Steven here from munny.club, a weekly newsletter where I share a different perspective on personal finance concepts. If this doesn't interest you or you don't find it valuable, you can unsubscribe at the bottom of this email. If you have feedback, just shoot me a reply!
When people think of personal finance they think of saving. Budgeting. Cutting back on expenses. Limiting yourself. These things make most of us sad. Yes, these things are important, but they are just one piece of the financial puzzle.
To achieve our financial goals, we follow a simple formula:
Income - Expenses = Savings.
Or Income - Savings = Expenses if you’re financially woke. But there is a sad reality hidden in that formula: for some people, even cutting after expenses down to $0 (impossible) they still wouldn't be able to hit their savings goals.
There is a natural limit to cutting back our expenses: food will always be an expense, even if you cook at home. Housing will always be an expense, even if you have roommates. Living with your parents incurs its own kind of costs, often worse than financial. My point is: you can only cut back to a degree. Even then, you may just be depriving yourself. This isn't sustainable long-term.
The higher-value area to focus is on how much you earn. Most financial writing is about cutting back because surprisingly, it's easier. It's like dieting for your money. you can choose to be money-healthy and have a holistic approach to things, or you can try fad financial diets and cut back on one more thing that is supposedly bad for your money. There always seems to be more to talk about here because we are continually so bad at it.
But earning more buys you so much more freedom and opportunity. I’m not about to say I have and secrets. Earning more is far easier said than done, but it makes the rest of your financial decisions much easier. My advice is simply: if you’re thinking about where to allocate your attention when it comes to money, once you have a decent saving system in place, focus on earning more. I realize this advice might be trite… “just earn more”, but it’s often a forgotten area when thinking about your financial future.
PS: don't let your burn rate change if you’re earning more.
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