aelle

It’s a reassuring message. When you go frugal you feel like you’re making an effort (by restricting yourself), but you don’t really go outside your comfort zone (by addressing why you aren’t making any more money and taking action). Basically they are encouraging readers to do more of the same, and of course readers will agree. When you make bold statements and tell people they aren’t doing the right thing, you take the risk of angering or alienating your readership – and people who hate you won’t buy your books.

Stacy McKenna Seip

Because it’s easy to apply to *everyone* (except those of us already not smoking and drinking lattes…), whereas the things people have to learn or analyze about themselves and how they could earn more, and why they aren’t, are hard and not easily generalized in a meaningful way. Additionally, it’s easy to *describe*, unlike some of those things that would get people to a place where they can earn more. It’s easy to talk about in a way people understand.

MC

Because going from the mindset of saving money to the mindset of obtaining value is not an easy journey.

Been there.

JBB

The reasons I’ve always heard given are the ones related to tax rates.

If I save $1, I have $1 to spend.

To earn an extra $1, I need to earn $1.67 less 40% taxes = $1.

(Personally, I’d like both. Lose the unconscious spending and save $1, and earn more and get $1, now I have $2 to spend on something I actually want rather than ‘where did that $1 go?’.)

Really, though, I think there are other reasons. One is that many people don’t think they CAN earn any more. Telling a single mother who’s working a full-time and part-time minimum wage job that they can negotiate a raise is going to get you a scowl or injured look in response.

Most ’save money’ advice seems geared toward people closer to that situation than to the young professional. Who’s your target audience? Who’s your *actual* audience?

J. B. Rainsberger

Hi, Ramit. I enjoy your work, and wish I focused more on sharing what I know about personal finance with the world.

I learned from Your Money or Your Life that for most people, most of the time, spending less is easier than earning more. I found that to work for us, and it was a key step in retiring at 34 instead of in our 50s. Unfortunately, most people conclude that they must limit spending to a predefined budget, and find that difficult to make work. I don’t set budgets.

Budgets don’t work because there’s no such thing as a typical month. I also learned that from Your Money or Your Life. For this reason, we never budgeted, but instead, tracked our expenses, looked for wasteful expenses, then eliminated them. We asked ourselves the question, “Do I value this expenditure?” When we answered “No”, we stopped spending that expenditure. We made a quantum leap when we decided that we didn’t value living in an expensive city like Toronto any more.

Now, fortunately for us, when we reduced our expenses, we had an active profit each month, which we turned into passive income generating assets, and the compounding effect took care of the rest. Some families can’t do this. Even after eliminating expenditures they don’t value, they still run on an active deficit each month. These families need help to start earning more money, which usually demands an investment they already can’t afford.

At the same time, Rich Dad, Poor Dad has pointed our attention to the tendency of families to spend more as they earn more. As a result, earning more does not translate to increased active monthly profit (nor reduced active monthly deficit), meaning that it does not lead to increased passive income and more financial freedom.

I would conclude from all this that first focusing on spending less leads to better results than first focusing on earning more.

Graham lutz

It’s easy to write a blog about spending less. there is no challenge with comic up with content for frugality.

Personal Finance Student

hmmm.. nice questions. It makes me think!

Great post. Good Luck!

Mike

It’s because people are generally lazy and they would rather spend less then work hard to earn more money.

Writer's Coin

Because making more involves other people, and that makes a lot of people very uncomfortable. If you want to save more, you can always just sacrifice more and more things, cut this or that bill and boom, you’ve done it.

But making more involves getting a raise (people hate bringing this up to their boss, it makes them uncomfortable) or starting something on the side which involves work and dealing with other people. The risk of failure is there, which will be public because you’re dealing with other people.

But spending less is easier and you have more control. Once you start getting more people into your equation, the level of discomfort increases.

Writer's Coin

Forgot to add one thing: I think that’s why people find/found blogging so appealing as a way to make money: it involves people but can be anonymous or at worst extremely impersonal, so the level of control is there and failure isn’t as public.

mary

I think spending less is a case of going after the low hanging fruit first. There is room in most budgets to cut back. Say you cut $250 from your monthly spending. This is like making an extra $500 a month after you figure in taxes and other expenses involved in producing income.

There is another, easier way to cut spending: increase your payroll deduction to your savings account(s). This leaves you with less to spend. There is a tendency to spend whatever money you have.

Tacoman667

To be honest, it is far easier to spend less then to get out of your comfort zone and earn more. Most people are content with what they are getting and it would be too much “work” for them to go above and beyond in light of a possible rejection to the efforts put forth.

Gerald Fineman

Reduction in spending yields an immediate, tangible result. Learning to create wealth or earn more usually takes more time and effort. People are LAZY. They want to be skinny, but they don’t want to exercise. So, they drink a diet soda and say they are on a diet. They have reduced calories yet done little to change themselves. They want more money, but they don’t want to use any effort to get it. Reduction in spending is the diet soda of personal finance.

RJ

“Spend less” is essentially zero risk. And until you get to some of the really dramatic frugality exercises, there’s very little time commitment.

Most of the “Earn more” options entails risk or time commitment. For example, doing free-lance work either means additional time on top of your existing job or the risk of abandoning the stability and benefits of your existing job for uncertainty.

Anand

It doesn’t matter whether the reader follows it or not. All they care is for the eyeballs and hits on their sites. They cannot throw something without any authenticity. So take the easy route.

cwright

Probably already stated (lots of good comments thus far), but “spend less” is appealing because:

* it’s passive (you don’t have to _Do_ anything, in fact, do less) and people are lazy

* it’s comfortable (starting a business or asking for a raise requires risk taking) and people hate being uncomfortable

* because there’s no downside (starting a business means you could fail, asking for a raise could rock the boat) and people are irrationally risk averse (esp. if they’re trying to fix their credit/finances after being careless in the past, which is who a ton of PF sites pander to)

Cecily

I think it’s because spending less fits into the paradigm we have for most other kinds of self improvement: giving things up that you like. If you do it, there’s a sort of monkish moral superiority that enters into it, and the dynamics are something easy to understand because we associate “giving up things” with self-improvement in general:

- to be healthier/lose weight, eat fewer bad things (not as much focus on eating more good things, except to keep you from eating bad things)
- watch less tv
- quit smoking
- stop procrastinating. notice here how the focus in a lot of the literature is on “stopping” time-wasting activities rather than “doing” better ones

…and so on. It feels satisfying to give things up. We feel like we’ve done something good, even if it’s not clear what that thing we’ve given up will be replaced with.

Anne Howe

When you need to create more money to just make ends meet it sounds very hard work to go get a second job in en economic climate where people are losing their jobs and business finance is tight. By finding out why you spend money and why you earn money, you can take action to find a balance. Its not one or the other; to get richer in money and time you need to do both and see the real cost and value of the work you do. If you spend less in fact you could be earning less but have more time for the things that are meaningful. Moving from cash poor, time poor to cash rich/time rich takes some doing but its not impossible.

Alfredo Colon

Simple. It all comes down to selling –which most people that I know are uncomfortable with. It’s easier to sell yourself on an idea than it is to pitch/sell to someone else. If you want to earn more, at some point you’re going to have to do some selling, and that’s makes many squirm. Call it just another psychological barrier if you wish.

Megan

Why focus on spending less? Because they know their audience is programmed by the media, public schools, standardized tests, and workplace training to respond to soundbites and concrete step-by-step spoon-fed instructions.

“Follow this one simple rule and lose 50 pounds in 1 week.”

Americans want quick & easy… Something that doesn’t make them think too much. If the steps are easy and concrete, they almost feel like they’ve already accomplished something just by reading them.

Last night you wanted people to understand that their whole paradigm was useless to them if they wanted to PROFIT.

