge that I am biased toward saving over earning in both my writing and my own personal life. Why? For one, I am better at saving. For another, having earned less than $5,000 last year (not counting joint investments), I am not particularly qualified to write about earning a high salary (Writing is my second, part-time job. My primary, full-time job — parenting — is unpaid). Beyond these personal reasons, I believe that it’s valuable for everyone seeking financial stability to devote at least some time and effort to spending less. Here’s why:

First, while some people will try to convince you that increasing your income is simple and can be accomplished without fail in just a few specific steps, that just isn’t the case. (If you could control your income easily, wouldn’t you already be earning more than you do now?) You can increase your chances at getting a good salary by earning a degree, practicing interviewing skills, polishing your resume, and networking with the right people, but even these practices don’t guarantee that the right job will be open at the right time — nor that you will be the most qualified applicant for that job. You can ask for a raise, but you might not get it. You can learn how to invest wisely, but investments depend on overall economic conditions and fluctuations in the stock market. Your earning power is largely out of your control. You don’t have complete control over your spending, either — you always have to buy at least a few necessities — but you have more control over spending than earning.

Most ways to control spending can apply to a broader group of people than ways to increase income, which vary greatly according to occupation, location and personal temperament. You are much more likely to be able to save the way I save than to earn the way I earn. For this reason, advice on spending less is easier for personal finance bloggers to pass along than advice on earning more.

I have already noted that you have to make money to save money, but many times, you also need to save money to make more money. You need money in the bank to buy a stock or mutual fund; you may also need cash to take advantage of certain business opportunities and special offers. In fact, if you find yourself in an emergency situation without enough money to cover it and have to go into debt, you can actually lose money because you have not saved.

While I have certainly heard some horror stories about people losing their life’s savings through no fault of their own, I know I have heard far more stories about people suddenly losing their income. Job layoffs, demotions, and disabling diseases and accidents seem far more common than mishandled pension funds and untraceable con artists. Those who have saved money by spending less tend to adjust to an unexpected loss of income much more easily than those who have focused exclusively on earning, who are often left in debt and accustomed to an extravagant lifestyle. Plus, those who have saved usually have their savings to help them if they do unexpectedly lose income.

Incidentally, few people are likely to increase their savings solely because they have learned how to make more money. It isn’t necessarily the case that people who have high incomes save more than those with low incomes, though it seems that it should be so. Spending tends to increase as income increases, and anyone who isn’t saving at his current income level is unlikely to start saving when he makes more. Meanwhile, someone who learns to save at a low or moderate income can save even more when his income increases. Whatever you make, start saving now by spending less — don’t wait until you’ve learned how to earn more.

Increasing your income usually requires many more hours of work than decreasing your spending does. Those who earn a high salary often find themselves with little time to enjoy the things they can afford buy. Conversely, those who deliberately choose to work less usually have to learn how to live on less. Working fewer hours and having time for other priorities is another great reason to focus on spending less over earning more. Not only do you get to do things you enjoy, but you are also likely to discover that life is about more than money.

With that said, I do encourage you to find ways to increase your income, particularly if you can earn more money without spending significantly more time and attention on work. A higher income can certainly boost your savings — but only if you already know how to keep your spending down.

Image courtesy of seibu1

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  • Jay Gatsby says:

    In football, as in life, winning is often a matter of playing good defense. Yet the corollary is also true, in that you cannot win the game unless you also have a good offense.

    I disagree with the blanket premise that you have more control over saving than you do earning a high income. This assumes that you work for someone else, and that you have little ability to affect what you receive in salary. You always have the ability to do a good job and make a solid case for a raise. If you don’t get one, you switch jobs to an employer who will pay you what you’re worth. As an entrepreneur, you can earn more by working longer hours or leverage the work of other people. Finally, as an investor, you have the ability to create a myriad of income streams, such that you earn money while you sleep.

    Learning to spend less is the first step towards financial freedom, but earning more is the next one.

  • Alexandria says:

    I think both are important.

    I honestly feel I have little control over costs lately. (HEalth insurance has gone up about 800% since I had a child, etc.).

    Likewise, I guess that is why I always thought it was important to live below ones means. I think it is important to make as much income as possible while young and able bodied. & live well below that income. It smooths out a lot of financial risks – so I agree with you but overall think it is important to make as much money as possible. Early on anyway.

    A second wage is iffy. My spouse might have brought home $500 last year but since not working he spends a lot of time keeping our costs down. It’s almost like my job is to make as much as possible and his job is to save as much possible – and as a whole that works out rather well.

    If you ask me what has brought the success in our finances is the years my spouse worked and we saved his entire income. I don’t find pinching pennies nearly as rewarding, personally. It’s important if we want to stay on one-income, but it is a snail pace towards success compared to the sports car we used to be in. 😉

  • wealthman says:

    Can’t let this one go. Another article that really does a disservice to people.

    you have more control over spending than earning

    see comment above.

