Why do so many personal-finance sites focus on spending LESS?

227 Comments

I’m in the middle of my private Earn1k course this week before announcing something next week.

I was doing a live webcast last night and I was trying to make a point, but I wasn’t sure how to say it.

It seems like 98% of personal-finance material (blogs, magazines, books) focus on spending LESS — keeping a budget, saying “no, no, no” to lattes, jeans, and vacations.

Why?

Why don’t they cover earning more, or negotiating, or increasing your responsibilities at work, or understanding the psychology of your own behavior, or all the other things besides cutting down on spending?

I’m trying to formulate 3 crisp answers.

So, what do you think? Why is the vast majority of personal-finance material focused on cutting down on spending?

[Also: No video office hours tonight. Too swamped on something else. Check out my YouTube videos if you miss me screaming at people.]

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227 Comments

 
  1. 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.

  2. 1. Because controlling your spending is a foundational step towards understanding how to maintain your wealth. E.g. the lottery winner effect, no use having a million dollars if you don’t know how to use it. Earning more should happen on the basis of you having a better grasp of financial control.
    2. Because it appeals to our fears of action and failure. It focuses on something we can control rather than what would be more effective but risky.
    3. Because the philosophy of frugality is flawed. It is about ‘not dying penniless in a ditch’ hoarding scarce resources rather than ‘how can I live my life the best I can’.

  3. 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.

    • I like that. Advice on cutting back seems applicable to everyone, since we all spend something. Yet, by the very nature of its broad applicability, it’s often not as useful as more targeted advice.

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

    Been there.

  5. 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?

  6. 1. availability and draw of credit. – too many live outside their present means. we (people in general) see it as a way to obtain items and bail ourselves out of immediate trouble, not focusing on the long term effect.

    2. we are creatures of habit – break the bad habits and then create good ones. (ex. cut out the caffiene and save $5 a day, put it in the pickle jar and then you have $150 saved up.) even though, if you are already stretched in the budget, that money is swallowed up as another financial band-aid. I quit smoking to use the money to join a gym only to find out there was no money to put aside at the end of the month.

    3. we (people in general) are lazy and want the easy way. – a fast buck earned is a fast buck spent. My daughter has her own business and I make her set back 10% for tithes, 20% for business expenses and another 20% for her savings account. Then she can spend the rest of her earnings. If I just gave her money, she’d spend it in a trice. Now, that she’s spending HER money, that she WORKED for, she’s much more thoughtful about how she spends it.

  7. 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.

  8. I’d say Guilt. Everyone loves to feel guilty because it’s a passive emotion. You know you shouldn’t buy x over y, so that’s the burden you carry around in your mind. If someone says ‘You really shouldn’t do that thing you know you do’ then they can very quickly become an authority figure to you, because they know best.

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

  10. I think it’s a reflection of the mindset of a limited amount of money that most people have (as MC alluded to). If someone buys into that it’s simple to say “here’s how to keep what you have instead of struggling to take more from others (no one deserves more anyways)” or “everyone else is spending less so you’ll earn less; you need to spend less too”. It’s a lot harder to change people’s view to “here’s how you can unlock untapped potential to contribute something new and be rewarded for it” or “what people spend doesn’t matter, it’s the actions of ordinary people like you that create true wealth”. In the end the writers may be falling into the same trap – “I can’t contribute enough value to change the way people think so I might as well offer meaningless tactics that play into their current fears”.

    It’s partly thanks to your blog that I changed my mindset, so you’re on the right track :)

  11. hmmm.. nice questions. It makes me think! :)

    Great post. Good Luck!

  12. The finite pie assumption: most people still think of their own personal economy in terms of a finite pie, there is only so much to go around. Thus the idea of growing their pie is much more difficult than rationing it further.

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

  14. I honestly just feel it is the simplest of messages. It is easy for any personal finance material to tell me that my spending habits are wrong and to stop doing that – it is just an opinion, albeit a common one. We are being told what NOT to do rather than what we SHOULD do or HOW to do it. It is harder for the same material to cover earning more or negotiating because it is not a simple message. I want to know how to earn more, I want to know how to be a better negotiator, and I want to know why I do what I do – I don’t just want to hear ‘stop!’

  15. 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.

  16. Because curtailing expenses is passive. It requires less persistence, brainpower, and energy/effort than the other things you’ve suggested.

    With spending less, the only person saying no is you and saying no results in success.

    Negotiating a deal, asking for a raise, marketing your services…there’s plenty of opportunity for no, but its not coming from you and it won’t yield the same, “positive” results.

    I will advocate that everyone needs to consider both sides of the equation. Spending less is not the singular answer nor is earning more, these should be used in concert to optimize your financial system.

    Enjoyed the video – you’re definitely an entertaining personality!

  17. 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.

  18. Its always easy not to doing some thing then start doing some thing new . So more people (Blog audience ) can relate to ( and try to follow advice ) Not spending more .kind of advice then Work more kind of advice

  19. 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.

  20. I think the answer is pretty simple. Most Americans spend too much in the first place and have no understanding of where there money is going. It is an easy target to get someone to realize how much money they are blowing on things that don’t really matter to them.

    That and I think it is easier to say “cut this, cut that” than “go earn more money, here’s how”. The earning more money isn’t as easy to do (or write about with any originality).

  21. 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.

  22. BECAUSE OF THE ECONOMY! I’ve tried some of the tips for earning more money, and because my industry is hurting, I can’t get a raise (I’m lucky to even have a job!), I haven’t been able to find well-paying freelancing opportunities (yet) and the job opportunities to switch positions aren’t plentiful in my field at the moment.

