Should You Focus on Saving Money or Earning Money to Reach Your Financial Goals?

Earn more moneySince I started blogging about personal finance a couple of months ago, I’ve noticed two starkly different trends that blogs take, and I’m still trying to wrap my head around which is the better idea.

Basically, there are two schools of thought when it comes to achieving financial independence. The first school of thought says that saving money (i.e. spending less, becoming more frugal, etc.) is the way to go. The second doesn’t talk so much about saving money but instead focuses on earning more of it.

In this post I thought I would analyze the pros and cons of saving money vs. earning more money, and give my take on which strategy I think is the better way to go.

Let’s start with saving money.

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Why You Need to Spend Less and Save More Money to Become Financially Free

Ever since I was a kid I feel like people have been advising me to save money by spending less. It was a constant theme around our house growing up. My Mother, God love her, was a teacher and earned a modest income as a single parent raising my two siblings and myself. Whenever I had some crazy idea to earn more money, she would cut me off at the pass and tell me to get a legitimate job or focus on my school work.

Needless to say, we didn’t have a lot of money when I was growing up. So it’s no real surprise that I was always thinking about money, how little money our family had, and dreaming up ideas for how I could earn more of it. Whenever I had some crazy idea to earn more money, she would cut me off at the pass and tell me to get a legitimate job or focus on my school work.

When I was in college, I joined a company called University Painters to paint houses in my neighborhood for the summer. After I finished the training and my Mom figured out what I was trying to do, she forced me to break my contract with them and quit. She even had my Uncle, a lawyer, step in to write them a letter to keep me from getting sued.

So being frugal and saving money has been a way of life of mine for many years. And it’s not surprising that this is also the mindset of a majority of the American public. Many of the mainstream authors that discuss personal finance, such as David Bach (The Automatic Millionaire)Dave Ramsey, Thomas J. Stanley (The Millionaire Next Door), and David Chilton (The Wealthy Barber) have been preaching the benefits of budgeting and saving money for as long as I can remember.

So is it really any surprise that an entire group of financial blogs has subsequently popped up spouting the teachings of these people? I even came across a Facebook group that has one rule – you can only talk about things that relate to one of Dave Ramsey’s 7 baby steps. Deviating from that gospel will be you booted from the group.

Dave Ramsey and others like him have almost a cultish following, to put it mildly.

Honestly, and this may piss people off, saving money is the easy way. It is clearly easier to do what you can to save money here and there and use that money to either contribute to your retirement or pay down debt.

It’s easy. It’s simple. It’s dummy-proof.

And it very well might be the best option for certain people.

In fact, right now my Wife and I are taking a cold, hard look at our budget to try to find ways to save. We are starting to pay off our student loan debts. We are, for all intensive purpose, living a Dave Ramsey lifestyle.

We’ve cut out a lot of needless expenses in the name of paying off our debt and becoming financially free.

But that’s not to say that it is the ONLY way.

You see, my Mom was wrong. She should have embraced my entrepreneurial tendencies when I was in college. What was the worst that could happen? I would have failed and learned a valuable lesson. Or I would have succeeded and gained the massive self-confidence that comes from starting and building my own business.

So let’s take a look at the other side of the coin.

Why Earning More Money is the Key to Financial Freedom

Here’s the thing about Dave Ramsey and those other authors. They didn’t become financially free using their own advice. They became financially free by creating value for a mass of consumers that were starved for their teachings.

They impacted millions of people, making millions of dollars in the process.

Now, I won’t sit here and say that Dave Ramsey doesn’t follow his own advice, I’m sure he does. But I just want to point out that Mr. Ramsey didn’t make his millions by canceling his cable and saving a couple bucks here and there to pay off his own personal “debt snowball”.

If you think otherwise, you are fooling yourself.

This is one of the reasons I love Ramit Sethi, the creator of iwillteachyoutoberich.com so much. Ramit doesn’t give a damn whether you go out and buy a latte from Starbucks every day or not. Ramit has an abundance mentality. He realizes, as I do, that you can only save so much money each month. However, the amount of money you can earn in a day or a month or a year is unlimited.

