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Income & Thrift: The Two Strategies to Improving Your Finances

Income & Thrift: The Two Strategies to Improving Your Finances

    Every newspaper has ran a story about how to improve your finances in the past few weeks. The same goes for every news show — and most online media as well. No matter the source, though, every tip or trick falls into one of two categories: increasing your income or decreasing your spending. Basically everything you can do to improve your financial situation boils down to one of these two strategies: refinancing your mortgage is just a way to reduce the amount you’re paying on housing. Selling stuff on eBay that you don’t need is just a way to increase your income.

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    The Trouble With Time

    Most people have the same issue with these issues: time. It takes time to be thrifty and it takes time to have a second job. There are thousands of ways to cut costs — quite a few of them amount to doing something yourself rather than paying for, like cooking at home or mowing your own lawn. And while there are many ways to build up passive income, even those ‘passive’ streams require some effort on your part — advertising, maintenance and such. In general, you have to trade time for money. That means we have to manage our time as part of managing our money.

    On the surface, it seems like finding the time to cut expenses would be easier than finding the time to make more money. After all, if I was to cut out one hour in front of the computer a day, I would have all sorts of time to spend on projects that would save me money. I could make my own cleaning supplies or clip coupons or walk to the store instead of driving. But there is a limit to how much money a person can save. It is theoretically possible to get your expenses down to zero, although I don’t know anyone who has actually done it. But at that point, you would have to spend all of your time saving money — you wouldn’t have any time to earn money.

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    In contrast, it is possible to buy time if you have the money — if you’ve increased your income. You can outsource a significant chunk of your task list: hire a maid or an assistant or someone to handle whatever task you don’t have time to deal with. That approach can get expensive to the point of being painful, but it’s easier to increase your income than save money you don’t have. At least in theory, increasing your income can get you further financially than simple thrift.

    The Balanced Approach

    In practice, however, just chasing income isn’t enough to straighten out your finances. Instead, it’s a question of just how much you can earn and just how much you can save. Taking a look at those numbers can show that, at least in the short-term, it’s far more practical to take a combined approach. To decide just how to balance your own efforts, you’ll need to know how much you earn in an hour. Whether you’re thinking about taking on some overtime at your day job, picking up cash freelancing or even selling plasma, your hourly rate will help you decide just what thrifty tips actually make sense for you.

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    You can generally estimate how much a particular thrifty tip is likely to save you: going to the library to borrow books instead of buying them will save you the cost of a book, for instance. You can also estimate how long that task is likely to take you: going to the library might be a couple of minutes out of your way on the drive home and you’ll need a few minutes to browse, rather than the seconds required to purchase a book on Amazon. That means you can easily calculate what your hourly savings is. Those savings methods that save you more money than you can earn in an hour? Those are low-hanging fruit — actions that are valuable than working for the same amount of time. But those savings methods that don’t save you that much — less than what you can earn in an hour — well, they just aren’t worth it in most cases. If you can earn more money by working during the time you could have been making your own soap from scratch, it makes sense just to pick up the soap at the local Wal-Mart and move on.

    It’s possible to make the calculations far more complicated, of course: you can factor in the distance you might have to travel for certain savings, the costs of working and so on, but that sort of calculation takes time. Time, as we have established, is money.

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    Your Thoughts on the Matter

    There are a lot of bloggers who have made their support for either increasing income or decreasing spending quite clear (Get Rich Slowly, I Will Teach You To Be Rich and The Simple Dollar all come to mind as blogs that have discussed the matter). No matter whether people say that there should be a balance between the two strategies, most folks wind up prioritizing one over the other. I know I have — I generally find earning more money to be a better use of my time than extreme frugality — but I’m interested in which approach you feel more comfortable with and why. Please let us know which technique you favor in the comments!

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    Last Updated on September 17, 2018

    Why Do I Have Bad Luck? 2 Simple Things to Change Your Destiny

    Why Do I Have Bad Luck? 2 Simple Things to Change Your Destiny

    Are you one of those people who are always suffering setbacks? Does little ever seem to go right for you? Do you sometimes feel that the universe is out to get you? Do you wonder:

    Why do I have bad luck?

    Let me let you into a secret:

    Your luck is no worse—and no better—than anyone else’s. It just feels that way. Better still, there are two simple things you can do which will reverse your feelings of being unlucky.

    1. Stop believing that what happens in your life is down to the vagaries of luck, destiny, supernatural forces, malevolent other people, or anything else outside your self.

    Psychologists call this “external locus of control.” It’s a kind of fatalism, where people believe that they can do little or nothing personally to change their lives.

    Because of this, they either merely hope for the best, focus on trying to change their luck by various kinds of superstition, or submit passively to whatever comes—while complaining that it doesn’t match their hopes.

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    Most successful people take the opposite view. They have “internal locus of control.” They believe that what happens in their life is nearly all down to them; and that even when chance events occur, what is important is not the event itself, but how you respond to it.

    This makes them pro-active, engaged, ready to try new things, and keen to find the means to change whatever in their lives they don’t like.

    They aren’t fatalistic and they don’t blame bad luck for what isn’t right in their world. They look for a way to make things better.

    Are they luckier than the others? Of course not.

    Luck is random—that’s what chance means—so they are just as likely to suffer setbacks as anyone else.

    What’s different is their response. When things go wrong, they quickly look for ways to put them right. They don’t whine, pity themselves, or complain about “bad luck.” They try to learn from what happened to avoid or correct it next time and get on with living their life as best they can.

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    No one is habitually luckier or unluckier than anyone else. It may seem so, over the short term (Random events often come in groups, just as random numbers often lie close together for several instances—which is why gamblers tend to see patterns where none exist).

    When you take a longer perspective, random chance is just . . . random. Yet those who feel that they are less lucky, typically pay far more attention to short-term instances of bad luck, convincing themselves of the correctness of their belief.

    Your locus of control isn’t genetic. You learned it somehow. If it isn’t working for you, change it.

    2. Remember that whatever you pay attention to grows in your mind.

    If you focus on what’s going wrong in your life—especially if you see it as “bad luck” you can do nothing about—it will seem blacker and more malevolent.

    In a short time, you’ll become so convinced that everything is against you that you’ll notice more and more instances where this appears to be true. As a result, you will almost certainly stop trying, convinced that nothing you can do will improve your prospects.

    Fatalism feeds on itself until people become passive “victims” of life’s blows. The “losers” in life are those who are convinced they will fail before they start anything; sure that their “bad luck” will ruin any prospects of success.

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    They rarely notice that the true reasons for their failure are ignorance, laziness, lack of skill, lack of forethought, or just plain foolishness—all of which they could do something to correct, if only they would stop blaming other people or “bad luck” for their personal deficiencies.

    Your attention is under your control. Send it where you want it to go. Starve the negative thoughts until they die.

    To improve your fortune, first decide that what happens is nearly always down to you; then try focusing on what works and what turns out well, not the bad stuff.

    Your “fate” really does depend on the choices that you make. When random events happen, as they always will, do you choose to try to turn them to your advantage or just complain about them?

    Thomas Jefferson is said to have used these words:

    “I’m a great believer in luck and I find the harder I work, the more I have of it.”

    Ralph Waldo Emerson said:

    “Shallow men believe in luck. Strong men believe in cause and effect.”

    Your luck, in the end, is pretty much what you choose it to be.

    Featured photo credit: LoboStudio Hamburg via unsplash.com

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