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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 November 5, 2019

    How to Cultivate Continuous Learning to Stay Competitive

    How to Cultivate Continuous Learning to Stay Competitive

    Assuming the public school system didn’t crush your soul, learning is a great activity. It expands your viewpoint. It gives you new knowledge you can use to improve your life. It is important for your personal growth. Even if you discount the worldly benefits, the act of learning can be a source of enjoyment.

    “I have never let my schooling interfere with my education.” — Mark Twain

    But in a busy world, it can often be hard to fit in time to learn anything that isn’t essential. The only things learned are those that need to be. Everything beyond that is considered frivolous. Even those who do appreciate the practice of lifelong learning, can find it difficult to make the effort.

    Here are some tips for installing the habit of continuous learning:

    1. Always Have a Book

    It doesn’t matter if it takes you a year or a week to read a book. Always strive to have a book that you are reading through, and take it with you so you can read it when you have time.

    Just by shaving off a few minutes in-between activities in my day I can read about a book per week. That’s at least fifty each year.

    2. Keep a “To-Learn” List

    We all have to-do lists. These are the tasks we need to accomplish. Try to also have a “to-learn” list. On it you can write ideas for new areas of study.

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    Maybe you would like to take up a new language, learn a skill or read the collective works of Shakespeare. Whatever motivates you, write it down.

    3. Get More Intellectual Friends

    Start spending more time with people who think. Not just people who are smart, but people who actually invest much of their time in learning new skills. Their habits will rub off on you.

    Even better, they will probably share some of their knowledge with you.

    4. Guided Thinking

    Albert Einstein once said,

    “Any man who reads too much and uses his own brain too little falls into lazy habits of thinking.”

    Simply studying the wisdom of others isn’t enough, you have to think through ideas yourself. Spend time journaling, meditating or contemplating over ideas you have learned.

    5. Put it Into Practice

    Skill based learning is useless if it isn’t applied. Reading a book on C++ isn’t the same thing as writing a program. Studying painting isn’t the same as picking up a brush.

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    If your knowledge can be applied, put it into practice.

    In this information age, we’re all exposed to a lot of information, it’s important to re-learn how to learn so as to put the knowledge into practice.

    6. Teach Others

    You learn what you teach. If you have an outlet of communicating ideas to others, you are more likely to solidify that learning.

    Start a blog, mentor someone or even discuss ideas with a friend.

    7. Clean Your Input

    Some forms of learning are easy to digest, but often lack substance.

    I make a point of regularly cleaning out my feed reader for blogs I subscribe to. Great blogs can be a powerful source of new ideas. But every few months, I realize I’m collecting posts from blogs that I am simply skimming.

    Every few months, purify your input to save time and focus on what counts.

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    8. Learn in Groups

    Lifelong learning doesn’t mean condemning yourself to a stack of dusty textbooks. Join organizations that teach skills.

    Workshops and group learning events can make educating yourself a fun, social experience.

    9. Unlearn Assumptions

    You can’t add water to a full cup. I always try to maintain a distance away from any idea. Too many convictions simply mean too few paths for new ideas.

    Actively seek out information that contradicts your worldview.

    Our minds can’t be trusted, but this is what we can do about it to be wiser.

    10. Find Jobs that Encourage Learning

    Pick a career that encourages continual learning. If you are in a job that doesn’t have much intellectual freedom, consider switching to one that does.

    Don’t spend forty hours of your week in a job that doesn’t challenge you.

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    11. Start a Project

    Set out to do something you don’t know how. Forced learning in this way can be fun and challenging.

    If you don’t know anything about computers, try building one. If you consider yourself a horrible artist, try a painting.

    12. Follow Your Intuition

    Lifelong learning is like wandering through the wilderness. You can’t be sure what to expect and there isn’t always an end goal in mind.

    Letting your intuition guide you can make self-education more enjoyable. Most of our lives have been broken down to completely logical decisions, that making choices on a whim has been stamped out.

    13. The Morning Fifteen

    Productive people always wake up early. Use the first fifteen minutes of your morning as a period for education.

    If you find yourself too groggy, you might want to wait a short time. Just don’t put it off later in the day where urgent activities will push it out of the way.

    14. Reap the Rewards

    Learn information you can use. Understanding the basics of programming allows me to handle projects that other people would require outside help. Meeting a situation that makes use of your educational efforts can be a source of pride.

    15. Make Learning a Priority

    Few external forces are going to persuade you to learn. The desire has to come from within. Once you decide you want to make lifelong learning a habit, it is up to you to make it a priority in your life.

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    Featured photo credit: Paul Schafer via unsplash.com

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