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Saving or Earning? Which is More Powerful?

It’s the question that divides the personal finance blogosphere. Some say saving is more powerful than earning. Others throw caution to the wind and focus on earning instead. What is the best route? Saving or earning?

Which is More Powerful? Saving or Earning?

I grew up on a farm. Take a guess what the focus was growing up. Yep – saving. Save all you can. It’s the mentality of farmers.

saving or earningSaving

Saving is powerful because it doesn’t matter how much you earn if you can’t save any of it. Net worth is king – not annual income. Net worth enables you to create passive income and become financially independent. Becoming FI is like being knighted in the PF community. Honestly, it should be a goal on everyone’s bucket list. It sure is on mine.


…And then I read a few books from very wealthy people. They said things like:

  • If you know what you’re doing, diversifying makes very little sense (Warren Buffett)
  • People who invest in mutual funds do so out of fear of losing their money in more profitable investments (Donald Trump)
  • There’s plenty of money out there for everyone – just go for it (Robert Kiyosaki)
  • It’s sure a lot more fun to spend whatever you please (Donald Trump)

Now I was confused. For most of my life, I had heard being frugal is the way to live. Now these wealthy people are telling me that only scaredy cats focus on saving money, investing in basic mutual funds and hoping someday to retire and just chill. The scales of saving or earning suddenly tipped toward earning.

This new way of life intrigued me. I thought to myself,

“You mean I can have basically anything I want in life and still do well financially? Interesting…”

I began focusing more on income rather than expenses.

saving or earningThe Power of Thought

This is fun because you really are able to maximize your potential. Instead of thinking, “Oh, I don’t know if I should live in that neighborhood. It’s awfully expensive. Where I live isn’t great but I’m pretty content.” You now think, “I want to live in that neighborhood. I can earn enough to live there. So that’s where I’m going to live. And it’ll be nice being around like-minded people. They help motivate me. I may end up doing business with them in the future.” Hmm. Sometimes spending money indeed leads to earning more. Saving or earning? Sounds like earning might be the ticket.

I even began thinking about how cool it would be to buy a Tesla Model S. I would probably buy a few other things as well. I was getting excited. I knew I could be earning more and so I would focus on that and achieve more.

It’s Not About Saving or Earning After All

I soon realized that I should scrap the whole saving versus earning mentality. We all should. We should instead ask what we want out of life and then go after it – no matter what. If a simple home, good food and good company make you happy – focus on whatever sort of income you need to make that happen. If you really want a Tesla – make that happen. Go after exactly what you want.

But hold on one second.

Make sure you really, really want what you’re going after. Don’t risk being disappointed once you get there. Consider meditating or at least thinking deeply about why you want a certain lifestyle. Maybe you embrace frugality because it’s kinder on the planet (unless you’re someone like Elon Musk who pollutes like crazy with his jet but ultimately makes the world a cleaner place). Or maybe you want to be wealthy because through that wealth you can help more people. Decide what you want and go after it – money be ignored.

I read two books per week minimum. Many of them are about personal finance. Through all of this reading I’ve come to realize that most of the awesome things people have done have been in the pursuit of something greater than wealth. Their wealth is usually a convenient byproduct.

The personal finance community shouldn’t be split on its focus of saving versus earning. People should create goals and then do whatever is necessary to achieve them. If the goals are cheap – focus on saving. If you’ll need lots of capital – focus on earning.

With my own goals, it means I’ll end up creating more money. That works for me!

What are your goals? Should you be saving or earning more?

Battle of the Mind Money

AUTHOR Derek Sall

Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially--one email, one article, one person at a time.


  1. Our goals are to both save and earn more. The more my family is able to save and earn, the more we can invest in dividend stocks and eventually rental properties.

    • John – do you only target the high-paying dividend stocks? Do you ever feel like the overall earnings are less by going this route (ie. yes, you receive a dividend, but is the stock appreciating in value as fast or consistent as the others?)?

  2. I like both earning and saving. After all, they are the first two letters in my name. 🙂

    Our goals are to retire early (at 55 or before) with our assets generating $100k in income so we never need to draw on our assets to survive.

    We are about 60-70% of the way there and should have the rest soon.

    Or maybe we’ll just retire next year and spend the assets after all! 🙂

    It’s a moving target, as you can tell. But all is good.

    Over the years, we have done both: tried to grow our income as well as spend smartly. It’s worked well.

    So I would say it’s not one or the other but both. Do both in moderation and your finances will take care of themselves.

    • Yup, totally agree with you ESI. Both are needed to create wealth. If you had to choose one though, which would it be?

  3. It certainly is a tough debate comparing the income vs savings. I would like to share that the most valuable lesson I have learned about money is the mentality – how you apporach money and having the mindset to make money work for you (anyone can start small) rather than working for money. This rule applies when you invest money or do business and also applies to non-commercial activities such as spending money on your family or doing what you like. There is no conclusive result or strategry from this concept but it does improve your general concept of money I suppose.

    • Yup. I’m still working on this, but having our money work for us is an important part of our future. I can’t wait to have the flexibility to watch my daughter’s soccer games and horse rodeos! 😉

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