    On the other hand, being frugal is something I can do RIGHT NOW to improve my finances, and I don’t have to rely on the whim of my boss (or potential new boss or clients). If I live lean right now, then I can keep up with rising prices and even get a little ahead. Then, when I am earning more money, I’ll be able to save a lot if I can avoid lifestyle inflation.

    The “go earn more money” mantra is a good one, but when I see how wasteful some people are with their spending, it feels like “fix your gaping wound by getting more blood!”

  23. 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.

  24. Consumption is bad. Buying things you don’t really need is damaging to the environment and your wallet. Developed nations purchase too many things so it is absolutely necessary that we cut out that consumption.

    Also, and extra hundred dollars saved is an extra $100 in your pocket. An extra $100 earned will be taxed and may be considerably less, especially if you live in a heavily taxed country. Why work your ass off if you are only going to keep 50% of it or less?

    However, I do understand your point. For most people, the focus should be on earnings. If you are making less than $50,000 per year. It is much easier to double your income than it is to halve your expenses.

  25. “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.

  26. Why? Because it’s an easily achievable goal.

    It takes only will power and the ability to comprehend the advantages of doing so.

    It’s also simple advice to give and requires less work on the part of the blogger

  27. 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.

  28. While you’re absolutely right that people should work to earn more, the fact is that for people who don’t have an understanding of budgeting, choosing priorities, and denying themselves certain things to make others possible, earning more money will only result in spending more.
    You have to be living within your means before more money will really help you. Spending 110% of a 100K income is just as bad as spending 110% of a 50K income.
    That’s why I think step 1 is learn to control yourself and your money, step 2 is earn more – they aren’t mutually exclusive.

  29. 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)

  30. I think that spending less appeals to the lizard brain (I just watched a video of Seth Godin – can you tell?) It’s about hunkering down and safety. Social mobility is a fairly new phenomenon in human history, and maybe our brains haven’t adapted to it yet. For millenia, the only way to have enough grain at the end of winter was to eat less than you wanted at the beginning of winter.

    Hey, Ramit, I’d be interested to hear what you think of Study Hack’s new premise, that a great career is based on mastering a rare and valuable skill (and passion comes from the mastery). Seems like an interesting intersect with what you’re talking about these days.

  31. 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.

  32. Saving is a well-defined problem. It requires effort, but the process is structured and consistent. Collect past spending data. Locate areas where you spend too much. Stop spending in those areas. Uncover the path, and follow it.

    Earning more, negotiating, increasing responsibilities – these are loosely defined problems. There is good research on each of these topics, but there is no clear, standardized data that paves the path for you. The loose definition makes action difficult. There is no obvious nest step.

    Similar comments have been made (Josh, Stacy, FinEngr, etc.), but

  33. 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.

  34. Jumped the gun on that one. Oops!

    Meant to finish: Similar comments have been made (by Josh, Stacy, FinEnger, and more), but I think that this lack of clarity lies at the root of the problem.

  35. 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.

  36. Spending less and “trying” to keep a budget is more important than earning more. Look at the sports world. How many times have you heard about an athlete who made MILLIONS of dollars lose this money because of poor spending habits? It’s all about how much you have after spending at the end of the day and keeping it controlled to what you earn is key. My only issue with the spending less, budget topics on blogs is that they make you believe that you will get rich off this which is far from the truth but I guess it’s done to lure people into reading the article. I’m sure the title “I will teach you to be rich” has helped you gain more readers than ” I will teach you to earn more money”. Same concept.

  37. 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).

  38. Spending less is something people can do right away without much effort. People are lazy plain and simple. If you want to earn more, you have to do something to make this happen… it’s an investment. If you want to save more, just do less…

  39. 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.

  40. Because it’s tangible, measurable, and socially acceptable. It’s more socially acceptable to spend less than it is to earn more. People who earn more are seen as greedy or materialistic, whereas eschewing material possessions and spending less on things that “aren’t good” is seen as a virtue.

  41. 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.

  42. It’s easy, at least on the surface. It’s like the “just cut calories” advice you hear for weight-loss all the time. Sure, it would be easier in the long run to learn about nutrition, but in the meantime, it’s a simple bandaid solution. Even the advice is similar: eat this, not that. Just cut out lattes, you’ll be rich in no time!

    I also think there’s this idea that that’s the only way to save more money. It’s what people are used to. The idea of freelancing, especially in the tech industry, seems novel in comparison to what people did in the Great Depression (reuse ziploc bags and paper towels) and what our parents did (get a second job, cut coupons). Those are the people that we’re learning from.

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

    People talk about what they know.

  44. “Niche it down” challenge, Ramit:

    One course for those who want & need scripts —- Another for those who are ready, willing & able to evolve.

    They are two different audiences. The latter can benefit from scripts as a tool for understanding what has worked for others and adapting their own behaviors. The former cannot benefit from and does not want the rest of what you are offering in Earn1K.

  45. 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.]

  46. FEAR! People just don’t want to ask for something they deserve. They would rather stand in front of the item on the shelf at the department store and have that inner dialogue of the good v. evil voices. Its personal, it provides immediate gratification and when they don’t buy it they get a small win with no confrontation.

    The main thing lacking in America, though, is foresight. America is about the immediate gratification. ‘How can I get everything I want now’ (with little confrontation). Not ‘how am I going to be able to get the things I want tomorrow’–that takes too much thinking and precious time to plan.