But even though they are motivated, most of them don’t want to think, to challenge their own assumptions, to learn how to understand what other people want and need, and to invest in themselves to grow the value they have to offer.

What do most ask you for? Step-by-step scripts tailored to their personal situation so they don’t have to think for themselves and they can get right to what they want (more money to spend).

Katrina

I’m going to agree with the commenters who said “tangible, immediate rewards”. If I slash $25 off my phone bill, I save that $25 /right now/…and every single month after this one. However, if I invest $100 or $1000 or $10,000 to grow a business…there’s no guaranteed payoff amount or date.

Also, without getting into too much of a rant, society has pretty much molded people to be followers instead of leaders. Business owners are these mystical, haloed figures. We could never do what they do. We’ve been trained since elementary school to sit down when the bell tells us, get up when the bell tells us, go to the next class that in a lot of cases is also selected for us…good training to be a wage slave employee. It gets better with a university education but not much — we learn to be bureaucrats and bosses there, instead. Still a part of the system. Entrepreneurship blows all of this stuff out of the water. We have no point of reference so it’s difficult to absorb and cope with.

Lija

I think it’s also a case that not everyone has the skills, capability or time to make money on the side. If I work two jobs as a housecleaner, with nothing more than a high school education, it’s not too likely that I can tutor, set up websites, or do wedding videos on the side. I don’t have $500 to spend on a professional development opportunity. But I can certainly choose not to buy something. Sure, some people are lazy, but I think a lot of the advice to make more money presumes a little too much.

Mike

It’s easier to talk about spending less than earning more.

People talk about what they know.

Jen

I think it has to do with the supposedly non-political nature of frugality bloggers and how most personal finance advice assumes an external locus of control. Which is a fancy way of saying that personal finance bloggers don’t like to have to admit that it’s not all under our control and it’s not always the individual’s fault that they aren’t making the most money possible.

For example, there are many studies that came out in the last year that show that women are at a marked disadvantage when negotiating for raises, but most personal finance blogs that addressed those studies focused on “women don’t ask” instead of “bosses view women who ask more negatively” because to focus on the second means to focus on the parts of personal finance that’s not in our control. In large part because if you pointed the second part out, the comments would be full of:

a) men saying how they are not sexist, so the woman’s boss isn’t, and “mansplaining” to women that this is all in their heads and men actually LOVE assertive women who ask,
b) women saying how THEY negotiated a raise, therefore this is a myth
c) men saying that this is because of women having kids and the impact to their careers, therefore this is justified
d) people of both genders saying how they know this mom at their who spends all day reading mommyblogs and puts off all the work on their shoulders, so women deserve it.

It’s not worth the angst to a lot of bloggers and their likely audience to discuss the limits of trying to earn more, so they focus on “spend less” which is much less fraught.

[And before anyone starts: I'm a woman and I actually got a new job in the last year when I realized that as much as I liked the old job, they weren't going to give me a raise -- and I now make 10K more a year in a bonusable position, and used a lot of Ramit/frugaltiy tips to improve my life. So I'm not some bleeding-heart slacker.]

chris

Because most people buy crap. Do you ever drive through your neighborhood and look into garages when the doors are up? You couldn’t squeeze a bicycle in most of them. Too much crap that isn’t used. I think what most people would call “frugal” would be to just stop wasting money on junk and stuff we don’t use after the day we bring it home. Aside of the necessities, people like to buy stuff they don’t need and often regret later. I think you should look for ways to increase your income (sell your crap) and spend less (or spend on what you need…like paying down your mortgage or your car so you don’t have debt) and save more.

joruva

Would you rather have $50 now or $60 next month? Duhh…I want it now!

Would you rather have $50 in 12 months or $60 in 13 months? Of course I can wait an extra month for $60.

We are driven by instant gratification, and frugality is instant gratification:

- If I make my own laundry detergent, I save 2 cents a wash!
- If I bag my lunch I save $3!
- I can save 25% with generic food products!

On the contrary, when we look at earning more:

- If I take on more responsibility at work, I may get a raise. I may also screw it up and get canned.
- If I work 8 hours after work on my side business, I might make money…or it could be a waste of time.

Also, there is the paradox of choice. Everyone knows how to save money. Personally, on the subject of earning extra money, I fall victim to analysis paralysis. With so many ideas for earning money, I toil over the pros and cons of each, instead of just picking one of the top 3 options and trying it out.

(Note: I have to credit Dan Ariely with the $50/$60 example. Watch his videos on YouTube since they are quite interesting)

Steve

The perception is that expenses are totally controllable by the individual, whereas other approaches have some level of dependency or reaction to the initial move made by the individual. So…other approaches are not as easily defendable by the authors of personal-finance material, since the individual can create many different excuses for not following through.

Cutting expenses on the other hand is clear cut.
Cut Expenses = Save Money.
Attempt to Cut Expenses But Fail = You (the individual) Didn’t Commit to the Desire.

Dave @ 30 Days at a Time

Focusing on spending does 2 things:

1) Engages guilt – People are easily conditioned to feel guilty for spending money when they “shouldn’t have.” Furthermore, guilt drives traffic. If you doubt the ability of seeding guilt to keep people coming back, just ask the Catholic church how that’s worked for them for centuries.

2) Gives reassurance to deprivation – If I deprive myself of something I want and can have, there had better be a reason. “I’m focusing on saving money” is a reason that helps us justify treating ourselves “badly.”

Josh

Lifestyle inflation.

If you earn more, you’ll have more to spend (or save, invest, etc.) — but without analyzing your finances and cutting spending where it’s not benefiting you, you’ll also be throwing away more money. The tide may have risen, but your boat is still leaking.

In any case, a good personal-finance site focuses on spending “smarter” and not just “less.”

baron

I see this a lot in corporate accounting. A lot of newer controllers and CFO’s, instead of looking at the big picture, like to focus on cost cutting because it’s the only method they know on how to increase the bottom line.

I find a lot of personal finance journals are written by ordinary people with not much in the way of a financial, organizational behavior, or analytical background. The only way they really understand on how to grow their bank account is by cost cutting. Sometimes they’ll talk about growing their bank account by investing, but it’s usually just often repeated, unpersonalized, rule of thumb suggestions that they read out of other personal finance books.

I think those types of suggestions are popular because it’s easy for most people to understand and quantify. A latte costs $3. If you drink one every day, that costs you $1,095 a year. However, you can’t easily quantify the benefit of setting up automatic investments. It’s harder for people to grasp the behavioral benefit of it. (though, if they’d read “nudge”, they would get it).

Mike

As others have noted, I think it’s mostly psychological. Most people are afraid to ask for a raise, let alone start a side business, because they don’t like confrontation or don’t think highly enough of themselves to do so. If they can’t even do the simpler of the two (asking for a raise), then there’s no way they can do the harder task of starting a business. I was in that mindset myself until recently, when I finally worked up the courage to asked for a raise at work and didn’t get what I wanted. A couple of years ago, I might have just taken my lumps and gone back to the grind, knowing I was still underpaid. But this time I did something about it.

If you’re just an average Joe, showing up on time and doing mediocre work, you really don’t deserve a raise. If you are that type of employee, you might be taking a gamble by asking for a raise, especially during an economic downturn.

But let’s say you’re above average, and you know it. Chances are, if you’re above average, a few other people know it too. Probably your boss knows it. Remember the maxim, “Doing good work results in…more work!” He’s piling work on your plate as fast as he can because he knows you’ll deliver. In a bad economy, above average people are even more valuable to employers because they get more work done. Average Joe can be let go, but you are worth keeping around. You should sit down with your manager and ask for a raise.

