A big topic in the personal finance blogosphere these days is the spend less or earn more argument. On the one side, we have Ramit from I Will Teach You To Be Rich telling his readers to earn more and just focus on big expenses. He doesn’t believe that the small steps of frugality are very effective compared to earning more.
Then we have Trent from The Simple Dollar. Trent’s argument is that if a person changes 50 little things, then they’re looking at their finances in a whole new light. Because they’re serious about changing their finances, they have a better job of succeeding.
Financial Uproar’s longest and biggest fan, EngineerYourFinances has one of the better posts on the topic, definitely worth a couple minutes of your time. His argument is that people should work on both, hereby reaping the most rewards.
Guess what? They’re all right.
People writing personal finance blogs sometimes forget that there are different ways to accomplish the same goal. There is no one way to get wealthy. There are people who have spent their entire lives being frugal, scrimping and saving every penny, who end up wealthy. There are people who are, at first glance, absolutely terrible at money management. They spend money on cars, vacations, whatever. But they make enough to make up for it. And they end up wealthy too. The only set formula for accumulating wealth is spending less than you make.
What do you think Trent would say if I told him that I eat lunch out almost every day? I’m sure he’d respond with links to his favorite posts about how much money one wastes on the little things. $10 per day translates into $3000 per year, which if you invested it, you’d end up with however much less at retirement…
Blah, blah, blah.
I’m not motivated by cutting things out of my life. I like eating out. I like drinking bottled water. I like having a laptop at both the office and at home. There’s probably a hundred other things I could cut as well. But I won’t, because I don’t care. Earning more? Love it. Motivates the heck out of me.
If you know, deep down inside, that you won’t be motivated by spending less or by earning more, then don’t do it. So if you’re spending 110% of your income, find a way to get that to 90%. I don’t care if you cut spending, or earn more, or do a combination of the two. I just want you to do it.
Remember, you can’t spell personal finance without personal. As long as someone is getting results with the method they choose to use, then they can use whatever method they want.