    People just DO NOT think about the future. They seem to think the future is out of their hands and play the victim to some external scapegoat or wonder what went wrong when they can’t pay the bills.
    Asking for a raise is something where you have to sit down and plan a strategy. There is more that needs to be invested than a 5min tete a tete with oneself. But if you add up all the time a person takes to decide on every single little item they are not going to buy, I am sure it could have been much better spent thinking about how you create value at your place of employment or how you can earn some money on the side to diversify your income.

    That scary boss may fire you in today’s crooked business culture for trying to get a raise. He will probably find you too expensive and would rather pay to retrain a lemming that will keep his head down. Because guess what? Your boss doesn’t like confrontation either and will do what he/she can to side step it!

    For all these reasons and more, its no wonder the average annual income has increased little to none over the past 40+ years.

    The peoples’ hearts are in the right place just not their efforts…wake up America!!!

  47. 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.

  48. Because spending less is generally easier for the masses than making more money. Most people can cut latte’s out of their budget, but earning an extra $3.99 is perceived as too difficult (whether or not it actually is).

  49. 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)

  50. If I have $100 to my name and I spend $10.00 I have a reduction of 10% of my net worth/time. To get back to $100 I have to get a near 12% return on my money/time. capital preservation should always be paramount to forming a stable financial base.

  51. 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.

  52. I think it is easy to focus on spending less, anyone can do that, but not a lot of people can increase their earnings. I could be an instant expert on helping people save money by spending less. But can I be an expert on helping people earn more? Not unless I have done that before.

  53. 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.”

  54. Control. It’s easy to manage YOUR spending, YOUR habits (in theory). When you’re relying on someone else’s good graces – getting a raise, scoring a client, whatever – you have minimal (if any) control. Not being in control is stressful. And like joruva says above, your master plan to get a raise/increased responsibility or gain clients could completely backfire – you get what you wanted but it doesn’t work out the way you planned.

    Or maybe you’re just not cut out for more responsibility/clients. Who knows?

  55. 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.”

  56. 1.- Because it’s easier. You don’t learn new things. Mostly it’s about not doing things.
    2.- You see the result right away. Hey, I saved 20 bucks not going to Starbucks today!
    3.- Like You’ve said. Its focused on protecting, not taking a risk.

  57. 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).

  58. 1/ It is generic and no one will argue that it is “bad” advice.
    2/ The majority of news media sells their message on a scarcity mindset – scarcity of security, safety, money, jobs, opportunities, etc. It’s the basis of the bad-news-sells model.
    3/ People can action it today, feel good and forget it tomorrow. So its throwaway which means it doesn’t have any real impact, but it can be written again.
    4/ It doesn’t at all hit the underpinnings/psychology of why someone can’t cut back (addiction to spending/life out of control in other areas/boredom due to job).. because that would cut too close to the core/root of the issue and people wouldn’t like reading it.
    5/ It makes all readers feel like they’re in the same mess as everyone else = comfortable.

  59. 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.

  60. Because being rich is bad, and being poor is virtuous.

    Earning money is evil, and cutting back is seen as a triumph.

    I stopped reading a personal finance blog that focused on frugality when the writer wrote a post about a woman he saw picking up a bottle of liquid Tide at Target. His statement was, “That woman values Tide more than she values saving money. I’m better than she is because I make my own laundry detergent.”

    Everyone commenting on that blog applauded him for his wise insight and his fortitude of character. Anyone who pointed out that perhaps that woman had no debt and that perhaps she couldn’t make her own laundry detergent for a lot of reasons (small apartment, not good at it, allergic to ingredients) was made to feel like a horrible person.

    How many people, when talking about a rich person’s newest money-making venture, say “How much money do they need??!”

    How many people people actively wish bad things on those who are rich or successful?

    Look at one of the comments – ‘most people buy crap’. Well, what do YOU buy? Who are you to judge what’s crap and what’s not?

    We like going to professional sporting events. We like travelling around the country to attend these events. How many people that we know continually chide us for doing this? “Wow, must be nice to be rich” or “Wish I had your kind of money”. I ask them how many times a week they go to the bar. They say “3″. I ask them how much money they spend every time they go. They say, “$10-30″. I tell them that we don’t go to the bar, ever, that we don’t go have expensive dinners every week, we don’t have an expensive apartment and we don’t have a fancy car… and that is how we can afford to pursue what we enjoy in our leisure time, and people’s eyes glaze over and they once again reiterate that it must be nice to be rich.

    This is why.

  61. 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.

  62. WOW. I just woke up and read these comments. Phenomenal. Let me call out a few that everyone should read:

    #62 (Karen) on friends who complain about money, but then glaze over when Karen explains how she lives a Rich life.

    #26 (John Bardos) for bringing up the tax reason. I’m skeptical, but it’s definitely a reason people use.

    #34 (Nathan) for pointing out that “saving” is a well-defined problem. Earning more is not, and people don’t like the risk of earning more. I’ve been hearing this in my Earn1k private course too: “How do I KNOW I’ll earn back the cost of the program???” YOU DON’T. THAT’S WHY IT’S CALLED AN INVESTMENT!! Honestly if you ask that, you probably won’t.

    #39 (Megan) for pointing out why my iwillteachyoutoberich scripts are so popular.

    #55 (Dave) for pointing out the effect of guilt. In my experience, guilt CAN be a motivator, but it’s not very effective in long-term behavioral change. Unless you’re a Jewish guy getting married cuz your mom said so.

    #61 (Mike) for his AMAZING story about demanding a raise — and getting it. I love you (bro).

  63. 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

  64. Because it’s really easy/obvious to tell people to stop doing stuff.

  65. 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.

