This is a question I have seen mentioned on several personal finance blogs - Should you focus on spending less money or making more money? Over the years we’ve struggled with this choice as well, and we came to the conclusion that with our circumstances it made more sense for us to focus on spending less money. We’ve made the decision to focus on spending less because it is something that we have control over right now - We could sit down at any time and make a list of ways to cut spending, which would make our “spending less” goal immediate (once put into action.)
Certainly, earning more is definitely a good goal to have as well. If you were looking to earn more, you would need to start looking for a method to earn more which might entail getting your resume up to speed, filling out applications and going on interviews, and so the results would not be as immediate. Certainly, earning more is desireable but if earning more equates to spending more, either because of child care expenses, increased transportation costs, or eating out more often, then the net effect may not be as large as one might have anticipated.
There are many ways to tackle the issue of spending less but for us it amounts to a very simple thought, “how can we ________ for less.” Now this has meant that some things we would like to purchase are not feasible. There really is not a way to purchase a brand new SUV for $5000. However, when confronted with the purchase of something we want, we try to look at the underlying desires to come up with a more inexpensive alternative.
Using the above example of purchasing a brand new SUV, we analyze what it is we are really looking for:
1. Reliable transportation.
2. A larger vehicle that will accommodate our family.
3. A clean and well kept vehicle that has a working air conditioner, heater, radio/CD player.
That is a little more concrete and defined than “we want a new SUV.” We now have a list of details that are important to us, so we can work on finding an alternate solution which meets our budget goals and meets the specifications.
This method works in every area of spending from eating out to going on vacation. We enjoy eating Mexican food so I’ve learned how to make a variety of Mexican dishes; Our family enjoys the beach so instead of going for a week, we go for a day. There are many ways to find suitable substitutes at much more affordable prices.
Spending less is also a way to save money. In fact, once you begin spending less, you’ll be amazed that you were ever spending more! The money saved by spending less can be used in a variety of ways; your goal may be to get your emergency fund set up, save for college, or invest for retirement. By training yourself to spend less, you will find the money to save.