In my situation, for a long time I was thinking to myself (and managers and HR people are trained to encourage all of us to think this way): I know I’m above average, and I always get a higher raise than my cubemate. I know because he is an average Joe, and he always complains about his low raises. I consistently get about 1 percentage point higher raise than he does, so my company is treating me well! Why should I raise a fuss and risk being labeled unappreciative by management?

1% more than the next guy is ok, but a few months ago I had an epiphany and realized that I was analyzing the situation from the wrong perspective. I was basing my worth (to the company) on my RAISE relative to my peers. “Joe got a 4% raise, and I got 5%, and I know I’m at least 25% better/more-productive than he is, so that’s fair, right?” Wrong! If I’m really 25% better than he is, then I ought to be making 25% more than him! I started to feel pretty crummy about my 5% raise. This type of wage-to-worth disparity is especially prevalent in so-called knowledge based jobs, like mine (software engineering), where the the best workers can be 5 to 10 times more productive than the average.

So I went to my manager and asked nicely for a small (in my opinion) additional raise of 5%. A couple of days later, I was told I would get an additional 2%. That night I started job hunting. After a couple of weeks I got an interview and an offer for significantly more than I was making at the time. I went back to my manager and said, “Here’s what I want, or I’m leaving.” This was scary, because I actually enjoy my job, and I didn’t really want to leave and start over someplace new. Also, I’m not very confrontational, and I had to be very firm. They tried to say, “Well what if we give you the 5%, or a little more? Will you stay then?” I told them, “You had your chance when I asked nicely a few weeks ago. Now you can pay me what I’m really worth, or I’ll leave.” It’s very difficult for me to say something like that face-to-face with my boss, but I put aside my fears and just did it.

Guess what? They matched the offer! Why? Because they KNOW how valuable I am, they just don’t want to pay me for it unless they absolutely have to!

That’s when I realized that every manager wears two hats, no matter how nice he is to you on a personal level. One hat is the facilitator hat. His job is to facilitate your work environment to make you as productive as possible. If you need a faster computer, dual monitors, a coffee machine in the break room, within reason he’ll get it for you because he knows it will make you more productive. The other hat he wears is the accountant hat. Now remember, we’re talking about workers who are already highly productive, not slackers. If you’re a highly productive worker, your manager has NO incentive to give you a significant raise because giving you a raise will not in itself make you more productive, and thus has a poor return on investment for the business. So your manager will always give you a raise just high enough relative to your peers to keep you from leaving. The only way to get what you really deserve is to threaten to leave, and have the leverage to actually follow through on it (like a job offer in hand).

I felt like I really busted through a psychological barrier in that situation because I generally avoid confrontation. Now I’m moving on to the next step, starting a freelance business on the side, which in my opinion is a lot more intimidating than negotiating for a raise. But I never would have considered freelancing if I hadn’t successfully gone through that first step of salary negotiation.

It pays to conquer your fears and trepidations, and I think that’s what a lot of Ramit’s advice is about. Not much about the intricacies of accounting principles or tax strategies for starting a business, you can get a book from the library for that, but instead he shows us how to start the gosh-darn business in the first place. That’s more a psychological problem than anything.

Sarah

Because it is easier. When you spend less, you know exactly what your return is. The wins aren’t big, but they are definite. Plus, everyone likes to feel like they are getting a bargain. It feeds into a worry people have about spending too much.

Ryan

Don’t forget the Puritanical roots of many in this country. I’m sure this definition is a bit on the simplified side, but it does say, “…especially one who regards pleasure or luxury as sinful.”
http://www.thefreedictionary.com/Puritan

Also the strive for self-denial was strongly preached as well, as this text from a 17th century Puritan leader shows.

I have a feeling some people’s emotions and actions regarding money are still governed by these principles.
http://www.scribd.com/doc/14969313/Self-Denial-Richard-Baxter

ahren

Uncertainty makes people uncomfortable.

A large percentage of people would rather have a 100% chance of saving $5 (not buying a latte) than a 10% chance of gaining $100 (inquiring about a performance bonus). My guess is that people process “wins” and “losses” much more completely than they can process probabilities, which leads to this behavior.

imelda

Ramit, you’re of course approaching this question from your own perspective/bias. Your blog is all about earning more, and that’s what interests you. So naturally you will seize upon the comments that criticize those who focus on frugality.

But I urge you to take special note of those who offer more neutral reasons. Comment #2, for example, points out that you can keep earning and earning, but if you can’t control your spending then you’ll never have enough. That’s one reason frugality is an important topic on PF blogs. Another commenter pointed out the issue of a blog’s audience. IWTYTBR focuses on young people with lots of energy and few responsibilities and commitments. Most PF blogs address people in their 30s and older, with children, who may not feel they have the time or freedom to take on the intense work in starting your own business.

It’s easy to dismiss those folks as lazy, as guilty, as less-than, as many above commenters have done. It’s also foolish. Frugality and increasing income are two sides of the same coin, as they always have been and will continue to be.

Chris Brightwell

The biggest problem, amongst my friends, is indiscriminate spending. They have a few dollars in their pocket, so they assume that they can afford a latte or a lunch or whatever.

Then, when the pocket is dry, they got to the ATM and load it back up.

They assume that, if the rent is paid and the lights are on, they can go on spending whatever is left. What they don’t realize is that they have $0 in savings, $0 in retirement, and $0 to land on in the event of emergency.

These people are one fall or one car crash away from serious financial ruin, but they don’t even know it.

A lot of the frugality and “spend less” blogs I see try to get people to recognize the danger of that lifestyle, then offer small ways to knock out debt, achieve short-term goals, and try to establish some solid footing.

When you’re backed into a corner and have only begun to realize it, the simplest answer (quit spending $5/day on coffee) is the easiest to understand.

joe

There’s a really simple answer to this and I’m not sure if someone already suggested it.

American society is built around spending, adding on debt and then spending some more. So, when seeking personal financial advice, it’s without a doubt that the first thing to look at is spending. And probably, a large percentage of those people need to cut back on lattes, jeans and vacations coz they have families on the verge of going into homelessness or something.

Also, Indians (myself included) are of the opposite mindset. We are a culture known to be very miserly to begin with. So naturally, if we think about personal finance, we can’t look seriously at cutting back even more. Most of us Indians just stop there. “I can’t cut back any more so I must be doing everything that I can”

You are suggesting a proactive look into earning more, which I think no matter what culture you are, you need to do.

avril

“Spend less” requires less action, it’s easy to do, the steps to do it are usually obvious (take lunch to work = buy food at the supermarket + pack it in the morning), there’s an almost immediate benefit, and there’s zero risk. You will definitely save money if you take just a couple of super easy steps. You go to the supermarket anyway.

Earn $1000 takes work, there are not definitive steps, it requires stepping out and talking to people in most cases, and since it’s not immediate, there’s ample time to think of 1000 reasons why you can’t earn $1000. Most people who work in the cube farm had/have other dreams that they’ve convinced themselves are impossible for any number of reasons. They project these same barriers onto freelance work.

I know this because I’ve talked to them, and I used to do the same exact thing. I thought every barrier I had was legit, and so to be less dependent on my job, I reigned in my spending and saved a lot of money so that I could live below my means and feel less chained to a paycheck. It worked to a degree because if I lost my job tomorrow, I could get by for awhile, but now it’s just not enough.

stu

depends on your target audience. Many people are already conscientious spenders, and so need help figuring out how to make money. You give them that advice. Many people are notorious spenders, who will outspend no matter their income. The other websites are targeting them. Says alot about our society that spending less is the priority

Justin

I think a serious lack of imagination and creativity. Elimination is a lat easier than sitting down and figuring out priorities, goals, or creating supplemental income streams.