  66. Hi Ramit,

    Here are my top four answers to why many financial websites focus on spending less instead of earning more:

    1) Spending less is more of a well-defined process with steps that are rather “mechanical” in nature, which means that more people can read through a budgeting plan (such as the envelope method of budgeting) and start working on it. People don’t have to understand the process fully to take action and start following the steps.

    2) Anyone can start spending less today while most people can’t start earning more money today. You can definitely start the process of earning more money today, but you’re unlikely to get a paycheck the first day that you start the process of earning more money. With spending less you can immediately choose not to spend $40 at a restaurant for dinner and instead cook something at home for much less.

    3) Most people with money trouble are “broke,” not “poor.” If you are poor then you definitely need to focus on earning more money because you will never be able to reduce your spending in any meaningful way. However, if you are broke then you have enough money to live on and aren’t allocating it effectively. If you focus on spending less and better choosing how to spend your money then most people’s money problems will be solved.

    4) If I can make an analogy, let’s compare financial health to exercise. There are two main reasons why people choose to exercise: lose weight or gain muscle. As hard as losing weight can be, most people find it easier to lose weight than to gain muscle. Losing weight has a number of very tangible health benefits. However, gaining muscle seems like the big win: you can eat more calories per day because more muscle mass increases your natural metabolism, you can physically do more that people with less muscle can’t do, etc. Losing weight is a great and for many people it’s enough, but gaining muscle is the next step. I think there’s a connection with this to money: spending less is hard work and has enough benefit for most people, and earning more has larger long term wins but is much harder for many people to do.

  67. 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.

    • Great comment imelda (#68). I’m definitely coming at this from my own perspective, so it’s really helpful to have other perspectives. And you’re right — while I’ve often said that a high income solves most money problems, that’s “most,” not all.

      For example, I have a friend who’s made 70k, 90k, even 100k+ as a single person in a big city. She’s always broke, check-to-check, regardless of her income.

  68. 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.

  69. It’s a question of action. It is much easier to point out hundreds of tips to cut some costs and spend less that people can really do, than to teach how to earn more and, most important, implement those behaviours. Also the economic reallity makes that there is always possible to spend less, but there are times where it is more possible to earn more then in other times/regions/countries.
    But you have been giving us a lot of excellent lessons on how to earn more. Thanks!

  70. 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.

    • Joe, I love this part of your comment:

      “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””

      SO TRUE. And actually, if you ARE hitting your goals, there might not be a need to do anything else (likely true with Indian people, who tend to out-earn virtually every other ethnicity). But many times, people are not hitting their goals, yet they think frugality is enough. Funny how people’s eyes glaze over when they hear others suggesting there are more things they could do (if they wanted to).

      It’s just not in our experience to think about other ways to hit our goals, whether it’s getting a raise, earning more on side jobs, etc.

  71. You might attribute it to people’s confidence to control their earnings. The data shows that most people do not negotiate their wage but just take their annual 3% raise without question.

    In some cases, they may even be right. Many industries with strong unions have set prevailing wages based on how those unions negotiated the rate. Even if you are not in the union, the range your wage is placed in is then dictated by the newly created industry standard.

    For those people in industries without predefined wage standards, workers often take what they are given. A special type of personality must come out in order to stand up to the boss and say they are worth more than the standard wage package. I have observed and read many people are not willing to take the risk of lost jobs or even personally choosing to change jobs in order to get to their own wage requirements.

    Any thoughts Ramit?

  72. Also possible people do look to earn more in a narrow field i.e. their usual experience as where earning more could be done in a variety of ways.
    Spend less –) earn more = balance
    or work smarter not harder!

  73. “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.

  74. I think there are 2 reasons
    1) It *appears* to be easier to make cutbacks
    2) Guilt when realizing how much we in the US actually consume and a desire to cut back on that consumption (perhaps going in extremes the other way)

  75. 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

  76. I think the spend less is so prevalent because it allows you to see an effect quickly. With earning more, there is time (and sometimes money) that must be invested before you reap the benefits. In comparison if you stop eating out for a month, you can “gain” a few hundred dollars.

  77. 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.

  78. It’s easier both bloggers to write about (since most have been through the overspending phase and are now getting it under control) and for readers to understand (just going by statistics here – the fact that a lot of people in this country have high consumer debt).

    Also, you have to figure out how much you spend and why or else no amount of income can protect you. Everyone has access to credit, which exacerbates the problem.

  79. 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.

  80. I searched for the term lazy in the comments and most people suggest that the recipient of the information is lazy.

    I think rather, the providers of tips (to spend less) are lazy and not being very creative.

    1. They don’t have to motivate people to be creative.

    2. They don’t have to open the can of worms that come when they suggest that their reader a) negotiate a better salary, b) freelance, c) change careers, etc.

    They can give you the suggestion and walk away knowing they’ll probably fail at spending less, but they did what sounded like good advice and they can blame the recipient for not listening to their sage words.

    Assume that someone is too lazy or dumb or whatever to take your advice and they might actually adopt that behavior and prove you right, rather than asking more of people and assume they can.

  81. 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.

  82. Totally in agreement with Joe. The culture in the US is to spend without regards to cost.

    PF in the US focuses on spending less because the crux of the problem is that people spend beyond what they can afford. Credit is (or used to be) readily available to everyone, regardless of their income, so no one had to pay attention to the simple fact that they were always negative.

    You never had to be accountable for your money, until recently.
    It’s only the fact that lending dried up that made Americans aware that they were living large.

    People all over the world say “no, no, no” to lattes and vacations – because they can’t afford it.

