Would you rather be good at earning or good at saving?
Obviously, we'd all choose to be good at both.
But if you HAD to choose between one or the other, which would you pick?
This will probably come as no surprise, but I think I'd rather be good at saving.
Why?
If you aren't good at saving, you can never earn enough.
As I was pondering this question, the finances of celebrities came to mind.
Musicians, actors, professional sports players...there have been so many of them that have earned unspeakable sums of money and yet have ended up basically penniless.
If you have no savings skills, then you can earn limitless sums of money without ever really getting ahead financially.
The money will just go out as fast as it comes in.
If you are good at saving, then even a little can be enough.
A person who can consistently save 10% of a small income will end up in a better financial place than a person who earns a million dollars a year while also spending a million dollars a year.
I mean, sure, spending a million dollars a year would probably be pretty fun. But being penniless at the end of the year is not exactly fun, so I'd still rather be the saver than the earner.
Besides, a high income is not guaranteed for a person's whole lifetime. If that source of income dries up, the non-saver is going to be in a lot of trouble. If you spend everything you earn, you are only ok as long as the earnings are there.
That's a precarious and stressful place to be.
Also, there's security in knowing how to make do with a little. The million dollar earner/spender is dependent on that high income and is not going to have any financial wiggle room with out it.
But a saver who is used to keeping expenses down will have a cushion and will also be able to make the cushion last for quite a while even in hard times.
Luckily, we don't have to choose.
Most people are going to be better at either earning or saving, but things aren't as black and white as all that!
Savers can learn to increase their income, and earners can learn to keep some of their earnings.
Because the very magical spot for happy finances occurs when you can earn more money AND save more money.
What about you? If you had to choose, would you rather be great at earning or great at saving?
P.S. One benefit of being a high earner that I didn't mention: you'd have a lot of opportunities to be generous with others. Your own financial security would still be terrible, but it would be nice to be able to help a lot of people.
If I'm always good at earning, I can get out of a hole (see: Nicholas Cage). And there's always bankruptcy and then earning more after.
Also, with automatic paycheck deductions etc. one doesn't have to be that great at saving for it to happen and retirement accounts and houses are often protected for things like bankruptcy etc.
(As to which I am, I started out good at saving and have in the past 10 years or so become surprisingly good at earning... as I become better at earning I save less. This weekend I convinced DH to buy an Apple Watch(!) and we're donating a couple thousand to DC1's school if and when the gift cards get here and I went a little crazy on Donors Choose after I got a paycheck and a bunch of late reimbursements this month and we recently got a new clothes washer and this summer we renovated the kitchen and basically did a ton of delayed spending.)
Yes, but most over spenders DON'T get out of the hole. They just dig themselves in deeper.
That's because most over spenders aren't good enough at earning!
I would much rather be in a Nicholas Cage situation than the most frugal of frugal single moms working multiple uncertain part-time jobs. Declare bankruptcy, lose a few homes to the bank, then be in a bunch of movies and build that wealth back up. At least you know the money is always going to be coming in. And either you'll get more credit or you end up stop being able to dig your hole because people won't give you credit. Living paycheck to paycheck doesn't sound bad if you know that the paychecks will never stop.
Disclaimer: I do not make Nicholas Cage levels of money.
I'm sorry, but this sounds dishonorable. Maybe you're just trolling...But bankruptcy is supposed to be a last resort as you are essentially leaving other people holding YOUR debt. It's not supposed to be part of a financial backup plan so you can just irresponsibly blow money because you are too lazy and selfish to save. Shame on you.
I don't think she meant that comment super seriously...she wasn't prescribing what Nicholas Cage does; she was describing it.
At least that's how I took it!
If my ONLY two choices in the world are one where I make a ton of money and am protected by bankruptcy and one where I can't count on earnings but am really good at not spending money, I will choose the one in which there's less uncertainty. Especially if I have children, which I do. I'm sure a lot of that not saving will go towards charity.
Obviously we don't live in either world. I am good at BOTH saving and earning and have zero debt (including paid off house and cars). I lost my ability to eat red meat in graduate school because we were trying to pay off DH's undergraduate debt and couldn't afford meat. I chose a field that is high income over several that are less high income partly because of my desire for financial security.
I do not, however, begrudge anybody who gets medical debt or a truly unforeseen emergency and has to declare bankruptcy. Sometimes people need to start over. I am also irritated by high earners who spend a lot and then declare bankruptcy because of their credit card debt and running out of credit, but if it makes you feel better, most people in that situation only get to restructure their debt, they don't get to fully discharge it. If you're talking about the Trumps of the world who use fancy tax havens to allow individual companies to declare bankruptcy etc., then I suggest campaigning (and voting) for Elizabeth Warren.
https://nicoleandmaggie.wordpress.com/2014/08/11/why-not-just-live-well-while-in-debt/
Nicoleandmaggie, I couldn't even make sense of that last reply. How many bankrupts make Nicolas Cage wages.? No one I know.