John

Since the majority of PF blogs are on spending less that is what most people are reading. The majority of pf blogs are poorly written and readers can tell this. They tell themselves they can do better and write a blog to prove it, even though the majority fail to write something better.

The second reason is likely that many readers of pf blogs don’t know about blogs that teach growth so they only see spend less. Imagine if 98% of TV shows were made by Fox. Until someone told you about ABC, NBC, etc you would think there was only Fox. As people learn about their options this split will balance out more.

But I think it is the wrong question to ask. If we apply supply demand economics to the pf blogging world then there is a greater demand for spend less blogs. The question to answer is why are readers of pf blogs more interested in spend less. There are a number of answers above that give good reasons (people are scared to take risks, finite pie, etc). If more readers wanted help growing their income then more blogs about growing income would start and readership would grow.

Russ

I encounter this same thinking across the financial services industry and in my work with clients.

In my opinion, it’s not as simple as saving vs spending. Although, I think most people, whether professionals or consumers, focus on this because it’s a binary, “either-or” variable and it’s easy to talk and write about.

I think the bigger question is what’s most important to a person . . . and then creating a mechanism or process to regularly reevaluate whether or not it’s still important relative to other choices.

For example, is it more important for a person to be able to spend more today even though they might have to defer their retirement? Or if someone’s non-negotiable priority is minimizing investment risk, that could impact their need to save and/or their target retirement age. What if traveling is a big priority for someone? What other choices are they willing to make to support this priority? It’s all about trade-offs, and once people make this connection and learn how to manage it, it can have a dramatic impact on their ability to make well-informed choices.

So whether it’s longer-term issues like retirement or daily issues like a cup of coffee, I think it’s important to recognize the “cost” of these decisions and whether or not they’re important enough to take priority over other things in your life.

This is what I work on with people every day, and once it clicks with them, they have an entirely new outlook on their financial decision making.

Still, it’s a good question and one well worth discussing.

Damilola

I have only been writing actively for about 3 months. I think the reason why most bloggers focus on spending less is that keeping more of your money begins more with self-control than any other activity.

Only a fool keeps trying to fill a basket with water. You plug your holes and then you increase the amount of water you add.

Earning money is important too, but the vast majority of people can keep more of their money by changing their habits and then focusing on increasing income.

That being said it’s a simple math
In – Out = Net Worth

Increase your In
Reduce your Out

MD @ Studenomics

It’s real simple- the results are fairly quick to see. If someone stops buying jeans or coffees today they will notice the extra money almost right away. Plus it’s very passive. Not buying something requires no work. Working more, negotiating, freelancing, etc. is all extra work.

I recently had someone write a guest post on getting hired as an English Teacher abroad. The article was informative but you won’t see the results until maybe a year from now. Many people don’t like that.

Eric

IMHO, the primary reasons most people focus on frugality rather than earning more are:

1) Many people (both advisers and people taking the advice) do not take the extra step to identify important expenses as you advise. The advice to “spend less” becomes a shotgun approach to frugality – if you blast all expenses, you’re bound to hit a couple of the truly unnecessary ones.

2) Many people do not believe they can change their current situation dramatically. The option that they can actually earn more seems baffling, daunting, and ultimately a pipe dream.

3) Many advisers do not know the situation of the people that they are advising, and THEY in turn then doubt the ability of people to earn more. They’re writing to the lowest common denominator and underestimate the abilities of their readers.

4) Americans seem to expect “suck it up”, “Drill Instructor”, “No pain, no gain” advice, so that’s what people dish out. We’ve been raised with the Puritan “you can’t have your cake and eat it too”, so we feel like if we need to improve ourselves, we have to skip of the cake (and anything that feels good is cake and we should feel guilty about it). Side note: What’s interesting is that this mentality just doesn’t seem to work anymore – people now just eat the cake, feel guilty, and get fat. Personally, I think as a culture we need to start challenging ourselves to think more, to be more clear with ourselves about what truly IS “cake” (extraneous stuff with little benefit) and what may actually be personally rewarding for us. And to accept that these answers will vary from person to person.

Just my $0.02

Dave M

People think that the way to happiness is through having more money, which means saving more money and cutting out the “unnecessary” things in life. That’s counterproductive, though, because it’s often the “unnecessary” things that make life enjoyable. i.e. Lattes and new songs on iTunes aren’t necessary but they make daily life more enjoyable. People seem willing to sacrifice those little, enjoyable things in life for an extra $25 a week in the bank.

If spending is excessive, the money will obviously run out no matter how much you make. There’s got to be balance.

Further, people are also trained to believe that you must have the “stability” of a 9 to 5 with a regular paycheck and even further, the six figure 9 to 5 is reserved for people with 30 years of experience and an Ivy League degree. (Although, it’s rare that a six-figure salaried employee only works a 9 to 5 schedule.) So for most personal finance authors, those criteria exclude the vast majority of their readers. All that’s left is to cut things out.

Our generation doesn’t want to accept the norms that previous generations did. Happiness for us means loving our lives, which requires that we love our work. And, although it’s become a bit cliche, when you love your work, the money typically follows.

Your readers love you because you’re willing to challenge everything that every other personal finance writer evangelizes. You’re willing to venture that you can have a higher quality of life, financially and psychologically, than by trudging hatefully back and forth to work each and every day.

Porus Munshi

In my mind, Ramit, it’s a mindset issue. Industries have mindsets and habits of perception. A large part of what you mention comes I guess from the Banking mindset. What’s common between mutual funds, credit cards, hire-purchase or mortgage and micro finance? NO BANK EVER CAME UP WITH THEM. All these were created by people outside of banking and that’s largely because banks saw customers as SAVERS and not as INVESTORS or spenders or earners. It was a very one-dimensional view of a customer.

A similar one-dimensional mindset towards customers seems to persist in financial advice too. If advisors saw their clients as investors or earners, they’d treat them differently and create solutions for them based on that new perception.

Elizabeth

Because cutting back on spending, while it seems like a *huge* thing to do, is actually the path of least resistance. It’s easier to say “No! I won’t buy that latte!” and congratulate yourself when you don’t, than it is to call a credit card company and negotiate down your rates (Optimize) or to start working on the side (Earning). It’s easy – nay, passive – to NOT do something. To DO something takes more work and energy.

Also, there’s something of the Puritan work ethic in White America, where it’s seen as virtuous to deny yourself and actively striving to get more is a vice, especially investment (time, money, whatever) because that’s risk-taking behavior, which is WRONG! In fact, it reminds me of a quote from the Simpsons when Ned Flander’s house is destroyed: “Oh, he doesn’t own insurance. He sees it as a kind of gambling.” Same principle applies, and as awesome and as modern as we all think we are, so many of us are still in the mindset of our ancestors, it’s terrible.

Earning and Optimizing means taking a risk, and risk means gambling, and that’s so subconsciouly considered dirty. Take for example my work, where everyone’s always on a diet and always trying to cut back (going to Wal-Mart or BJs or Costco for food, clothes, everhting!) and bragging about how little they’ve eaten and spent. That gets a lot of ooohs and aaaahhs. But, when I tried to organize a yoga group once a week at a professional studio, at a STEEP discount from their usual rate, suddenly no one was interested in a HUGE discount on something that would help them lose weight because it required active participation. Denial is popular; investing is risky and most people are afraid of it (as you even said yourself last night!) And, as you know, most financial blogs, gurus, etc. are all about getting readers, which means making things as easy as possible, which means playing to the passive side.

Well, all except you, of course, and Dave Ramsey who actively encourages his readers/listeners to get second jobs, sell things they don’t need, and otherwise Earn More.

aelle

Joe (#72), good call on the cultural influence. I should have thought of it, the situation is even more caricatural here in France. The thought of becoming “nouveau riche” is globally met with extreme disdain by the college educated population. People don’t even try to out-frugal their way out of poverty here, they try to out-vote their way out of poverty. Which seems to me like the ultimate way to stay put in your comfort zone.