Paula Pant, of the Afford Anything Podcast recently said on her show:

By believing money is scarce, we often set ourselves up to focus more on saving than we do on earning. And I have no objection to saving of course, but… It is a problem when clipping coupons or using up a bar of soap to its entirety or ripping dryer sheets in half, or stockpiling toilet paper because it was on sale at Costco or hoarding a garage full of junk because you found it at a yard sale and it was such a good deal….

It’s a problem when that stuff becomes more important than actually creating something and putting it out there in the world that people will pay you for. All of those frugality hacks, the 53 ways to save money, that all comes from, deep down, a belief that it is more worth your time to penny pinch than it is to create abundance. And I would urge you to question that assumption…

Listening to Paula’s podcast was the initial catalyst for this post. I completely agree with her on this point. Saving is great. Saving is important. Nobody is saying that you should spend money carelessly, without a little forethought.

But understand that there are two sides to the coin.

If you want to become truly rich, if you want true financial freedom, than earning more money is the way to go.

I realize that to many people, this is complete and utter blasphemy.

Maybe so.

So who is right?

What is the Right Way to Achieve Financial Freedom?

Should you follow Dave Ramsey or Ramit Sethi?

Should you strive to save more money or earn more money?

The answer to that question is that “it depends”.

Every individual, family, and personal situation is unique. Some people enjoy working for a company and then coming home to spend time with their family. They are completely happy with working a 9-5 job for a steady paycheck that they can save and budget and use to manage their household.

There is absolutely nothing wrong with that.

As entrepreneurial as I am, there are many days when I just long for a job at a firm where I know that I will get paid next month, regardless of what I do this month.

Having my own law firm as a solo attorney does NOT afford me that luxury…

Living life as an entrepreneur can be stressful and hard, and if you aren’t building a business to help grow your wealth, then you really just have a glorified job anyway. I’ve learned this the hard way.

But that’s not to say that owning your own business doesn’t have its rewards, even if it is just a glorified job. You can pick and choose your hours, earn as much or as little as you want, and don’t have to report to anyone (except your family that depends on your income).

That being said, if you are at a job now that you hate and want to leave to start your own thing, I’m not suggesting that you up and quit just because you might earn more if you started your own business.

What I am saying is that budgeting and saving is a good short-term strategy to help you build up a stash of savings so that someday soon you CAN leave your job. But for the time being, when you have a job and are trying to dig yourself out of debt and save up your emergency fund, frugality is the way to go.

In the meantime, start a side hustle to provide the cash catalyst that your savings and debt pay off goals need. Start a website, do some freelancing, sell some of the junk out of your garage. Do something, anything, to earn additional income to put towards your financial goals.

Then, once you have paid down your debt and have a financial cushion that you can fall back on, think of ways that you can add true value to the world and get paid for it. By providing enough value to other people, you will build true wealth for yourself.

Once you have financial freedom, you are able to keep your job or leave your job. The choice is yours. Your financial cushion puts you in the driver’s seat. You can choose what is most important and appropriate for your family.

Should You Strive to Save More Money or Earn More Money?

I believe that both saving money and earning money are important. You should attempt to do a bit of both. If you have focused on nothing but cutting coupons for the past several months, it’s time to put down the scissors and find ways to earn more income for your family.

And if you have been spending carelessly because you make a lot of money, it’s time to pull out a spreadsheet and look at your budget.

If you don’t have a good handle on your finances, both your income AND your expenses, you will never become truly financially free.

And isn’t that what we all want?


What do you think? Should you focus on earning more money, saving more money, or a little bit of both? Please leave a comment and let us know how you approach this topic!

  • Adventure Rich

    Can I choose both? I really like Paula Pant’s focus on “mind the gap, grow the gap”. There is a gap between our income and our expenses and as long as we are growing the gap and then saving/investing the gap, we will see the progress and reap the benefits!

    • BMG

      I totally agree. That’s the approach I’m taking personally as well. And I love Paula’s podcast – as I mentioned above, her talk was my inspiration for this post.

    • I totally agree. That’s the approach I’m taking personally as well. And I love Paula’s podcast – as I mentioned above, her talk was my inspiration for this post.

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