And let's leave politics out of this blog.
Hannah-- We're even-- I can't make sense of your reply either! Also didn't know you were a blog moderator here.
Who knew that asking a hypothetical question that could never be possible would generate so much controversy?
I stand by preferring to know that I'm going to continue earning lots even if I'm no good at saving over being terrible at earning (and having uncertain earnings) but great at saving. Which was the question. Nobody is saying that being terrible at saving is a good thing-- the question says you have to choose!
I'm the spender in my house (and the higher earner) and my husband is the saver. Over our many years together, he's helped me to become a better saver and I've helped him to spend when it was necessary to spend. He's been retired a while now and I'm going to retire in a couple of months. Working together, we've put ourselves in a situation where we have zero debt (including that we had a new home built and it's paid for), have a lot in our retirement savings accounts, and a very healthy emergency fund. There's huge peace of mind in all that even though that step into reduced income in retirement is a little scary. But to answer your question, if I had to choose, I would agree that it's better to be a saver.
Definitely I would choose saver. You can always blow through the money you make but the real peace comes when you have a good savings account.
I’m a saver, all the way! It’s a game to me to see how I can achieve my goals for the least money. I’m also a secondary shopper and try to never buy anything new.
This is me too! I use a budget not to prevent me from spending, but to help me spend even for things I want to buy (like helping me say yes to travel goals even though museum fees and airline tickets initially make me want to stay home...seeing the money in an account set aside helps me spend it!) My husband is opposite and every time we get ahead (get a raise/bonus, pay off a loan etc) I feel that money is instantly absorbed into our “must haves”. I don’t know we would ever reach an income/expense amount that is “enough” for him. So yes, being the saver is better, though as someone else said, it helps to be balanced by a spender! I think those radical savers (who eat beans and rice and retire at 30) must be made up of two strong savers.
My husband is more spends than I am, but he’s by no means a spendthrift. When I get stressed I get suuuuuper obsessed with not spending money. We both know that about me and he does his best to not exacerbate my stress. Plus, I’m the person who handles all the administrative tasks in our household, so when I tell him we need to take a spending break...he does.
It's hard to imagine being really good at earning and not simultaneously being a good saver. Banks make it so easy with automatic stuff that if you're rolling in the dough you shouldn't really have to think much about saving. Just set it up and watch it go.
I would pick to be a saver. Much more reliable.
Just think of celebrities. 😉 Happens frequently, apparently!
Think of many athletes, too.
Absolutely... Just hard to relate to. 🙂
I think a balance of both is best. However .... when I think of a saver, I think of someone who is good at prioritizing wants versus needs, which is a very useful life skill. None of us knows what a day will bring--let's say you get into a car accident and are unable to return to your previous job (where you earned a comfortable income)--in this scenario, being a saver would be very helpful!
Good question!!! A watched a documentary that basically said that Americans are brainwashed into buying from birth and we are told we are missing out if we dont have the latest and greatest new thing. I am personally in a frustrating place in that i am a frugal person by nature. ( my dad says its in our Scottish DNA) and 25 years ago i married my husband because he looked like famous country singer Kenny R. without asking about his feelings about money. So basically i save a penny and he spends two. We have very little savings but dont have very many bills because I am a fun sucker and put my foot down on certain things that allowed us to at least have no car payments or consumer debt. Lesson learned people! Make sure you are on the same page about money or you are in for a bumpy ride.
The discipline it takes to be a saver carries over into all areas of life. As a person with discipline I have been able to become a higher earner, so I have best of both now. This very conversation is why some people "never get ahead." Something I see happening across society right now and it is frightening to me.
Ooo good point -- that the discipline to save IS related to the discipline to become a higher earner -- true!!
Although, I will say I am just naturally cheap and loathe to overspend. I can't take the stress of worrying about $$$. It's not even discipline for me as much as a an engrained personality trait. I have a friend who cannot handle money and she says, Oh what a great saver you are, etc. I feel like a fake, because over-spending doesn't give me that endorphin boost -- quite the opposite -- and it is really hard for her.
I am similar- don't like wasteful spending.
I'd choose earning over saving. Given the purpose of The Frugal Girl, I'm pretty sure all of us self-selected folks answering here understand the importance of saving and being frugal, but you can't save what you don't earn.
That's a bit of a tough one to answer, but I'd say saver. It's a myth that the next payday will always be there to bail you out. Speaking as someone whose spouse has become basically disabled and hasn't been able to work for several years, who has seen thriving businesses shut down by recession, and who has seen a high-earning co-worker unexpectedly succumb to dementia well before the age of 70, I realize that we need a safety net -- all of us do. If we don't save, there is trouble ahead. Delayed gratification, such as savers practice, is a valuable skill in many areas of our lives.