Susan Tiner

There is nothing more valuable than time. Earning more usually takes more time, spending less doesn’t.

Sergiu

Hearing some of the stories about people who are in debt up to their eyeballs while making 100k-200k per year it’s easy to understand why personal finance folks focus on spending less.

As someone said: you can’t out-earn stupid spending. No matter how much more money some folks make there’s always going to be a bigger and better latte/car/etc out there that they’ll waste money on. That is why so many financial advisors focus on getting your spending under control!

Early Retirement Extreme

I can’t speak for other blogs, but the reason I recommend a level of extreme frugality on my blog is that given a wasteful behavior (spending patterns) it is much easier to optimize efficiency (getting value for money) than it is to optimize effectiveness (getting more money). It is a also lower risk method of becoming financially free than trying to earn more or start new businesses. It worked for me. I retired when I was 33. Statistically speaking, if 100 people had started out at age 25 negotiating or trying to increase their earnings while still sipping lattes, I bet only 95% of them would still be working to pay their bills because most of them would not have been able to quadruple their income. The remaining 5% would probably be writing blogs telling other people about starting new businesses though

Alison

Not sure why they say just to cut back. Doing one or the other doesn’t actually work as well as doing both. On the saving side, I don’t think cutting coupons is the best way, but being conscious of what/how you buy is smart – no need to go out and buy a dvd that you’ll watch once for $20 when you can go to a redbox and get it for $1 or join netflix and watch 3 movies in a month for half the price of one purchase. As Ramit has said before, someone’s train of thought about finances is often parallel to their thinking on exercise/food. Why buy the $200 running shoes when you can’t run a mile? Don’t buy more than what you actually need and you have value.

On the side of making more money, I just put myself in a position to increase my income by 30% at least. I sought out every opportunity I could at my existing firm to make myself more valuable, and when that couldn’t pay off, I moved along to somewhere else. I’m sure I’ll play with some of that additional money, but before my first paycheck kicks in from the new place, you better believe I’ve laid out all my expenses and figured out how much more I can automatically set aside into a savings account.

It’s a lot easier to avoid impulse purchases when it feels just as good to hit another round number in your savings account.

Lindi

I would say it’s a lot like a weight loss program actually. There’s a lot of restrictions and focus on cutting back but without the concept of reinvigorating the diet with a whole host of goodies, the plans tend to fail. Most personal finance advice I find to be terribly restrictive and not productive in the same way that a weight loss plan doesn’t work. Until you start developing healthy spending habits you’re not going to get rich which includes spending money on the things that get you closer to your goals.

Credit Card Chaser

There are a lot of good responses above and there are many different factors at play but the biggest reason is that quite simply:

99.99% of personal finance writers/bloggers DON’T KNOW HOW* to make more money but anyone can think of ways to spend less.

Maybe a little roughly put but its true

*At least not any type of meaningful amount of extra money.

rkt88edmo

Reasons:

1 – It’s familiar – denying yourself or going on a budget diet is a familiar concept. The incumbent wins again!

2 – Puritanical attitude towards transgression – You’ve obviously been naughty with your finances and should self flagellate for redemption

3 – Punishment for self loathing – your desire to be less greedy is really a desire to have more money, money is evil and therefor you must punish yourself.

Increasing your income is something new, unknown, and dangerous; it is a validation of the desire to HAVE MORE MONEY. Too scary. It also sounds like a “J – O – B” and you already have enough of those

AD

Bob is dead-on. Especially on the raises…that’s how it works at my organization, too, so I’m afraid I’m one whose eyes glaze over on the “how to get a raise” posts.

Instead I started freelancing, and when we got meager raises this year, I couldn’t have cared less because I had just given myself a 40 percent raise with my freelance work.

oilandgarlic

Although I did a series on negotiations, I guess I’m also guilty of focusing on saving money. Like many have said, advice on saving is easier to follow. Everyone can do X and save Y. Making more money is more personal. In order to give good, meaningful advice, you have to know an individual’s background, education level, family responsiblities, aptitude etc…

Whats_the_point?

The point is – even if anyone manages to increase their income, without controlling the spending part, spending more than they earn, you know..
= misery

Jen

I agree with most of the comments that I’ve read (tips to cut spending are easier, low hanging fruit type wins).

Just adding to the conversation that I think very few sites/people, etc discuss the psychology of finance/saving/spending because it scares people to turn the microscope on themselves and really get to the heart of what they think about money and how they relate to it. Even if people wanted to, most probably need guidance on what questions to ask themselves to even figure out their relationship with money (e.g., do they equate money with independence, happiness, comfort/solace, etc.)

Plus people usually don’t talk about money in an open way (what’s your salary, what’re your savings, what’s your debt, what’s your investment strategy, what’s your relationship with money) so spending tips are easier to give without having to show someone your bank account. I have a few friends where we are wide open with our finances and that kind of trust & opening up is hard to establish in a larger group setting.

Lastly, there’s the general mainstream perception that tackling your finances is complex. If it’s perceived as hard, a lot of people don’t bother trying. The fact that I used the phrase “tackle your finances” shows how ingrained that perception is all the way down to the words we use to talk about it.

Whats_the_point?

When I was a kid – I was saving for a brand new bike – the allowance I get from my mom, I did not spend a whole lot of it, I would go hungry for days aiming for the new bike, I saved an empty Pringles can, made a slit on the cover to push money in and hid it in my sock drawer.. then one day…someone stole it…guess who it was…my mom. I never look at saving the same thing ever again…so sad

Quita

To Whats the point

I know how you feel. When I was in elementary school, like you my brothers and I saved our allowance in a pringles can. We each saved $200. I know because I would count mine all the time. One day I came home and there was a new van in the front yard and all of our cans were empty. When I looked at my mom she said “look what you helped buy”. I will never forget that moment. I learned to hide my money on this day.

Quita

AD- That sounds like a good idea. I have learned alot about my mom and money over the years. When I got my first job she wanted me to take her out to lunch every time I got paid. She did the same thing to my younger brothers. She told me to take a year off from work to focus on my studies in college and then she fell behind on two of my credit cards. One of which went to collections. The funny thing is that the payments were really low until she started to miss them. I was paying them myself before while making $100 every two weeks in a work study program. I learned that that would be my life at home so after graduation I obtained a live in counselor job for 10 months to save money within worrying about living costs and I was able to get back on top of my bills. Its sad when you cant even trust your parents.

Kim - self improvement and motivation

I think cutting back in a culture that is used to spending more seems most logical. Additionally, it’s the easiest advice to give (not necessarily follow). In this economy, most companies are asking that you do more with less so while positioning to increase your earnings via a job is a little tougher.

I love the question and the comments. Thanks for asking.

Mike C

Why is the vast majority of personal-finance material focused on cutting down on spending? From my experience, cutting down on spending and coupon clipping is easier to do than to be entrepreneurial. Spending less is the path of least resistance. It is less difficult than starting a business, or taking on a project at work, or interviewing for that promotion, or marketing your wares etc. These actions requires one to get off the butt. Personally staying productive earning money automatically cuts my spending as I have less time to shop and eat.

Brandon

Now you know why financial blogs talk about spending less….Look at all the comments…I suspect we will see more posts in the future about this or maybe a I will teach you to spend less course coming soon….Only $1,000….lol

AD

I wish I was Asian or Indian. My parents would NEVER steal my money (in fact, they tend to spend too much on me, which seems like a horrible problem, I know, but when you’re 28 and making a good living, you’d rather them save it). Anyway, thing is that neither is great with personal finance and savings, so much of that education came from books and blogs. I remember being in high school and my friend was online checking his stocks. I thought he was kidding me about having stocks, but it was money invested from his bar mitzvah. I would have loved to have learned about money from such a young age.

