Getting ahead financially in the most basic sense is actually fairly simple. It typically seems complicated to many people because of the many varying opinions about the specifics of something that in general terms is quite easy to understand. For example, choosing the best account for an emergency fund and exactly how much to keep in it is something about which many people have differing opinions. But it’s only one part of the basics of personal finance.
What I’m talking about here are the two main parts of everyone’s finances, our earnings and our expenses. It’s important to focus on both of these instead of neglecting one in the name of the other. As The Digerati Life mentions, we should spend less than we earn, and earn more than we spend. These two phrases may seem redundant, but the subtle difference is important.
Focus on Your Earnings
I believe it’s safe to say that you don’t have a financial life without earning any money (or at least having some sort of income). Too many people though, go through life having resigned themselves to earning whatever income it is that comes fairly readily to them. If you’re serious about attaining some level of financial freedom, there needs to be a focus on growing your earnings. You can’t save what you don’t have, and you can’t invest what you haven’t earned. Be sure to make this a priority in your financial life.
Focus on Your Expenses
As you’ve probably experienced yourself, or at least seen with others, it doesn’t do any good to earn a great deal of money if you end up spending it all. And for those that have already taken a keen interest in their finances, this is usually the area of most focus. I’m not going to go into a long explanation of why one needs to focus on expenses (it just makes sense), but I do want to make one point. You can always spend more than you earn. So make sure to keep tabs on your spending.
If you take a step back and look at your financial life, you can probably see which if these two goals you tend to favor. That’s what it should be though, a tendency. You need to consciously focus on both of these areas, regardless of where you naturally focus.
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by Mark - Productivity501, on April 15 2008 @ 10:57 pm
I think people tend to focus too much on earning more and not enough on controlling their spending. If your spending is under control, it is much easier to get to a point where you are financially independent–the point where you only need to worry about your own business instead of getting paid a salary to help someone else run theirs.
I’m not saying you shouldn’t try to increase the amount you make, but you can achieve financial independence working from both ends simultaneously faster than just one.
by The Digerati Life, on April 19 2008 @ 8:00 pm
Hi there! Thanks for featuring my post. I do think that the mentality that “I’ll just make more money” can be detrimental, especially if it makes people loosen their hand on their spending. ITA that by focusing on both earning and saving, you’ll go far financially.
by Missing Money, Multi-level Marketing and More @ The Roundup, on April 20 2008 @ 10:06 am
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