Top-ranked financial advisors and gurus like to advise you to pinch your pennies and save every dollar. The more you save, the more you’ll have later.
It’s not a bad idea. In fact it makes perfect sense. It’s math. Don’t spend a dollar today, you’ll have that dollar tomorrow.
It’s good savings advice, but it’s lousy overall business and life advice. And people often confuse the two.
Let me explain.
There’s a way to “make” money that I call “Give-it-Up Earning.” It works like this:
Give up your daily latte, you’ll save that $4. Give up going out to movies and you’ll save that money.
What the financial coaches never seem to mention is this obvious fact: Going without coffee and movies will save you money, but will also keep you from enjoying a coffee and a movie.
Let’s take this give-it-up earning viewpoint a step further and you’ll see how quickly it breaks down. Because you can save all sorts of money if you:
- Skip meals
- Never buy new underwear
- Don’t feed your pet
- Take the bus instead of using your own car
- Move to a scummy part of town and pay less rent
- Refuse to buy chocolates for your significant other
- Tell your kids they were bad all year and so get no presents at Christmas
Yeah, you can save a lot of money this way. You’ll also be extremely unhappy and surrounded by dead pets.
The Solution is Bigger, Better, More
The proper way to engineer your finances is to look bigger, better, more. Not smaller, cheaper, less.
Do you want coffee? Be productive and make coffee money.
Want that “useless” trip to the movies? Be productive and make your movie money.
Want to spoil your kids at Christmas? Be productive and make present money.
The magic of this is that, given certain freedoms, you can always expand. You can always try harder, be productive as hell, make the money for what you need and want in life.
But inversely, you cannot always continue to shrink. There’s only so much you can give up to save money. Before long, you’re down to the barest of necessities and probably not enjoying your environment all that much.
I haven’t seen the Rulebook of Life recently, but I’m fairly certain the purpose of life isn’t to skate away at the end with every last penny you could collect.
It sounds much more fitting that one uses life to do and produce great things and earn a fat, stinky pile of money for it.Posted: Tuesday, February 28th, 2012