Natalie

I think that the financial advice industry is a lot like the diet industry and I often actually hear financial advisers themselves draw comparisons between the two. The diet industry also focus on deprivation. I’m wondering if it’s because it’s so difficult that most people don’t succeed with the first method of deprivation that they learn about so they buy another book or sign up for another program. In other way, maybe it’s a way of perpetuating the industry. Or maybe our consumer society creates a philosophy of scarcity that even permeates the mantras of the financial advisors.

jenn

I think the answer is probably the simplest one: they themselves focus on cutting their own expenses more than increasing their income.

MC

Can you say more, MC? What do you mean? And if you have any specific examples, I bet others would love to hear them. I know I would.

Sure. I didn’t use the notify of followup comments because the last time I did my inbox was flooded. I love this site, but … you know

If there was a method that would guarantee an instant 100$ , anyone not willing to pay almost 100$ is more concerned about saving money, even though he / she is being irrational. I mean, it’s a sure 100$, without loss of time or other resources, except for the initial investment.

Now, if it wasn’t a certainty of 100% that 100$ could still be earned, people should still be willing to pay a certain amount, depending on their risk aversion.

However, people aren’t accustomed to make decisions based on taking into consideration the various outcomes and their probabilities.

To stop with the theoretical talk, I will take myself as an example.

I am involved with a coach, whom I pay a monthly fee. This is with respect to a very specific skill set, which I won’t get into here. For basically a year, I was not willing to pay for help / advice / guidance because 1) my ego prevented me from seeking all that and 2) I didn’t want to part with my money (i.e. I wanted to save money).

However, in reality, I do assign a certain value to having that skillset within a certain amount of time, and thus I should be willing to pay a certain amount for coaching. And so I sat down and analyzed how much I valued this skillset, considering the time I would have to put in, and came to a number that I would be willing to pay for guidance. I’ve been doing this for 5 months now, and I have no regrets.

Another example is your earn1K course. The information on the course (I’m signed up for this week) is somewhat blurry, so I have to come up with how much value I assign to the course. And that value ultimately defines how much I would be willing to pay for it. For example, I currently would not be willing to pay 100,000$ for it, and not because I don’t want to spend the money. I would, however, be more than willing to pay 200$.

I don’t know if you took decision analysis when in Stanford, but this all comes from that series of courses. It opened my eyes.

If this post does not make sense, it is just further proof that I should probably not post on blogs at 3AM

DowntownDan

People focus on frugality because it is easier to see immediate results. Checking a savings account after a week of effort and seeing an extra $100 is instant gratification, rather than putting in the extra effort to consistently earn additional income a month, or possibly even a year down the line.

Another important note regarding the psychology is that people love to be miserable. That’s why we have the daily news. Everyone wants to turn it on and know that someone had a worse day than them. Personal finance is no different. Individuals that focus on frugality and love the challenge of knowing that someone out there is more frugal than they are.

I’d be interested to see how many of Ramit’s followers waste their time watching the news (I’ll bet it’s a story about a house burning down, someone was killed, and the economy sucks — if you love saving, I just saved you an hour of your time), driving 5 minutes out of their way to save $1 when they fill their gas tank, or have decorated their home with clothes hanging all over the place to save $10 a month on their electric bill by not running the dryer.

christina

For the same reasons that weight loss sites focus on tricks and gimmicks like not eating past 6 PM–it’s something that seems very easy to do, and gives the user/reader a sense of control over the situation. The wins are small, and easily wiped out with one “slip” of willpower, but they are comforting in their simplicity. Generating more income is hard and requires near-daily attention to your strategy for earning more, just like fitness requires near-daily dedication to getting to the gym. Telling people that all they have to do is skip a latte is telling them what they want to hear.

Adam

Without getting too much off-topic, Ramit, I can say that I’ve developed a spending plan. Now, when I say that, I don’t mean of-the-minutiae variety, where every receipt is kept and everything is accounted for. But a general amount set aside for certain things every month: I don’t beat myself up if I go 50 bucks over Movies or Entertainment one month, but if I start crossing north of $100 or more in excess for something I have budgeted, I start taking note and try to reign my spending in a bit.

I absolutely had to do this because I got a new apartment literally across the street from a sushi joint and my “Dining Out” expenses shot up from $400.00/mo to $900.00/mo literally over the span of a month because of this. (Mint is great at helping you setup budgets, you can even have it text message you when you spend too much in a category, to the effect of “Hey, Dummy, stop spending so much for Dinner Out This Month!”. A great psychological barrier for me.)

Having said that, I will be frugal (to an extent). As the old adage goes, “Time is Money”. You will never see me clipping coupons, or taking old bars of soap and putting them together to make them last longer: my logic is that if you are freelancing, and charging a customer $60, $75, $100 bucks an hour, that is implicitly saying how much your time is worth. If I don’t think I’m saving at that same rate through based on time invested, I don’t think it’s worth doing.

So, from that perspective, I have to honestly say that spending a few hours, setting up a *general* budget, and checking for 15 minutes a week to make sure you fall within the constraints you’ve setup, is absolutely worth it if it can reign your spending in from 110% to 70 or 80% of your take home pay.

Amy

It’s for the same reason that 98% of the weight loss information focuses on eating less/differently or exercising more. Groups like OA who focus on the motivations driving the bad behavior represent a much higher success rate with managing food and exercise behaviors but a much lower – acceptance- rate of success in conventional wisdom. People who are completely out of wack in both finances or health behaviors are usually ignorning major underlying drivers and/or do not have the process in place to manage their behavior properly. Willpower is not the answer. Good systems are. Add on to it that most people cling to conventional wisdom ideas far longer than they make sense and berate themselves as failing to achieve it instead of reevaluating the groupthink. Thanks for leading the way to change this mentality in personal finance.

Raphael Burnes

Great question. There are lots of insightful answers in here.

In my opinion based on observations of many of my friends – it is just too overwhelming for them, and they don’t think they are worth it (or could be worth it with some work, or think it would be too much work). A lot of them feel the problems in the economy and shut down and say they just need to focus on X. Where X is cutting costs, keeping their job (by trying to be ordinary and not stick out), not “rocking the boat” so to speak.

Other people I imagine decide “well I can’t save my money so I shouldn’t try to earn more as I will just waste it”. Which is especially dangerous when combined by them feeling obligated to be “more green”, consume less, etc.

Obviously as others have pointed out earning more doesn’t mean you will be any richer. I’ve noticed myself the expanding effect of earning more on how much more stuff I purchase, which I admit has been unconscious in many cases.

I first was introduced to the concept of earning more as being more important when I read the book Seven Years to Seven Figures by Michael Masterson. In it he has a table that shows how much you would need to save to have $1 – $5 million after 7 years… and it is reality inducing. For example, to save a modest $1m in 7 years @10% annual interest return you would need to save $95k / year.

You can’t do it by cutting out lattes and eating gruel for every meal.

So for me, I’ve always been acutely interested in things which can help me increase my income – which is why I’m excited about the upcoming earn1k program!

Toni House

You are absolutely right. I do everything I can to teach my clients to pay off their debt to save, to stop living above their means. But the most important part of teaching and working with them is to get them out of the mind set they can not earn more money.
You need to work. With technology today it is easier than ever. But as you make more money still follow all the rules. Pay yourself first, get out of debt and stay out of debt. Put money away.

The biggest thing I see in people is that they don’t understand or believe in themselves. Everybody has knowledge, everybody has experiences, everybody has strengths. Just step back and look at who you are and what it is that you want and be willing to go for it, work at it. Just remember God Don’t Make No Junk!

