Pick one: earning lots of money or better money management

[sv2007]

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.

I wrote a program to illustrate the importance of adopting a steady, consistent investment strategy, using actual SP500 data It simulated tax, dividend, money market, and brokerage fees in addition to stock prices. I.e. WYSIWYG.

Plugging your $150/month into the program... Here's what it gives ... "if I had saved $150 per month for 19.5 years, then I would have contributed $35400 with an account value (IRA) $72038." (I've not updated it with current data, so it ended at April of this year).

That's only for 20 years. As we all know how compounding works, 40 years isn't just double of 20 years, it is exponential growth.

[Outdoorsygal]

At first I was going to say make more $. Then Willie Nelson came to mind.

He'd probably have better $ management skills if he stopped smoking

[JBinKC]

Both are important. But you still have to earn a living wage to provide for the basic necessities and have enough remaining seed capital to be able to take some diversified financial risks but the second one determines success or failure.

[Fishindude77]

True, in order to have basic housing, food, transportation, clothing, etc. you first need to get to a liveable wage.

I'm in a pretty low cost of living area where you can still pick up a decent house in town on a small lot for $45,000. I think things are going to be pretty tough for any young couple that isn't pulling down at least $40K gross.

[Singuy]

Better money management is the only answer. You can always always scale down. Flip phones, roommates, don't use the A/C, no cable, eat rice and beans, bike to work...

You can always earn more by working two jobs...even if they are min wage. Just grind in really scaled down/working hard environment for 10-15 years and you are set.

Everyone else crying that "how can they expect anyone to survive on 8'hr and expect a savings" should ask like every immigrant ever how they did it.

My dad did all of the scaled down things above..made 800/month in one job and 500/month in another job back in 1988...he managed to save 900/month.
Once my mom got here, our savings rate was even more aggressive So there's no such thing as "not making enough for basic needs" in the first world....unless you really suck at flipping burgers or cleaning bathrooms..basically unemployable by any means.

[JBinKC]

True, in order to have basic housing, food, transportation, clothing, etc. you first need to get to a liveable wage.

I'm in a pretty low cost of living area where you can still pick up a decent house in town on a small lot for $45,000. I think things are going to be pretty tough for any young couple that isn't pulling down at least $40K gross.

I also live in area with a very low housing cost on a similar order but sadly only minimum wage slave jobs are scarcely available here with travel required. A very dead end place to live for the working class but great if you have assets and looking for a general lower cost of living.

[DaveInPgh]

At first I was going to say make more $. Then Willie Nelson came to mind.

He'd probably have better $ management skills if he stopped smoking

https://youtu.be/-tJXjt5D4zY

[GoodSteward]

I wrote a program to illustrate the importance of adopting a steady, consistent investment strategy, using actual SP500 data It simulated tax, dividend, money market, and brokerage fees in addition to stock prices. I.e. WYSIWYG.

Plugging your $150/month into the program... Here's what it gives ... "if I had saved $150 per month for 19.5 years, then I would have contributed $35400 with an account value (IRA) $72038." (I've not updated it with current data, so it ended at April of this year).

That's only for 20 years. As we all know how compounding works, 40 years isn't just double of 20 years, it is exponential growth.

I used a coumpound interest calculator. 45 years at 9% interest gives just over 1 million at 150$ a month. Even if you miss that mark by several percent and "only" end up with 750k$ that is still a win. Saving large sums doesn't take a lot of money, just knowing where to put it and actually putting it there.

[msomnipotent]

I have been good with money management and diligently saved, invested, and educated myself as well as I could. I was still poor because I just was't able to earn enough. Unless you are extremely lucky by having perfect health, the right stocks, and were born in a LCOL area with decent jobs, it is very unlikely that you will ever be wealthy without earning a lot. Plus, I am just a LOT happier with earning more. I was miserable when I had to pinch pennies. I had to save up just to buy dress shoes for work. I truly enjoy the hell out of everything I buy now.

[LivingAlmostLarge]

I said make more money. I know both are important but we've been those low income people and it was harder to make the money stretch than to manage more money honestly. So I picked make more. Even with mistakes you can get ahead easier. Saving 10% of $100k is still easier than 10% of $10k. And it's also more you are saving of a bigger income.

[Tabs]

I like this conversation a lot.

I agree that both are important, but between the two, I would still say money management is most likely the more important of the two.

That said, I think there is also a case to be made to analyze our individual financial situations organically, and to adapt our strategies accordingly.

[sv2007]

I said make more money. I know both are important but we've been those low income people and it was harder to make the money stretch than to manage more money honestly. So I picked make more. Even with mistakes you can get ahead easier. Saving 10% of $100k is still easier than 10% of $10k. And it's also more you are saving of a bigger income.

Being very poor sounds like a special case. For the normal incomes, when it comes to money management, saving money is just the beginning. The key to wealth is what you do with all that savings. In this thread, there's already been a few examples of how compound growth can make even the most meager savings, when done consistently, grow into something exciting.

[DaveInPgh]

Being very poor sounds like a special case. For the normal incomes, when it comes to money management, saving money is just the beginning. The key to wealth is what you do with all that savings. In this thread, there's already been a few examples of how compound growth can make even the most meager savings, when done consistently, grow into something exciting.

2015 Statistics

The official poverty rate was 13.5%.

43.1 million people living in poverty.

I bet those 43.1 million don't feel special

[disneysteve]

2015 Statistics

The official poverty rate was 13.5%.

43.1 million people living in poverty.

I bet those 43.1 million don't feel special

Well that means 86.5% are not living in poverty, so I think the point still stands that for the vast majority of people, money management is more important than more money.

[DaveInPgh]

Well that means 86.5% are not living in poverty, so I think the point still stands that for the vast majority of people, money management is more important than more money.

Not downplaying the importance of money management for anyone.

Just pointing out yet another comment that shows how out of touch sv2007 is.