Having said that, we do need to earn! If there are opportunities to increase income, which don't come with too much in the way of life costs, then those opportunities should be taken. We should improve our skills and knowledge as best we can, and I include homemakers in that, too. But I still say "Saver" is my answer.
I'd like to take it a step further. I'm a saver *and* an investor. It's as important to know what to do with savings as it is to actually save the money. Investing turns one penny into two, then two into four, etc. Pretty soon you have enough to do whatever it is you want to do in life. Go back to school? Change careers? Stay at home with your kids? Pay for college? Retire early? Help family members? Help others? Start your own business? Pay off your house? Buy your parents a home? Never have to worry about budgeting again? All of the above are possible.
Investing will get you there much faster that just plain savings. It's a lesson I wish I'd figured out a lot earlier in life. I got there eventually, but man, taking the time to learn and understand investing would have helped me reach my goals years earlier and with far less effort.
I have become a saver but I still struggle with what happened to my parents and grandparents---they were prosperous and then the Soviets invaded their country and confiscated everything. I grew up hearing how they lost their home, possessions, and everything they had saved, and they had to flee for their lives. I look at my bank account and I do not feel secure, I feel worried that it can all be taken away by a depression or political upheaval. And with the current divisions in the U.S. I have an almost constant low level state of anxiety. This has been reflected in my buying more food for storage, just in case.
I think that makes a lot of sense that you feel that way. Hugs to you!
Lindsey, my Dad and his family went through that, as well. I often think about how sheltered a life I've lived and I intend on keeping it that way!
God doesn't want you to live in a constant state of fear. Jesus said, "come onto Me and I will give you rest." I'm so fed up with the media serving us garbage day after day and have decided to not tune in to the news much any more. Instead, I take time reading God's Word and reminding myself that these times aren't any worse than what's been had before (in many ways these times are a lot better, actually), and just how faithful God is. To think what our ancestors had to live through, and yet they survived and here we are... my folks started with nothing, but I never went hungry. My Mom used to say, "half a year of '47 and you'd eat anything" - I'm so glad I missed it. I am very grateful and appreciate our many blessings.
The things that are seen are temporal, but the things that are not seen are eternal. We are to seek those things that are above, and the things here will work out. There's still Good News for Modern Man! "A man's life does not consist of the abundance of things he possesses" is what Jesus said. He would know. It helps my perspective when I back up a bit...
More Hugs to You!
Amen, a beautiful response and reminder!
Assuming one is living within their means and saving modestly (please don't ignore your emergency funds and retirement needs!), I guess I'd skew towards earning more assuming it did not require more hours than I'm currently working. Earning more would mean being able to hire out tasks like housekeeping and yard work that bring me little joy and rob me of time to hang out with my family and generally relax. Saving is good and necessary, but none of us know how much time we have on this earth. I'd rather use my money to enjoy life while I'm living it now instead of an unknown future that I may or may not be here for.
I hear ya. Saving money is a necessary life skill and we all need to practice delayed gratification as well as building up a savings account, but a family vacation while my kids are still little means a lot more to me than some extra money in the bank. I don’t know how long my husband and I are guaranteed our health so we’re going to enjoy things now (within reason; we aren’t crazy spenders but we do believe in shelling out some for family experiences while we can), rather than waiting for a very uncertain future.
My husband’s family always took frugality well past the line into miserliness, and my husband has very few pleasant family memories while growing up. They refused to ever lay out any money for anything and it didn’t benefit them in the long run.
I did, in fact, make this choice. I chose to have a pleasant lifestyle and not earn crazy amounts of money, which involved becoming a good saver.
As it is, I'm not sure you can be both simultaneously. Being a good earner is time-consuming, meaning that time is not available to save money. When I worked 2 additional hours per day and made a lot more, I bought dinner frequently, not because I wanted to but because I didn't have time to make dinner daily. I certainly didn't have time to search for a used dining table, when I could walk into a store and buy a new one in an hour. (And let's not talk about the high-paying, 100 hr/week job. The money was nice; not having a life outside of work was not.)
My mom and I were just having this conversation last week! I was taught to save first and grow your strengths to earn a great living and continue the save first and give generously. When catastrophic things happen *and they do*, you are ready and have no regrets or panic. What a great post.
Savers are happier and less stressed. And it's a myth that high earners are bigger donors. Lower income people tend to donate a higher percentage of their income than wealthier folks. And you also do not have to donate money. Savers may find it easier to donate time (frequently valued much higher than monetary donations) and in-kind donations that they've secured through their savings' savvy.
