The Viral Personal Finance Mantra: “Focus on Earning More Instead of Spending Less”
Many personal finance “experts” have gone viral with phrases like “instead of cutting expenses, focus on earning more.” This makes a lot of sense: there’s always a limit to how much you can cut your spending, but no limit to how much you can earn. So instead of stressing over which subscription to cancel to control your expenses, channel that energy into finding new income sources.
The Importance of Increasing Your Income and Diversifying Income Sources
Of course, increasing your income and building diverse income sources are crucial. However, this doesn’t mean you should neglect your spending or assume that simply earning a lot will solve all your financial concerns. It’s about achieving balance.
Earning More Takes Time
Earning more isn’t something that happens overnight. It can take months or even years. For example, if you want a salary increase at your job and simply ask your boss, they’re likely to deny it, even if you’re excellent at what you do. It’s not that they don’t want to give it to you, but rather that they can’t at that moment due to company budgets, tight budgets, and specific compensation review periods.
Strategic Planning is Key
Even something as simple as securing a salary increase requires strategy, planning, dedication, and execution. Some people start businesses for additional income but end up neglecting their primary job and miss out on important opportunities. In my professional experience, I’ve seen cases of individuals with great potential who were being considered for management positions but were eventually let go due to distractions and focusing on other things.
Success Stories and Potential Pitfalls
There are successful cases of people using their free time to generate extra income, such as giving private lessons, baking goods to sell, or promoting beauty products. However, it’s essential not to jeopardize or neglect your primary income source, which currently supports you.
More Money Doesn’t Guarantee Financial Stability
Simply telling yourself, “I need to earn more,” doesn’t help you stop worrying about money. It doesn’t imply that you should stop managing your expenses wisely or that a higher income automatically solves all financial issues. People who earn more tend to spend more, as they now have access to a world of possibilities previously unavailable to them. They start desiring things they never even considered before, as they were completely out of reach.
Key Questions and Answers
- How much money do you really need to live without financial concerns? Carefully assess your needs and create a realistic budget.
- How will you obtain that amount? Develop a plan with diverse income sources and consider long-term investments.
- How long will it take? Be patient and persistent. Building wealth takes time.
The Unpredictability of the Future and Overconfidence Bias
While the future is uncertain for everyone, including you and me, it’s essential to have long-term vision. Setting life goals is crucial, but we must also understand that the future is built brick by brick, starting with a solid foundation rather than the roof.
One of the main reasons people neglect their finances today is due to the hope that they’ll solve all their problems by earning more in the future. Additionally, humans have an overconfidence bias, which means we tend to overestimate our abilities and the outcomes we can achieve.
Realistic Expectations for Business Ventures
For instance, people starting a business often anticipate higher sales and lower initial costs. They estimate reaching the break-even point in six months, but it often takes more than a year. While it’s natural to believe things will improve in the future, remember that building that future happens daily.
Money Management as a Valuable Skill
Managing money is a skill worth learning today, not tomorrow. These tools help you make better decisions, which can positively impact various aspects of your life.
