If you are a young professional or have a long-term expectation of salary increases, focusing on saving money should not be your upmost priority. I was one talking to a well-off family member about my continuous work towards saving money, living below my means, and doing anything I can to be frugal now so I can achieve financial independence and retire early. For some reason the words that he said, and I will be paraphrasing, resonated into my whole personal finance:
“instead of focusing on saving money and restricting your lifestyle, you should actually find ways to increase your income”.
Duh! As soon as I listened to him something clicked in my head, financial wellness professionals focus so much on saving money and frugality, that sometimes we forget about the other part of the personal or household budget: Income.
Focus on well being rather than frugality.
You see, for most people, the ability to make additional money is a lot harder than saving on eating out, or cutting the cable bill, etc. The immediate changes that you can implement on the “expenses” part of your budget can start helping you get started on your wealth creation quest. However, saving on expenses that are not necessary do bring some challenges. Even though some activities and expenses are not Pavlovian necessities (food, shelter, security), these are extremely important for our emotional and mental wellbeing. While a cleaning person, food delivery, laundry service, dinner date, etc. fall into the category of “nice to have” rather than must haves, the lack of these services in your life might do more harm to your financial goals than the good the money saved provides.
Financial Goals are not only about saving, but also earning
So, when you are planning to start saving for your financial goals, being purchasing a home, paying off debt, or increasing net worth to retire early, don’t just think about cutting all the unnecessary to put the rest on a savings account. Sit down and think about the value that those additional services you use provide you to do a better job, or to progress on your career. Start thinking about how you can increase your income and wealth by finding a higher paying job, acquiring new skills or education to advance on your career, or starting a side business/gig to help you make extra cash. Being stressed over doing the laundry, cleaning the house, or mowing the lawn will not get you to financial independence any quicker. Find a balance in your savings habits and quality of life that are the right fit for your long-term career and goals. What you cannot do, is to stay stagnant. Always work towards figuring out what will get you to the next step on your career, and what things (like not having to clean the house on Saturdays) will help you get there. For some people, like me, it is easier to find ways to make a bit more money to achieve financial goals (career advancement and side gigs) than to cut down on expenses that while not necessary enable me to enjoy a certain quality of life.
A final word, don’t just spend money for the sake of spending money; don’t try to keep up with the Joneses just because… that’s just so 1990’s. Spend money wisely, but enjoy your money.
