When I first became interested in personal finance, I thought the best way to get more financially fit was to spend less. I’m realizing, though, that when it comes to managing money, some people are better off spending less and some people are better off earning more.
I think I fall into the latter category. I’ve cut out most excesses, like not having a TV in my home for over 4 years and only buying clothes one time all year (and at a consignment store of course.) I still struggle with the food category of my budget since I’m not the best at meal planning. However, I see many people I know buying nail polish, new decorations for their house, some boots for the fall, or Christmas pajamas, and I just… don’t.
So, it seems the only way for me to be better off in this thing we call life is to earn more. Luckily, I am self-employed, which means the sky is the limit.
If you want to know if you should focus on spending less or earning more, check out the information below.
You Should Spend Less If…
You have trouble tracking your spending. Tracking your spending is a learned skill. It’s a habit just like anything else. If you don’t track your spending now, go ahead and start. It’s a pretty simple process. You can write it down on a piece of paper or track it with your phone. Either way, getting into this habit will show you your spending weaknesses, and I promise that you can find a place to spend less once you have a better picture of your overall finances.
You have plateaued in your earning power for now.
Many people who might be starting their personal finance journeys might have just received a raise and won’t be due another one in a year. They also might be new to their jobs and don’t want to bounce around to another one. Or, they might have a new baby at home and don’t want to spend time away from family to side hustle. For these people, the best way to get control of your money is to slash spending left and right. Then, in another few months or a year, you can focus more on your earning potential.
You Should Earn More If…
You are naturally self-motivated. In order to earn more, you need to have a strong work ethic and a desire to go above and beyond the call of duty. Some people thoroughly enjoy doing their best during the hours of 9-5 and enjoying their life when they get home. There’s absolutely nothing wrong with that. However, the type of people who usually earn more are the people who pick up side hustles, who work on the weekend, and who impress their boss by taking on extra projects and working longer hours. Earning more isn’t everything, but if your family is in need of a higher income, it’s something to consider.
You don’t want to change your lifestyle. Some people are perfectly happy with their lifestyles. They don’t want to give up having friends over to watch a football game, taking vacations, or enjoying that morning cup of Starbucks coffee. For this type of personality, cutting back on their spending is much more challenging than those who could care less if they leave the house on the weekends or not. This type of personality needs to channel their energy into earning more because if they don’t, their lifestyle could put their family in a difficult situation.
Ultimately, when paying off debt or trying to get your finances in shape, I think it’s important to focus on either spending less or earning more. Trying to do both is possible but usually overwhelming for someone new to the personal finance scene. It’s hard to devote your energy to both causes so decide which one is better for your life and either start slashing some luxuries or start brainstorming ways to take home more cash.
Would you rather spend less or earn more?