curious builders

A Few More Reasons Why Saving Is Better Than Earning

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I just wrote a A Simple Guide to Financial Freedom based on my experiences with Financial Freedom. Consider giving it a read if you are interested in this topic.

My previous post on this topic focused on the numbers behind saving vs earning. But I think there is more to the story than math.

Being more efficient with your money just seems like the healthy thing to do.

Needing less makes you more resilient

The less money you need, the less dependent you are.

The Anthology of Balaji

The more you have, the more you have to lose. If you need a big pile of money to keep you satisfied, that is a risk.1

Whatever you do with your money, there is always as risk someone takes it away from you. The government may change the tax code (or even outright confiscate your property), someone may steal from you, your investments may not work out, etc.

The more dependent you are on money, the less resilient you are to changes. If you instead learn to live an efficient life with less needs, you don’t need to worry as much about all of this.

The government can increase taxes and it won’t hurt you much as there is little to tax in the first place. Should some of your investments not work out you’ll be fine as your life isn’t set up on razor thin margins with a need for high returns. And should the terrible thing happen that you lose it all, you’ll have skills to survive (and maybe even thrive!) while you build up again — a process that won’t take decades as you don’t need all that much.

Earning more is a never ending endeavour

“The secret of happiness, you see, is not found in seeking more, but in developing the capacity to enjoy less.” - Socrates

learn to love less

We humans have an insatiable desire for more.

Which means you’ll never reach “enough” unless you deliberately focus on what enough is. If the goal is just to earn more money, you’ll never finish.

Discover what is essential and you’ll know how much you need. Most likely it won’t be all that much.

Once you know what is essential, start the process of cutting anything nonessential. I think you’ll see that much of it has to do with spending money and working in order make that possible.

Nonessential spending makes you think you need to earn more than you do.

The only way to accumulate wealth

Saving is the only way you gather wealth for yourself. If you have a high income but spend it all right away, you don’t build any personal wealth.

If you want to increase your wealth, you have to spend less than you make. The earlier you learn this, the better.

Less wasteful

Success is having everything you need and doing everything you want. It is not doing everything you need to have everything you want.

Early Retirement Extreme Manifesto

Earning a lot and spending it on things you don’t need is wasteful. It is bad for you and for the world.

Don’t waste your only life.

Footnotes

  1. This may be why so many rich people seem anxious all the time.