Mar 23 2010

It’s not how much $ you make, it’s what you do with it

Trent had an interesting post today about wealth. In it, he showed two (fictitious, I’m guessing) scenarios involving two 25-year-olds. One earned $100k and lived large, and another earned $35k, lived modestly and put money in savings.

To make his point, both scenarios were to the extreme.

But still, I think the post raises an interesting point on income and expenses in general.

If you have a large salary, but also have a lot of debt, your money may not go very far. You’re paying a portion of your income to debt repayment and interest.

Contrast that to someone who has a lower salary, but also is debt-free. That family might have more disposable income than the family with a lot of debt.

More disposable income means more to fund retirement, more to save, more to enjoy, and more to give. Oh, and more breathing room!

4 Responses to “It’s not how much $ you make, it’s what you do with it”

  1. I actually see this up close and personal in my own family. My sister, for instance, is a well paid nurse and her husband also works full time. They pay minimally for child care because my other sister babysits for her during the week. They earn more than twice as much money as my husband and me, but they are ALWAYS struggling financially.

    And honestly? When you compare our situations? They are pretty similar. We each own one car, rent instead of owning, etc. We just spend less on the things we do buy, and we’re more careful with our money.

    Sometimes I think about what we’ve been able to accomplish on a modest income, and it kind of blows my mind. I’m so glad we chose to put our resources toward saving instead of living beyond our means.

    Honestly, the people who spend more than they earn don’t even really have that much to show for it. They can never afford to take vacations because they’re always so behind. They always feel like they’re broke even though they have a relatively high income. I don’t get it.
    .-= Karen´s last blog ..Boxed in =-.

  2. I read Trent’s post and thought similar things. If we didn’t spend so much money each month we would have more money to cashflow problems when they arose.
    .-= Jennifer´s last blog ..How do you cash flow big expenses? =-.

  3. We’ve experienced this too – my husband and I don’t make a ton, but we are usually good about living within our means and TRY to put money in savings like we should. We know several couples who make much more than us who live month to month.
    .-= Christi´s last blog ..Things I Love Thursday =-.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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