Why you should focus on earning more, not spending less | Briefing v3.0
Frugality has become a popular SEO buzzword in recent years, and for good reason. Financial discipline is critically important to preparing for your future and maintaining a sustainable lifestyle, while still enjoying life.
The old saying goes, “spend less, save more.” However, we at MRP want to slightly modify this saying to, “earn more, invest more.”
It goes without saying that scaling back your spending habits shrinks your monthly expenditures and allows greater liberty in how you reallocate your savings. However, you can only cut your spending so much before reaching a point of diminishing returns in your quality of life.
There is no shortage of forums and message boards filled with FIRE (Financial Independence, Retire Early) fanatics with personal stories, tips, and tricks about they saved a few bucks this month by eating eggs, oats, and beans for every meal. Or keeping their house at freezing temperatures during the winter and sleeping with 7 blankets. Or not paying for Wifi and camping out at the local Starbucks or public library. Or grabbing fistfuls of condiment packets from fast food restaurants, etc. Is this really how you want to live? When the alternative we advocate allows you to earn disproportionately more so you don’t have to sweat over spending a few bucks on things like ketchup, london broil, or toilet paper?
Time is our most important asset, and is typically how work compensation is determined; you are renting your time. Therefore, it’s often more conducive to your valuable and finite time to spend slightly more money on something that will save you a quantity of time that is greater than or equal to what you would earn in the same amount of time (or less).
For example, I can spend two hours at a laundromat to manually do my own laundry for a total of $6.00.
Conversely, I can drop off my laundry at a wash and fold laundromat next door, and for $20 they’ll wash, dry, and fold my laundry for me. All I have to do is drop it off and pick it up. Time spent: 2 minutes.
Many people compare these scenarios and believe the more financially responsible or ‘frugal’ decision would be to block off two hours and manually do your own laundry for $6. We contend that is precisely the incorrect decision. Why? Because you’re essentially being ‘paid’ $14 for two hours to do your laundry. However, if you were to drop off your laundry at a wash and fold, and perform two hours of work, even at a minimum wage job, you would be earning more than the amount ‘saved’ in the same amount of time spent doing your laundry yourself.
What if you were to be compensated at well above minimum wage, at say, $30 per hour? Only 40 minutes of work is equivalent to two hours that it takes for you to manually do your laundry. In this example, you not only gain 1 hour and 20 minutes, you make $10 more AND someone else does your laundry for you. Which sounds more appealing?
Obviously, this implies you earn $30 per hour. Many earn that, or higher. They have the privilege of being in a more advanced financial position. For those of you who earn less but aspire to earn more, accept there is no secret or lifehack to earning more. The solution is take action and ‘just do it.’ Whatever it may be, put in the time, study, work, stumble on problems, learn from them, and improve. The better you get, the more you can charge for your services/skills/expertise/knowledge. You don’t need to simultaneously be working on seven different projects, all of them a ‘work in progress’ but none actively running or generating any revenue. Zero in on one thing, get better at it, and prove it to someone who will pay you more.
Now, let me be clear: the points raised above are not a suggestion to order takeout every night and hire a dishwasher, chef, maid, and gardener to outsource all your undesirable daily responsibilities. This is a hypothetical (but real) scenario to demonstrate how in order to make stronger financial decisions and balance your work-life, you need to value your time appropriately and in high regards.
When it comes to spending, practice common sense and don’t spend frivolously. Maintain a lean budget based on necessities, investments, and expenses that add value to your life. This includes saving you substantial time that otherwise allows you to allocate your time to more valuable tasks (earning more) or more enjoyable activities (work to live, not live to work).
But don’t skimp on spending $2.75 for a MetroCard swipe to get you from Midtown to Wall Street in 20 minutes, when opting to walk the same distance to save that same $2.75 would consume over an hour (and probably get you sweaty, rained on, or both).
Originally published at https://www.moneyredpill.com on May 27, 2019.