    I appreciate that your view on finances takes PF from the approach of “earn more” and your emotional relationship with money, instead of the “spend less” approach. But “spend less” definitely has it’s place with most Americans because they’ve never thought about what they could really afford.

  83. 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

  84. Yes, scripts are popular, but that is twofold:

    Two things are needed to make proper use of the script.
    The script, and understanding why it works.

    If you have no experience in changing your thought process, then breaking out of that paradigm requires help. And a simple way to start are the scripts.

    By learning from the scripts one can then make their own, and their own variations.

    Changing your thought processes is a learning process.

    As an example, Ramnit learned his negotiating techniques from his father (Ch. 1 of IWillTeach). His father had an ‘internal script’ for this process. He took this script and internalized it modifying it as needed to get what he wanted.

    When you don’t understand the techniques, scripts help to internalize the learning. (A good example might be Zen koans.) And eventually after internalizing them, you can modify them as needed.

  85. 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.

  86. It is so much easier to just spend less. You don’t have to actively do anything, your free time is still yours. People are lazy. They don’t want to work harder or more to make more money, instead they would rather feel like they are doing more by just spending less. And other people grab onto that concept and promote it.

    Also, it allows you to have instant gratification. Trying to make more money does not necessarily mean you will have any return for a while. Saving less though is instant and tangible.

  87. 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

  88. It is much easier to show results. If I can show you how to save $20 that’s automatically assumed money in your pocket. Earning money and all the rest of it is much more uncertain as to the outcome. Even though earning $20 and cutting out $20 of spending should theoretically have the same impact, it is hard to tell people exactly how to earn $20 more dollars, and very easy to tell people how to cut out $20 of spending.

    • I’m a little surprised how few people are touching on the psychology of frugality, and the profound cognitive costs of guilt and trying to save on everything (or even “a lot” of stuff).

  89. 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.

  90. My two cents worth in 3 reasons:

    1) It’s much easier to connect with the audience because it’s easy for them to understand the concepts and the tactics. Things like negotiating and earning more take a lot of practice and hard work and very few people are willing to do, even if they want to.

    2) PF mediums (blogs, mags, books) can piggyback on what the TV has been doing, which is showing big discounts and “savings”. Psychologically, we are programmed to be emotionally reactive to saving, price discount, and free stuffs.

    3) Some of them are not prepared to discuss more advanced topics because they don’t know much about them.

  91. First, I think a bunch of people nailed it above. Somewhere around 50% of Americans live paycheck to paycheck, so focusing on spending less makes sense.

    Second, I think you underestimate your own frugalness when you write things like this. Yes, you earn a ton, but without the foundation of frugality you learned from your family you would be driving a Bugatti not a Honda.

    Third, not everyone has the skills to earn more. It takes not only knowledge of marketing, but it takes a certain amount of confidence in your abilities (cough-cockiness-cough) that not everyone has. While you have been sharing the Earn 1K stuff you’ve seen people commenting over and over about terrible ideas, and markets. Americans are obsessed with coming up with “the” idea, and most of us don’t realize it’s not about a particular idea, but how we sell it.

  92. 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.

  93. I think the big reason is that spending is something you can control. You don’t need anyone else to buy in to anything or even be involved. And for a lot of people, that’s going to be easier than asking for a raise or starting a business, even if it’s not the most lucrative strategy in a time/money sense.

  94. 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.

  95. Thanks for pointing out my previous comment Ramit! This is turning into a rich discussion.

    I have seen some discussion of risk aversion, but I haven’t seen one specific point that I think is important:

    Saving is a good first step because it helps people to build up a safety net. It is much easier to go out and take a risk with a new freelance job or to negotiate with your boss when you have a lot of money in the bank. If you fail, who cares! It won’t make or break you.

    If you don’t have much savings, failure probably won’t make or break you either, but it will feel more painful. You will have missed out on a golden opportunity. The cost of losing the opportunity when you have no cash buffer seems higher – it’s like a loss-aversion argument.

    Would love to read more thoughts about the psychological side as well!

  96. 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.

  97. Frugality–in the penny pinching sense–provides short-term gains. Most people erroneously make short-term decisions with little regard for the long-term due to lack of patience and persistence. Earning more income and/or cutting large expenses is often a long-term investment, which scares many impatient and lazy people away. Pinching pennies can provide results today albeit small.

    Side note: I think the term frugality carries different meanings for different people. To some, frugality is meticulous penny pinching on everything. To others, it is a quest to obtain high value when spending money.

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

  99. i think it’s as simple as this statement.

    It’s easier to tell someone to do less(ie less spending) then it is to tell someone to do more(earn more)

    Everyone’s lazy and they’d rather do less.

  100. 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!

  101. Ramit, Spending Less is something people CAN perceive-ably do. Some might find it easy to cut spending, instead of Earn More, Invest, Save, get out of debt, Ect ect.
    So spending less, or giving lip service to it has become popular.

  102. 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 ;-)

  103. Great comments!

    Spending less is more immediate, so it helps with those who need a solution now, rather than later. Also, we are SO wasteful, so cutting back spending is one way of being more mindful of where our money goes. And MAKING DO is what our grandparents had to do.

    Earning more is longer term and humans aren’t as good as focusing on long term things!

  104. 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.

  105. I work at a non-profit consumer credit counseling agency, and it’s astounding how the tone of our consultations with clients is so close to those penny pinching blogs I loathe so much.

    Most of the time when a client seeks help from us it’s because financially they’re upside-down, so after their household expenses there’s nothing left to pay down unsecured debt.

