Buzz
To accumulate wealth and improve your net worth, the key is to spend less than what you bring in. While increasing your income can certainly help, it’s ultimately about making sure you don’t waste your money. Frugality remains a vital piece of the puzzle in achieving financial success.
Many people view frugality as unnecessary, believing it’s better to focus on earning more than saving. But the issue is that plenty of people do earn more, yet fail to build wealth because they never master the art of frugality.
In *The Complete Tightwad Gazette*, author Amy Daczyczn brings up a crucial observation:
...no matter their income, many families always seem to just scrape by. Suggesting you should earn more instead of saving more is like telling someone “Don’t reduce your food intake, just exercise more.”
It’s true that you could also argue it’s possible to go too far with saving: cutting back so much that you never enjoy life. Both perspectives have merit, but G.E. Miller offers a great solution over at 20 Something Finance:
Here’s the reality –
to truly build wealth, you need to break away from the conventional mindset
. This requires taking a hard look at your spending habits, regardless of your income level. In fact, it’s best to treat them as completely separate entities. Your spending shouldn’t be tied directly to your earnings. If it is, you’re likely heading into financial trouble. Even better, why not strive to excel in both areas? That’s when you can really make progress.
In simpler terms, you can either focus on just one side of the equation, or you can optimize both factors and use them together to maximize your success. For the full post, check out the link below.
Photo by Tony.