    You are much more likely to be able to save the way I save than to earn the way I earn

    Because it’s harder to write about it isn’t a valid reason to ignore it. In fact, because it’s harder you should be writing more about it.

    save money to make more money

    If you make enough money, there is no reason to save because it’s automatic. You earn more than you spend without even having to budget.

    Those who have saved money by spending less tend to adjust to an unexpected loss of income much more easily than those who have focused exclusively on earning

    Any statistics or studies on this? Those that focus exclusively on earning usually have multiple income sources making situations where this will happen much less likely.

    few people are likely to increase their savings solely because they have learned how to make more money

    This is just ridiculous. When you make more money, it’s easier to fund all your retirement accounts to the max. I have a hard time believing this was even written.

    Increasing your income usually requires many more hours of work than decreasing your spending does

    This is a false statement because it doesn’t look at the entire picture. It takes effort in the beginning, but then allows you to work less later in life meaning that overall you work a lot less.

    Again, people should spend more time focusing on earning more money than they do. While saving money is limited, earning money is potentially unlimited.

  • Sheilagh says:

    Well said Jay Gatsby!! However not everyone is great at playing football. In the real world, not everyone has the ability or drive, sadly.
    Wealthman: Don’t think this does any disservice!! Sounds like you have “made it” financially and found it relatively easy to pump money into retirement funds, good money management etc. Probably one of the top 6% of society.

    “If you make enough money, there is no reason to save because it

  • bRobert says:


    Wow. Pretty much all the comments of yours I’ve read are ridiculous.

    If you make enough money, there is no reason to save because it

  • Momma Snider says:

    I think this article made perfect sense. The writer never said you can’t increase your income, or tried to discourage it, but we all know plenty of people who appear to make plenty of money but still say they can’t afford to save. All they need is to learn a little frugality.

  • Thaansa3 says:


    You took the words right out of my mouth. I can’t believe how pompous Wealthman came across. While trying to point out all the ridiculous statements in the blog, he made nothing but ridiculous statements.

    Anyway, I think it was the writer’s intention to focus on saving, not to discourage people from trying to earn more. I do agree that people have more control over saving than earning. This holds true even for an entrepreneur. I also agree that learning to live on less is easier and, in most cases, more necessary when you earn a smaller salary simple because you may be forced to.

    Ms. Christman, thank you for writing this article. I think the majority will find it useful and encouraging.

  • Hilary says:

    I have a hard time understanding wealthman as well. Why does he continue to read a blog about saving and frugality, only to make a snarky comment at every post that is about, well, saving or frugality. And if time is money to him, why does he waste time on this blog? Perhaps not as “wealthman” as he wants us to believe.

  • Arturo says:

    You guys are making this way too complicated. Simply put: do not spend any more than you have to. Start saving in tax-sheltered plans as early as possible.

    Use coupons. Shop carefully. Buy once, which means buy the best quality you can afford. Analyze your spending. I just traded in a car that only had 60,000 miles on it. But, my total costs to date were $.28 a mile; a bargain, in my mind. But, it inhaled gas and has a history of conking out at 70-80,000 miles. I now drive a brand new car with a much better repair history and resale value, and get double the gas mileage.
    Make your savings automatic through automatic transfers and deductions before you get your paycheck. Invest conservatively. Look where and how rich people invest: dividend-paying stocks with DRIPS, gas fields, real estate, and once you really start collecting, tax-free bonds. Google Suzy Orman and see where HER money is invested! What an eye-opener!

  • think outside the piggy bank says:

    Great article, and I agree that it’s much easier to control spending than earning. While I’ve never been particularly good at making money (and choose to work part-time), I’ve always excelled at saving, stretching and managing the money that IS available, and that has been invaluable.

  • typome says:

    I agree that it’s easier to save money than make money. One of the comments suggested that a person should just make a strong case for a raise, and if s/he doesn’t get one, then move on to a company that does. Okay, point is, that’s not easy to do! It’s harder to quit and find a new job than it is to, say, save $1,000 instead of buying a new TV.

    I’m also the type that doesn’t want to work more than 40 hours a week (and not out of laziness, either). Unless I really like my side income, I’d rather use the few hours I have outside of work to be with my family and friends than earning money. I’d also rather save money by not buying so many clothes than having to work a side income or overtime. Again, saving is easier to do than earning money.

  • wealthman says:

    Why is it that anyone that has money is regarded as “pompous” just because they don’t fit your image?

    I’m not in debt. I have my house fully paid for. I have a nice retirement account. If I’m not mistaken, those are the goals all of you are after.

    The easiest way to attain them isn’t by saving little bits of money here and there. The easiest way is to improve your income so you can buy everything you want and still have money left over. That is why I complain when everyone says only save, save, save.