    What’s interesting is that you can distinguish newer financial counselors from more experienced ones by what advice they give to the client at that point. Newer counselors will typically recommend increasing income, usually by taking a part-time job or asking for more hours at work. However, 99.99% of clients refuse, wrinkling their noses and spitting out a list of excuses that winds up looking like the comments section of an iwillteachyoutoberich article. What happens next is remarkable. Counselors become so jaded with pushing clients to realize their full potential and failing to sell the point that they give up. Instead clients who have already underedtimated their own potential rave about the great advice given by those jaded counselors who focus on frugality, in turn also underestimating the client.

    In the end I think it’s this vicious cycle (the same one that causes your friends and family to hate you for following the advice of folks like Ramit) that fuels frugality blogs.

    • Wow. Everyone read Stickypurplecat’s comment.

      That is a destructive cycle I’ve never heard of before (and I thought I’d seen a lot).

      Can others chime in? Have you guys ever seen this happening?

  106. I think it’s because it’s easier to spend less than it is to earn more. We (I) may be so lazy, we’d (I’d) rather do something that doesn’t require a lot of effort. The people who are not lazy, who have energy, who want more out of life, will expend the extra effort needed to earn more.

  107. 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.

  108. A dollar saved is $2 earned. And thts why….

    • Xmasy, that’s overly simplistic and misses out on virtually all the factors I’ve discussed on iwillteachyoutoberich over the last 5 years.

  109. I really don’t get why so many folks are insisting that frugality is the “easy” or “lazy way when compared to earning more. Actively watching your spending is like trying to pull teeth to someone that’s already horrible at managing their finances, especially since that usually also means monitoring other hard-to-break habits like smoking, eating out and being a couch potato (wonderful combo of TV, internet AND junk food!).

    If you get a raise at work – even if it only amounts to a dollar or even /half/ a dollar per hour – you’re still bringing in more for the same output.

    On the other hand, if you say saving vs. earning is simpler, that makes more sense. Like the classic comparison to weight loss, it might be easy to go on a diet, but it’s damn sure not easy to STAY on one.

  110. 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.

  111. In general, cutting spending is a great idea. Simply looking at lattes and things like that won’t really make a big difference. I love starbucks so I will have my java chip light with a smile on my face. However, I also look at the things that aren’t important to me (as you suggest in your book). I don’t pay for cable or internet and I watch tv on occasion at a friends house. I go to the library and use the free wireless internet. With knology I would pay $80/mo for something that isn’t really important to me now that I am out of college. Since I wear a uniform to work I have also stopped buying a lot of clothes. My next goal is to start buying groceries and stop eating out so much. I will take out a set amount of cash for spending each month and when it is gone it is gone. I cut spending because I want to move out of my house with a roommate and get my own place this summer. All saved money is going towards having my credit cards paid off in 6 months and watching my credit score go up. I also want to get ahead by 1-3 car payments before the end of the year. So long story long, I cut expenses/spend less now so that I can really enjoy the things that are important to me and take on my big goals.

  112. To hazard a guess, more people feel that not spending money is in their control, but making more money largely isn’t, or at the very least, is stacked against you.

    If I want to save money by not going to Starbucks in the morning, the only person I have to convince is myself.

    If I want to make more money at work, I have to convince my boss, who will probably defer to HIS boss, BOTH of whose bonuses depend on not paying anyone any more than they have to, and when they do, those decisions are largely based on politics, not real value to the company or its bottom line.

    If you want a better job, you’ve got to convince a series of people to interview you, hire you, etc.

    If you want to make money selling something, usually you have to convince someone to buy what you’re selling. It’s EXTREMELY rare for it to be the other way around.

    Investing money is one possibility, but it’s usually viewed as too complex and confusing (i.e. too much of a gamble) by most people.

    What other ways are there to make more money without convincing someone else of something?

  113. 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 ;)

  114. 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.

  115. Here is my thought on being frugal vs generating side income.

    Being frugal means you are giving up a lot of things. It means turning down going to the bar with your buddies, passing up a trip to Hawaii, not buying a pair of shoes you want, etc.

    I would prefer to be able to save money and still live the lifestyle I want. I personally like to go to the bar with my friends. I don’t want to give that up. So instead of cutting back on a bunch of stupid little stuff, I focus on making income on the side that will allow me to live the lifestyle I want while still allowing me to continue down a path to early retirement.

    Which would you rather do? Cut back on stuff you like, just so you can save a couple bucks here or there? Or would you prefer to make some extra cash on the side so you can live your life on your terms?

  116. 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…

  117. Wow, very interesting comments.

    I must confess, I think frugality is actually the hard part – the part that most people forgot to master first. After you realize that you can’t have everything now, you have to decide what is important enough to spend your money on.

    Anyone can spend more as their income (or access to credit) increases. It takes self-control to spend less, no matter what your income is.

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

  119. I think it’s because they’re taking the first step in teaching us how to use our money and then how to make more of it.

    If you read Larry Winget’s book, You’re Broke Because You Want To Be, he talks about earning more and spending less. He also talks about spending your money on the right things to help you earn more money.

    I like how he mentions that you don’t go broke from spending money but you DO go broke from spending your money on the wrong things.

    What do you think?

  120. 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.

  121. Ramit. I am in law enforcement. With a 6 days on 3 days off schedule… I don’t really have to dress up much. In fact, I am looking for a parttime job now just to funnel cash into my emergency savings account. I want to have 6 months worth of expense money saved up.

    I have always heard that there are two options for getting ahead financially- earn more or spend less. I took the earn more route. I went from making almost $1,000/mo working at a restaurant making 7.25/hour …this is about $12,000 year if I would have had the job for the entire year. I now earn almost $40,000 a year. I am working to get out of debt and I hope to be on the path to financial freedom by the end of the year. As soon as I file my taxes I am going to open up my ROTH IRA with T. Rowe Price.