Terri Ann

You make a great point. The finite pie of how much you have to manage is a much easier an often consistent pie to work with. Growth can be scary for people because of the maintenance and effort involved in maintain a segment of growth or continuing growth. because if it’s not still growing it can be seen as a loss which for most people equates to a defeat.
I’ve just recently begun supplementing my income with Internet based work and freelance and while I will be excited for the extra income – if I can’t budget what I have already who is to say I’ll be able to budget what I will have with the additional income.

In an analogy: Budgeting is like kindergarten – you can’t go to first grade (income growth) until you are able to consistently manage your kindergarten (or basic budgeting) skills.

Car

I think most PF blogs focus on spending less is because it yields quick results and it’s easy to implement, which can get people kick-started on their path to financial freedom.

The other thing is, it is easier for someone to reduce their consumption of goods and increase the bank account balance than it is to make extra money so they can afford the items they want. There would always be an excuse as to why they couldn`t make that extra $100 per month so they could afford their gym membership, netflix, or whatever.

I have stopped reading most personal finance blogs now because I have a tiny income and already live on the basics. Short of eating ramen every single day, I have pretty much cut out every necessary expense. My focus needs to be on earning more so I have extra $$ to throw at debt.

There is definitely a psychological barrier in earning more money. Most people can`t get past thinking they have no time, no skills, or reason 46253 why they couldn`t do it. I am stuck in that mind frame at the moment, mostly because I am comfortable working only part-time.

4hr

This may have been covered already, but I think this type of advice is very popular (and therefore people give it a lot) because couples often differ in their spending habits – one spends a lot and one is ‘tight’ or in the words of George Costanza “careful with money”. The “careful with money” people *love* this sort of advice, b/c it validates their side and brings a sense of authority to their own spending (or lack thereof) habits.

Klint

I find it interesting that so many comments blame the prevalence of frugality-driven personal finance on the overspending tendencies of “the typical American,” (i.e. not me, the enlightened commentator, for I am holier than thou!).

Despite the problematic and realistic nature of U.S. Household debt, I wonder how many commentators themselves actually spend responsibly.

I gave a copy of IWTYTBR to my best friend, and despite his phenomenal retention of the concepts presented, the book has made no impact on his financial life.

You can lead a horse to water….well you know the rest.

FinEngr

Liam. I really think you’d enjoy my article:

http://www.engineeryourfinances.com/2010/01/spend-less-or-earn-more-the-only-answer-you-need-to-know/

You address a social crutch at the beginning – the expectation that as our income rises, so should our expenses.

Towards the bottom of your post, you get towards what I myself am after – optimization. There’s no singular answer. It’s a combination of strategies to get the most value.

best of luck in your financial quest.

LeanLifeCoach

Ramit – I think for most it’s because they see it as something they have more control over.

Both making more and saving less should be addressed where possible.

However, the math is clear! A dollar saved is much more valuable than a dollar earned. The return on investment is greater for a dollar saved, period!

David Cameron Gikandi

Because…

1. (And this is the only reason I find valid) it is important, as a foundation, to spend less than you earn and invest the rest.

2. Because it is easier to show someone how to skip a latte than to show them how to create a second income stream. Laziness on the part of the teachers and the students might contribute to not making an effort at this

3. There are many ways to make money and much fewer ways to save them, so it is, from a writer’s POV, easier to cover and research, as well, and to sell to a broader audience (not everyone wants to start forex investment but many more want to save).

My two cents

JH King

Are you familiar with 3 Card Monty?

“Follow the latte, follow the latte, where she goes, nobody knows.”

At least on TV lots of the so called experts shows are subsidized (advertisers) by the exact people you would have to fight to get many of the big wins…maybe they just know where their breads buttered.

And if we all get rich, who do they market to?

Erik

Earning more isn’t always the problem. If people still have really bad habits with spending A LOT of money, it won’t matter how much money they make. If used to make $50k, and now they make $75k, they’ll up their spending to start doing things they didn’t in the past if they don’t develop habits of frugality.

If you develop solid ways to spend less money than you make, then the amount of money you make it is less relevant. I don’t think people should be complacent with their current salaries or never ask for a raise, but frugality isn’t the boring, not-gonna-get-you-anywhere principle that you’re portraying it to be.

Silvia

If we observe the History, we can see the effect of the phrase used by PF sites that focus on ” spending less”.
” The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, and transport had a profound effect on the socioeconomic and cultural conditions starting in the United Kingdom, then subsequently spreading throughout Europe, North America, and eventually the world. The onset of the Industrial Revolution marked a major turning point in human history; almost every aspect of daily life was eventually influenced in some way.(…) The Industrial Revolution began an era of per-capita economic growth in capitalist economies.(…)” – Resource: wikipedia
Summarizing the History, it leads us to a thought that people had the chance of working to make their own money to conquer and to buy things like they never thought before (clothes, food, whatever for that period).
The factory system was largely responsible for the rise of the modern city, as large numbers of workers migrated into the cities in search of employment in the factories.
Under this thought, before the Industrial Revolution people had to rely upon themselves and their communities to provide the vast majority of the things that they needed. A period of scarcity.
After the advent of the Industrial Revolution, people were led to improve their social and economic conditions but most of the people were still ” workers”.
Ok. All this essay to explain my point of view about the subject: why do so many personal finance sites focus on spending less?
As Kiyosaki says: ” formal education is primarily for those seeking to be employees or self-employed individuals.”
This is about what I was telling above: have a good job, pay your bills and be glad for the life you live.
Most of the personal finance sites are written for people who had this same education by people who also were educated this way. Being so, most of the people look for a way to start saving money.
Differently of those who think differently about money: a gifted person in financial intelligence, a person who born to be an investor or even a person who applies the knowledge of what he/she has learned to help others to be financially free, these group of people teaches that people should INVEST a part of their earnings.
“Spending less” is just a sort of a planning for those who are already broken exactly because they are not in a financial condition of having an investment strategy, yet or for people who developed bad habit of over spending and feel themselves not comfortable inside this condition.

I suggest an interesting book:
” Secrets of the Millionaire Mind” – T. Harv Eker

Rohit Joshi

1. You can see the result immediately for “spend less” but not for “earning more”.

2. There is no proven, short term strategy to earn more but there is proven strategy to spend less and save money.

3. Spending less is less riskier than earning more.

My Thoughts on Frugality vs. Earning More « Financial Uproar

[...] blogosphere these days is the spend less or earn more argument. On the one side, we have Ramit from I Will Teach You To Be Rich telling his readers to earn more and just focus on big expenses. He doesn’t believe that the [...]

Chuck

Even if you’re earning more you should always keep an eye on spending. There are two sides to every balance sheet. If you earn a million a year but spend two million a year, you won’t be rich for long.

Croton

As almost everything you earn more is taken up by taxes and social security in most developed countries (the US maybe an exemption). And not literally but almost really… if you earn 1200€ in a part time job in Germany, you will get around 1000€ after tax, if you earn 2500€ full time you will get (rolling drums) 1200€ after tax!
That’s an extreme example from the lower end but even at higher levels of income, a € earned more, will yield to 20-30 Cents more. A € saved is a €.
So unless you make it to top-management or be an entrepreneur (which isn’t always possible in all careers) frugality has an really extreme impact far superior than earning a meager 1000 € more (which equals quitting membership in a upper middle class gym) for most people in the world

skabetti

Ramit, I disagree with you hugely on this basic point, and I think you’re gonna have to give it up.

This is why I don’t give you full credibility. You (and your readers) are relating spending less to deprivation. You also falsely assume that people who spend less don’t take advantage of opportunities to increase cash flow. To me, these are all separate issues.

