I was asked by a reader for a money tip for the new year. I would typically give the save, invest, repeat spiel, but I thought I would give a tip that is even more fundamental.
If I was to give a personal finance tip for the new year, it would be about the way that we think about money. The predominate thought in the personal finance blog world is to “spend less than you earn.” Although I believe deeply in that concept, I think that a better way to phrase it is to “earn more than you spend.” Simply rearranging the phrase creates a paradigm shift from one of scarcity to one of abundance.
Providing that expenses are kept in control, focusing on increasing your income is many times more powerful than reducing expenses. Expenses can only be reduced so far (to $0), but earned income is potentially unlimited. I know, this is strange coming from a frugal guy, but it’s really common sense and can make a big difference in the way that you think about money.
At the beginning of this year, I was very concerned about my wife leaving for maternity as she made over 50% of our household income and maternity benefits only cover 50% of her income. Instead of dwelling on that fact however, I focused my efforts on making more income. As a result, we now have the luxury of choice. That is, instead of going back full time after the 1 year maternity benefits, my wife can go back part time and we still would be comfortable.
So focus on making more income this coming year, you’ll be surprised at what can happen once you set your mind to it.