  122. 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

    • That is the saddest story I’ve ever heard. Dude I would buy you a bike myself now. Plus, on the positive side, they’re only like $25 at Target.

  123. 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.

  124. I’m going to call my mom right now and tell her I love her. Those stories make me sad.

  125. 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.

  126. 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.

  127. Ramit- I’m not sure but I will never do it to my kids and I will teach them about financial responsibility early on in life.

    • Dude I need to tell you guys a funny story about my parents. I’ll do it in an upcoming blog post. Any Asian/Indian will TOTALLY get what I’m talking about. I actually have like 50 hilarious stories that I need to write about.

  128. To back up what Jen said, where I work, you can be fired for telling others what you make in salary, bonuses, etc. I’m sure that, even at places where it’s not that secretive, it’s still HIGHLY discouraged. Most companies WANT it that way.

  129. 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.

  130. Re: psychology and the profound cognitive costs of guilt (or of the perpetual “no no no”):

    For me Conscious Spending isn’t about “no no no.” It’s about “yes yes yes.” Yes for me making choices about my money, yes for me being aware of where my money’s going, yes for me being able to say “this is what I want to spend money on… and this is what I don’t.”

    And if I buy a latte or a Gazingus Pin or whatever, I don’t feel guilty. Sometimes I’m all “wow, that thing was so worth it,” and sometimes I’m all “meh, that thing wasn’t worth it.”

    Ramit, you wrote yourself about Conscious Spending, which is really at the heart of frugality.

    There’s also the huge psychological benefit of having less stuff to think about–less stuff in the house, less stuff in the brain (because you’ve already decided you don’t need to worry about “whether or not to buy XYZ”), fewer lattes down the gullet, whatever.

    It’s so much more than “no no no.”

    Also 100% agree that frugality is about control, and about taking action today, and about something you can do vs. something you have to convince someone else to do.

  131. 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

  132. Ramit,
    The focus on spending comes from the fact that you can always overspend what you make. Even big fancy surgeons making $500k can overspend their income if they go hog wild and buy six Ferraris a year, owning a yacht and living in a fancy mansion.
    There are two elements for profitability, income and expenses. You can build wealth on even a small income as long as you spend less than you make.
    There is always room to make more money and it’s great to talk about making more but for most people with money problems, just making more money isn’t the solution. They have to change their attitudes and their habits and get it in their heads that they MUST NOT overspend their income, whatever that income is. The way to learn that is by budgeting and knowing how much is coming in and where and how it is going out.
    Any conversation on personal finance should have both elements of the equation.

  133. 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.

  134. I believe its much more straight forward to give advice on cutting spending than advising someone on earning more. If you were telling someone to make more money the list is endless on how to approach this topic with lots of gray areas. Also, earning more money is a very personal topic with lots of gray areas – tactics and approaches that are applicable to one individual may be a bad fit for another individual. Cutting spending is much less personal, more well-defined, requires less experimentation, and is much more a short-term solution.

    Thanks!

  135. 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.

  136. My two cents is that it is simpler to tell people how to save money then to make money. After all is it simpler to not by a pair $100 pants or to earn an extra $100? I just think that people are programmed to say cut costs they are not programmed to think earn more when it comes to the question of money.

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

  138. WOW. Dani, I was almost going to skip your comment because it was so long. But it is one of the best ones in this thread of 150 comments so far.

    Especially the second-to-last paragraph. That is simultaneously fascinating and depressing.

    I have a lot to think about. Thanks for leaving it.

  139. Well Ramit, I hope you’re including your blog in the 98% of PF blogs that advocate frugality, because certainly that’s what Conscious Spending, the A La Carte Method, and negotiating prices all are.

    As for why frugality is stressed, it’s the first step in teaching people to value money and that they can be rich. Take the ubiquitous latte–say someone spends $50/month on it without ever thinking about it. That’s their latte money. Advocating frugality (and conscious spending) tries to wake people up and remind them that that $50 doesn’t have to be latte money. It could be retirement money, concert tickets, a vacation, or any number of possibilities. If they get a lot of joy out of their lattes, by all means, spend the money. But realize that money has real value outside of lattes. In short, frugality is the first step in living a rich life–allocating your resources to where they make you happiest. As I tell myself, I can have anything I want, but I can’ have it all.

    However, if you are constantly squandering your resources on things that don’t matter to you, you probably believe that you’ll never get rich (and likely rightly so). Ask people on the street if they think they’ll ever be a millionaire. Most people don’t think it’s a possibility. So if you think you’ll never be rich (not to imply that being a millionaire means you’re uber-rich), why would you ever bother trying to earn more? From your perspective, its a lot more time, without the ability to make a dramatic difference in your life.

  140. 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 :)

  141. Spending money/time requires you to have the confidence that you’re investing in the right thing. If a person doesn’t believe in their own ability to make a good decision, they’ll never spend that money. And if the investment is in an area in which they have no expertise (say, Finance!) – even worse, they feel like an uneducated amateur.

    In contrast, ‘spending less advice’ is based on the assumption that you were already doing something WRONG (spending too much), which people of low confidence are all too ready to believe.

    The only real solution is to become educated (which you already advocate) or to put your faith in an expert and blindly follow their advice.

    From your perspective, Ramit, it seems like your options are to either start a cult of personality to bend the public to your will, or continue your campaign to educate & empower. From experience, I think you’re doing a bang-up job talking people up from that Frugality Pit.

