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As I was growing up, my parents always lectured me on being frugal and emphasized on saving money. While I can be frugal in certain ways, I, personally, cannot live a life of total frugality. For instance, I am completely fine with bringing lunch to work, but I still enjoy eating out with family and friends at least once or twice a month.
Don’t get me wrong – I love saving money. Saving money is one of the keys to getting on a path to financial freedom, which is why I always try to avoid paying full price for anything by looking for deals and coupons. However, unlike my parents, I believe that the best way to saving more money is not by being completely frugal but by making more money so that there is more of it to stash away.
My “Aha!” Moment
I came to the realization that I needed to make more to save more years ago. I remember getting my first big promotion that came with a significant increase in my salary. Rather than changing my spending habits or going out and making a big purchase, I kept my budget exactly the same and ended up having more money to put away.
One mistake that some people make when they start making more money is they also start making expensive lifestyle changes. They may start dining out more often or make big purchases such as buying a new car or TV. Because they have now increased their expenses, their savings account cannot grow as much as it could. The money, saved, could have gone towards an emergency fund or even an online business or investment so they can grow their passive income streams.
Since my realization that making more money leads to saving more money, I spend as much time trying to find ways to make more money as I do trying to find ways to save more money. One thing is for sure though, those big promotions with the significant increases are rare and do not come often. So rare that it only happened to me once in my entire career working for six different companies.