What’s the best way to increase your financial situation?
There are two camps.
One camp says you should be frugal and save more, while the other camp says you should hustle hard and earn more.
The save more group will talk about making coffee at home, bringing your own lunch to work and riding a bicycle.
The earn more group will talk about starting Shopify stores, getting sales jobs, driving Uber on the weekends and starting a lawn-mowing or car-washing side hustle.
What do I think?
To me the answer is pretty obvious.
Both of them are effective, but the save more is the one that makes the difference.
Think of it like this;
If you want to get in shape, you need to do two things.
- Exercise more
- Start eating healthy
However, the one that really makes the difference is the eating healthy, because that’s the root cause.
Do you know anybody that doesn’t drink, doesn’t smoke, only drinks mineral water, eats fresh fruits for breakfast, a salad for lunch, fish and vegetables for dinner, never snacks on junk food, and is overweight?
Of course not!
Going for a jog every day might help keep some weight off, but it’s never going to help enough to cancel out eating pizza and drinking beer every day.
Not to mention – if you always ate healthy and controlled your portions, you wouldn’t even need to go jogging to lose weight, because there would be no weight to lose.
When it comes to money, saving more is like eating healthy.
Earning more is like going to the gym.
One of them will help mitigate your problem.
But one of them will completely eliminate the problem in the first place.
The reality is, if you don’t learn to be a diligent saver, it doesn’t matter how much money you make.
Making a million dollars and spending all of it still leaves you at zero.
Whereas making $50k and saving $5k leaves you at $5k.
It’s obvious that the save more part of the equation is the part that really moves the needle.
Earning more requires more work, saving more doesn’t
Say you decide that every weekend, you’re going to focus on increasing your earning power.
So you wake up a 6am. You drive Uber from 6:30 to 12:30.
You take a lunch break, then 12:30 to 6:30 you work on your flipping business.
You have dinner, then 7:30 to midnight you build your niche site.
This is all great, but look at how much work it requires.
You’re literally working from 6:30 in the morning until midnight.
So let’s change strategy.
Every weekend, instead of hustling for hours, you’re just going to focus on saving an extra $100.
So you wake up at 6 a.m. and you … relax. Go for a walk. Download the Auckland Libraries app on your phone, and read a book for free. And then just spend the rest of the day doing … nothing.
Both options above will put extra money in your pocket.
But one requires hours and hours of extra work, stress, learning, hustle and energy, and the other requires you to literally do nothing.
Which one is easier? Which one is more sustainable over the long-term? The one that requires you to hustle from sun-up to sundown, or the one that requires you to literally just relax?
This is why focusing your lifestyle around saving versus earning is more effective for most people.
Not everyone is built to earn more
I’ve always loved acoustic music.
Every time I listen to acoustic piano or guitar instrumentals, I go into a daze.
I listen to them all the time while I’m working.
Naturally, I thought it might be cool to learn how to play an instrument.
I bought guitar courses online, paid for the premium Yousician app, I even paid private guitar and piano tutors $60/hour to teach me to read and play music.
I still suck.
I’ve probably started and failed five times over to try and be decent at playing an instrument.
And then you have my cousin, who literally just picked up a guitar one day and with no lessons, was jamming live in front of audiences with a band within a few months. He’s now composed pieces that are theme songs in Nintendo video games.
Some things just come naturally to people and not to others.
This translates to not only music, but every other endeavour in life – sports, art, and yes, making money.
If I tell you to go through a Shopify store-building course, spend twenty hours sourcing and reviewing products, start a website, build your Shopify store, learn how to run social media ads, and start dropshipping a product, it might excite you so much that you’ll start right away and be making $1,000/day within a few weeks.
And to someone else, they might take one look at the Shopify website and it will be the absolute last thing on planet earth they want to be reading.
Some people are built for the entrepreneur hustle, some people aren’t, and that’s okay.
But that’s the problem with the “earn more” mindset.
Not everybody wants to spend their weekend trying to earn more.
To succeed in anything entrepreneurial, you need to love the process, and many people do not love the entrepreneur process.
I, of course, enjoy it immensely. The reason I build this site is not because I need the money, I just love building things. I love the creativity process, I love the writing process, I love the making money process. I can spend an entire Sunday just fiddling with the colour scheme and fonts on the site, and I’ll love every second.
But for others, that might sound like torture. They want to be out walking in the sun, or playing their piano, or cooking. Not fiddling with a website.
This is the advantage of the “save more” side of the equation.
You don’t need to be built for it.
It doesn’t require you to learn new skills and hustle for hundreds of hours until you succeed.
All you have to do is … nothing.
Just stay home. Just don’t buy that thing.
Anyone can do it.
Saving more is mandatory; earning more is optional
Let’s say you never try to earn more than your basic salary, but you still manage to save diligently.
This means every year you try to improve on your saving, whether it’s finding a cheaper power or phone plan, changing your grocery habits, or walking a bit more so you can save a few dollars on gas.
Do you know what will happen?
You’ll become a millionaire.
The math is dead simple.
Even on minimum wage, if you manage to save and invest a small portion of your income each month, you’ll reach a million dollars by retirement age (and probably a lot sooner).
Now let’s take the opposite scenario.
Let’s say you never try to be a good saver, but you earn a million dollars every year.
Do you know what will happen?
You’ll retire broke.
Because nobody can work forever, and as soon as you stop working, if you haven’t been saving and acquiring any investments, your income will fall to zero.
You will have spent millions of dollars over your lifetime, and you’ll be left with nothing.
Learning to save more will always be effective.
However, learning to earn more will only be effective if you also learn to save more.
Saving more works without earning more, but not vice versa.
This tells you where your priority should lie.
Build good saving habits first, not good earning habits. Build a lifestyle around saving, not around earning. Teach a saving mindset to your kids and partner, not an earning mindset.
Of course, there is nothing wrong with earning more, and in time, you should definitely make that a goal of yours.
Spending your weekends and evenings trying to increase your income is a natural part of levelling up your money game.
But it will be useless if you haven’t first developed a good foundation as a saver.
Always remember it is the saving and investing that makes or breaks the fortune. The earning just accelerates the process!