Benjamin Franklin popularized the expression: “A penny saved is a penny earned.” However, Ben got this one wrong because a penny saved is much better than a penny earned! This is one reason why being frugal is such an important aspect of wealth building. Of course, frugality on steroid is even better — i.e., save more and earn more.
Thomas Stanley and William Danko in The Millionaire Next Door
“Being frugal is the cornerstone of wealth-building.”
Each additional dollar you earned is taxed at your marginal tax rate, along with myriad other taxes. In fact, My Money Blog has a great pictorial demonstration of your take home pay after taxes. For most of us, we are taking home just a bit less than 60 cents on every dollar we earned at the marginal tax rate.
This one is perhaps the most important of the three. People who earn more tends to spend more. You may have experienced this lifestyle inflation yourself — e.g., when you get your yearly raises, somehow you automagically found ways to spend that extra money.
So it pays to be frugal and start implementing some frugal living ideas. While you are at it, also learn how to earn more money with these alternative income ideas.