  • Jay Gatsby says:

    To comment 11 — what’s wrong with getting paid what you’re worth? I agree it’s not easy to find a new job. But why should you have to compromise on the luxuries you want by staying in a job where you’re underpaid? Doing so smacks of a lack of ambition – both to better your life and to better yourself. Extending your rationale to its extreme, you might as well stay in your high school job flipping burgers, drive a 20-year old clunker, live in your parents’ basement, and save your pennies for quarter beer night at the local dive bar.

    Life isn’t about earning big bucks or saving big bucks. It’s about living, which is always a measure of personal preference.

  • xinecho says:

    Should I focus on earning more or spending less? As a young man, I’m often confused by this question.Now I get some point in this article.

  • Danny says:

    Judging by the vocabulary and style of #3 wealthman; as I kept reading further into his comment, he appeared more and more unwealthy.

    I completely agree with you. Save money first. Once you have the funds and disapline, use it to your advantage to make money!

    Oh, and that business man #1 jay, I’m not sure if he is really a businessman or just a hardcore football fan but the advice shannon is sharing is not for millionaire entrepreneurs who already have money to make more money. It’s for the less fortunate who needs to SAVE MONEY FIRST and then buy or start a business!

  • Chris says:

    Decreasing your expenses is just as good as (if not preferable to) increasing your income. Indeed, there are certain benefits that spending less has over making more. When you save money you are essentially earning the money that you don

  • Gail says:

    I find it interesting in discussions of this sort that there will be the commenters who jump in and talk as if everyone should and could increase their income. Not everyone is on the same playing field, either due to lack of skills, education, intellect, location. It seems the assumption that everyone has a prestige job that increased income is a given. Unfortunately many people are not able to have high paying jobs. They have to flip the burgers or sack the groceries because that is all they are able to do. For them, teaching and helping them to SAVE and care for the money they do earn is a better approach than expecting them to be able to earn more. And then there are many of us that are disabled and sidelined long before our earning careers normally would have ended and any way that we can stretch available funds is a blessing…because we can’t earn more.

    Wealthman: I have seen studies that show no matter how much people make on average the savings rate is the same if not better the LOWER the person’s income. I’m sorry I can’t access them now, but if you were interested, I’m sure you could find it.

    One of the reasons that our country is in a financial mess right now is that the higher income earners bought highpriced houses in anticipation of even higher incomes and now can’t afford where they are living. I don’t feel a bit sorry for them, but I am sorry that the rest of us have to pay the price for their inability to save and spend within their high incomes.

  • Valentino Buoro says:

    Learning to save is the advice that cuts across board. Afterall no human being goes around without money all of the time.So if you can save you can hold on for much longer at lean times

  • Alissa says:

    Hi there,

    I think this is a GREAT post, and I wholeheartedly agree. In fact, I wrote a blog post not long ago along a similar line:


    It seems every time I think I ought to go out and earn some money, I realize that it would actually be more effective to trim that money from somewhere in our budget instead.

  • I think being creative about jobs, career, and income is an often overlooked side of personal finances. A dollar and hour raise is $2,080 a year for as long as you work a job, and that money compounds with any raises. That is huge! I think we do oursleves a disservice by not encouraging each other to really think about honestly and creatively about our careers and income.

  • Stoner says:

    Whether, it’s football, or plain life, the only thing we always have control of is spending. Earning is not always within our control, even if one is self-employed.

    Besides, this all boils down to learning to live within one’s means. How else are you going to build your fortune? We all know, Rome wasn’t built in a day and neither will your fortune.

    So, look for ways to save money. How about that Mocachino, or whatever Starbuck sells. At $4 bucks a pop daily, well, I don’t need to tell you. But there are many other things you can do to save more. For example, you can raise the deductible on your car insurance. Ease up on the accelerator. Don’t race to the red light. Wait for the video of your favourite movie. Cancel subscriptions to magazines that just end up piled in a corner. Turn the thermostat lower in the winter and higher in the summer. Trade in your gas guzzler for a more economical vehicle. While you’re at it, refuse to get suckered into buying the options.

    Once you see how much extra money you have saved you will be pleasantly surprised. Start socking your money away at institutions that pay you higher interest. Pay off your debts.

    It’s not rocket science.

  • Leanta says:

    I think budgeting is very importanct and should be incorporated into life. Just think about the type of lifestyle you want and how much you are willing to spend (or save) to achieve it

  • Michael says:

    Both are important, it’s a question of balance. And that isn’t properly addressed in this article, because it varies for everyone. My big problem, should I spend the time to cook at home or should I eat out? If I cooked, I’d save money but lose time (I eat at a cafeteria in the same building where I work, it usually takes me less than 10 minutes to eat lunch or dinner, so don’t tell me I can make lunch and dinner at home and still save time.) So I look forward to the time I can really start saving, but in the mean time I’m going to be eating crappy and expensive cafeteria food.


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