I agree that it's a myth that big earners donate a higher percentage... in some cases. But it's not a myth that they donate a higher dollar amount, which is what counts for many non-profits.
Also agree that donating time is worth just as much, if not more than donating money.
I agree with you, although it’s a bit odd to make it a dichotomy. Having either one with none of the other gets you nowhere. That being said I’d rather be “okay” at earning and “good” at saving because, as you said, saving part of a small income is still better than saving none of a larger income. Funnily enough that’s basically what my husband and I have done in real life too. Hubby could certainly make more as an accountant than he does by switching jobs around and moving up faster. I could work more hours as a nurse and on a harder unit. But we would both be miserable all the time and I would feel overwhelmed or unsafe at work. So we choose to work less and spend less.
I though I was very much in the saver camp unitl I read the comments. Then I was torn. But I think I'd prefer to be a saver. I have flexibility in my life because I know how to save. I've thought about getting a part time job to boost our income a bit to have a bit of extra cash for me to use for my projects or for things I deem important, but I've realized over the last week or two that I would lose a lot of flexibility in getting that job. As it is now, I get to volunteer doing the very same thing I want to be paid for, and I can do my work from home rather than going the office when my kids get sick. I think right now being a saver allows for a better quality of life because it gives me flexibility. I realize that I'm extremely lucky to say that: my husband makes good money, my insurance is supberb, and extra benefits at my husband's job reduce costs for caring for our child with exceptional physical needs.
As Kristen says, thankfully it's not a black and white choice most of the time.
I think you can have both. One spouse earns the money, another one saves it! The spouse who's better at earning earns, and the other one learns how to be as frugal as possible. OR the spender learns how to earn more, and hands the money over to the naturally more frugal spouse to manage spending.
If I were a single person and had to choose, I'd rather be a high earner, high spender. I think your quality of life would be better as long as you had a high income. Am I naturally that way? No. But I'm glad my spouse makes more money than less, so we can have the best of both worlds.
Always Saving!! Like you say, if you don't save well, you will never earn enough!
It is a lost skill in today's world! My husband and I both make a pretty good living, but I still prefer to budget my meals, shop at resale shops, etc. If you are a saver, you can get through tight spots financially because it's a lifestyle, not something you have to do in an emergency!
It is much easier to automate savings/investments for a good earner than it is to increase the earning potential of a low skilled saver. You have to have income streams in order to save or invest it and I've known far too many really good savers (based on percentage of their income) that did not have sufficient funds in the last years of their life. The notion that if you are a good saver all will work out in the end is a fantasy for many.
I would prefer to know that I could earn money any time I need it. Being great at saving but not good at earning (or investing!), means I could end up with insufficient funds. Many good earners have multiple income streams, so losing one is not devastating. I'd rather have options and highly sought after skills, than simply to know I have the ability to save x% of whatever I make. It is easier to start saving x% than to obtain the highly sought after skills or knowledge that earns more money.
Agree. I have always been a good saver. But on $18000 a year I could only save a little; on $60000 a year I still couldn't max out my retirement because of the 17k a year for daycare at this moment and the health care and the taxes and the actual cost of feeding people even if we keep the temperature at 57 degrees through the winter and eat food from our garden; on $100000+ I can max my savings and waste money on fun or convenient things -- it's a choice. If you're a good earner and you pick a spouse or advisor who saves for you, you're in luck. If you don't earn as much, you don't have as much room for mistakes.... 🙁
What a fascinating discussion -- and thank goodness we don't have to choose.
That said, I guess if I HAD to choose, I would go with savings since, assuming a safe harbor and growth opportunity for my stash within a fully and correctly functioning economy, I would always have a safety net. I get the argument for earning more (and dang, we all want that!) Bbbbuuuttt, what if you suddenly can't earn that inflated income for any number of reasons - health, aging out, family issues, enormous changes in the economy, or in your vaunted field of lucrative endeavor? Stuff happens and sure bets some times don't pan out. So my little nest egg would allow me to sleep at night no matter what.
The Nicholas Cage example is interesting, since he apparently was able to recoup some of that fortune. But even mega-stars age out of roles and the easy money may not last. I guess that's my intrinsic paranoia coming out -- What if my amazing talent and skill are no longer wanted?
So I have to lean toward saving, even as I fully acknowledge the need to make $$$, too.
I think saving is more important overall. As you pointed out if you can't save money than you can easily spend all that you earn. We've been fortunate to earn a lot and have the desire to save a lot too, but as our incomes rose we did spend much more than I would have expected. It becomes very easy to throw money away when enough of it keeps coming through the door!
If I had to choose only one I'd go for saver. If you're earning a lot there's always a really good chance you'll fall into the golden handcuffs trap, but a saver will usually come out better off than they started