You’re right: if I spend less on gas for my car, I ma save a quarter that week. Negligible! However, remember, I’m saving it every week. And I’m exploring how to save on almost every sale I make. I can get a lot of stuff I want and need for less. It doesn’t take any more energy to shop or negotiate a sale than it does to buy at a premium. I can apply this knowledge to the big stuff too (I refinanced my house on a special rate from a credit union because I knew lower mortgage deals were out there–just like lower gas prices). So, spending less is a powerful strategy. Spending less actually teaches how to spend less.

While I’m doing this bargain shopping, I’m also applying your principles of increasing income from raises, investing, negotiating, understanding the psychology of my own behavior, etc.

I’ve read your stuff. You yourself are on a budget, you just call it something different.

Spending less doesn’t mean deprivation.

Spending less doesn’t exclude applying the principles of increasing income.

And I’m not sure all finance websites tell people just to spend less. I haven’t read them all. It may be one of the components of a complete financial picture. But it IS a good first step to getting a handle on out-of-control financial matters.

skabetti

Here’s one more thought. After I achieve a certain income, why do I need more? Where do I draw the line? This year, I’m practicing the statement, “No thank you. I have enough.”

We do, you know. Have enough, I mean.

Cornelius Aesop

I think that so many other sites on the saving aspect because that is a realm where the individual has more control. You can negotiate and add more responsibilities but that doesn’t always direct an increase in income, at least instantly. Whereas if I save, by not spending, $1 I instantly have $1 now that I can apply to savings or other debt. It’s an instant gratification world with people searching for those kind of answers and solutions.

anonymous

Is there a reason you cant do it all?

HollyS

I agree with AD (#144) even if it sounds really privileged. The extent of what my parents have taught me about finances is “we’ll take care of you.” Meanwhile, their retirement plan is social security, credit cards and my grandparents. It’s probably going to cost me more in the long run both in bad habits and paying for their retirement/nursing home/whatever than if they stopped sending me stuff every month I don’t need and trying to convince me saving and earning more money isn’t important.

Gerard

Because cutting spending is easier than earning more and because it is also quicker to achieve than earning more.

Second, because most people can cut back on spending. The idea however is good, albeit not the total answer.

Clayton

There is a diverse amount of people out there and some of them really are happy just working for someone else and then going home and spending their money that they earn from one job. These people have to work on controlling their money.

There are people who think that to make more money they have to work more for other people. These people earn more money, and will work more for their money and normally have to just work on getting a time and place to spend theirs.

There are people who go to work for themselves and work extremely hard and sometimes earn excellent returns. These people normally don’t have a difficult time understanding their money.

People will match their lifestyle to their income level. Which is why you see millionaires going broke. I think most of the spend less than you earn teachings are just trying to say that you don’t have to be an overspending consumerist.

There is nothing wrong with living within your means if it is 25k or 250k. it’s just learning to be content with where you are and ambitious to make things better.

Neily

It is a very simple answer… It is all about control and the immediacy of it. We can control our spending right here, right now. All of the other things you recommend take time, energy, motivation and can be influenced by self-esteem, current levels of education, etc (none of which can be changed over night). So, the cliche used most frequently is “stop spending.”

Such a cliche can work wonders for smaller short-range goals such as buying an iPod or small flat screen tv. If a person spent 15 dollars each day on a latte and eating out for lunch, they could save enough in a month to buy the short-range goal ticket items.

However, you, my friend, are not looking to impact our smaller short-range goals. You teach lifestyle change which can benefit us all in the long run.

So, thanks for not being the cliche kinda guy!

Dani

I think someone was questioning at what point in these comments it just becomes the same thing over and over. I found it: right around 170 the repetition-to-innovation ratio changes sharply.

There are still a lot of good, new, interesting comments after that, but all of a sudden there are a lot more comments from people who clearly couldn’t or didn’t want to read through 170+ just to make sure they weren’t saying the same thing as someone else!

Pretty damn good actually. I think you can tell a great blogger by the quality of their commenters. GOOD bloggers tend to have a lot of “me too” comments and/or a lot of trolls, maybe because they tend not to be involved in the community they create. (I get so frustrated when I want to post my thoughts on an interesting blog post elsewhere and instead of an insightful discussion like this, there’s just a bunch of readers fighting and calling each other names….)

Diane

Because even the authors of those articles don’t tell you that savings isn’t the ultimate goal. Spending less could enable you to have a few extra bucks to put into a savings account. Keep doing that, and in time you will have enough money saved to move into an investment. Keep doing that and spread that money around and sooner or later you will have a boatload of money that will rise and fall with each new economic wave, but if you are lucky and consistent, won’t sink. Saving money is the bedrock for increasing your net worth and letting your money work for you.

Plus, in this particular economy, asking for a raise or increasing responsibility at work may not mean more money. It may just make the boss think that you don’t have a grip on what is going on in most of the country and with the company, or it may just give you additional work with no additional benefits.

Also, I’m old school. Negotiating might work for the big things, like the car or for the wedding caterer, but I’m not enough of an extrovert to want to fence with everybody trying to sell me something. You’ve got to have the desire for that.

Gotta agree with FinEngr – try both – one will work when the other one doesn’t.

OnTheRoadToFinancialFreedomAt23

RE: E

I think it is best that everyone do a combination of the two. Why earn more to simply get by when you can earn more, spend less, and get ahead. This is my current goal. I am now earning $15000 more than I was at my last job. At the same time I now have living expenses and I had to get a new car. I should have gone with a used car but I plan on driving this car into the ground. It is a Honda so this vehicle will last me for a long time. Right now I have consolidated my credit cards. Since I have too many for someone my age I am closing 3 accounts and keeping open the two with the longest histories. I will have the others paid off by August (i hope) and I am about to start contributing $200/mo to my new T Rowe Price ROTH IRA and $100/mo to my emergency fund. Once my credit cards are paid off the extra funds will go into my emergency fund. I also plan to get ahead by two payments on my car this year. Once my car is paid off the extra $500/mo will go towards my house fund. I want to buy a home as soon as I can…preferably before I am 30.

Brian Doe

Seth Godin’s new book – “Linchpin” addresses this concept in great detail.

It is a must read for the new economy and is full of great advice for making yourself more valuable and less replaceable. If you don’t want to be a expendable cog in the machine and you want to do more in life and not less, then it is required reading.

Shawanda @ You Have More Than You Think

Most people can immediately cut their spending. Many things we give up don’t require as much sacrifice as some personal finance bloggers would lead you to believe. Creating a budget and trimming unnecessary, non-value added expenses isn’t difficult at all unless you live in a state of denial whereby earning more money will solve all your problems. If you’re too brain dead to manage what you already have, then more money won’t change anything.

There’s nothing wrong with earning more money. I think it’s a wonderful thing. It’s an area I focus quite a bit of my energy on actually. But there’s also nothing wrong with not wanting to sacrifice the precious hours you have here on earth to create a business or move up in the corporate world when you already have plenty.

Before giving up their life’s time pursuing worldly wealth, people should ask themselves whether it’s better to focus their efforts on making a living OR living.

Sian Chu

I haven’t read all the comments, so forgive me if this is redundant:

I think that, often, the emphasis is on “spending less” instead of “gaining more” as people tend to still have the same spending habits no matter how much they make. If you analyzed the spending vs saving habits of the majority of people, this is probably true. There are, of course, exceptions, but these people aren’t necessarily the personal finance site’s core reader group.

PS. Ramit: Just found your site and as a 23-yr old, for the first time in my life, have started to care about my finances. Your ability to break down the complex and often inaccessible world of personal finance into simple, manageable, actions has re-programmed how I think about money, and hopefully, has initiated a life-long relationship with my own money that will now be conscious and guilt-free.