    I generally find it difficult to spend money on myself, but I think your writing has had a big part in my FINALLY starting on the certifications that will prove to others that I know what I know – and give me some negotiating power.

  142. 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.

  143. Because it is much easier (and less riskier) to save $1 than earn $1.
    If I want to save $1 per day, all I need to do is to resist the urge of buying soda with my lunch. Too easy, I don’t even need to think.
    If I want to earn $1 per day, I might need to do a lot more. If I build a new web site, I need to find a good hosting company, install wordpress, create good content, put on some advertisement, establish links, … you know what it takes.
    How about renting one property? I might need to buy something worth more than 10K to get $1 profit per day.
    To earn more, you need to put either time or money into it. Sometimes even both. Create something profitable might have unlimited potential. But if you take the possible loss into consideration, it might not be worth for some people.
    Short-sighted? Yes, I think it is. Since no matter how you reduce your expenses, you still have some basic needs. But most people do have some rooms to spend less. It is more achieveable for most people like me.

  144. 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.

  145. I generally like the material in this blog and encouraging people to make more money is great, but I have a real issue with many of the comments on this post.

    If successfully cutting costs and saving is so “easy” that “everyone can do it”, as many of the above commenters have claimed, then why is the savings rate so abysmal in this country (USA)?

    If you’re in the habit of spending 110% of what you earn, it doesn’t matter if you make $30k or $230k; either way you’re headed to financial failure.

    You can operate all the freelance, stay-at-home, side-project income boosting businesses you want, but unless you’re able to manage the money you have coming in, you’re never even going to notice the extra money before you blow it away on valueless crap you felt like you’re entitled to buy.

    I’m not advocating that everyone live a life of self denial and spend their weekends and time off making soap @ home (TSD seems like a popular target around here). I just don’t see how questioning whether your really getting your money’s worth from your twice daily Venti, sugar-free, non-fat, vanilla soy, double shot, decaf, no foam, Peppermint White Chocolate Mochas from Starbucks (@ $15/day) should be scorned, but busting your ass to set up a side business (that will likely fail, by the statistics) in the hope of making a couple extra grand a year is to be applauded.

    These are not mutually exclusive things. Shockingly, it is possible to both lower your spending, AND make extra money. One is not the path of weak-minded lazy people, while the other the path of the righteous enlightened; they go hand in hand. Anyone mocking either approach while pursuing the other singly doesn’t yet “get it”.

    • A good point, P.K. It’s easy to point the finger at others, but how many of us actually have a conscious spending plan (or, even if we don’t use the phrase…how many have actually reduced our spending consciously)?

      What do we NOT care about spending money on?

      A lot of personal finance seems to be pointing fingers at other people while simultaneously saying, “Well, it’s different for me.”

      I hope I don’t encourage too much of that on this site.

  146. Good point, P K. Totally agree that those two are not mutually exclusive.
    It’s just that spending $1 less is different from saving $1. If you save $1, my definition is that you keep the money for future use, you might use the money to fund your business. If you spend $1 less, maybe the next second you use that $1 for some ultra expensive gadgets.
    How to manage your money well is the key here.

  147. 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.

  148. [...] 想要有錢,應該花少一點,還是想辦法賺多一點? 著名個人理財部落格I Will Teach You To Be Rich最近貼了一篇文章:Why do so many personal-finance sites focus on spending less?(翻譯:為甚麼這麼多個人理財部落格的內容都專注在減少花費上?)。的確,現在有許多部落格或媒體,關於理財的主題比較偏向於如何節約、省錢,而非創造新事業、新價值。 [...]

  149. 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.

  150. “So, what do you think? Why is the vast majority of personal-finance material focused on cutting down on spending?”

    The same reason that 12 Hr workdays are overvalued in a corporate environment: the US seems to value personal sacrifice over personal productivity or personal happiness. For some reason we keep thinking there’s a light at the end of the tunnel if we can just live like paupers for some undefined amount of time.

    After reading The 4HWW for the 4th time it’s finally engrained in my head that this is not the way to live.

  151. 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!

  152. Personal finance sites focus on spending less money because the writers of the content don’t themselves know how to make more money. They can’t dispense advice in an area in which they have no expertise. Also, earning more money is not formulaic in most cases, or if it is, I don’t have the time on my hands to try out all kinds of different formulas before finding the one that works. Most of what’s out there in terms of products that help you to make more money are pyramid-scheme-like in nature and a lot of us are either turned off by that, or try to drink the Kool Aid and really get behind things such as MonaVie or whatever in order to try to make more on the side. Most writers in the personal finance world don’t want to dispense advice they’re not sure they could execute into results on their own if challenged by a reader, and they know how afraid we (not EVERYone, but the royal ‘we’) are to venture into untried and untested territory. We crave security and comfort, but when we crave stimulation, most of us back away because there doesn’t seem to be any safe way to fail when most of the things we need for daily life seem to cost us so much energy to acquire. The system thus disincentivizes people from taking a risk to grow, financially, and by extension, personally. I think people decided to become experts in frugality when they find they can’t outwit the setup. Anyone can become an expert in frugality, really.

    As for earning more money at work, I’ve found that in many places, even if you are to become ‘indispensable’ (as the latest buzzword trumpets), people become jealous of your capabilities and you can be shunted out the door for political reasons that have nothing to do with your capability. Being a woman, I can attest to truth of the horror stories you hear about women getting stabbed in the back by other men and women in the workplace even if they are ‘indispensable’. Honestly, there is no such thing as indispensable. Only indispensable for right now, which means that if you are to be indispensable indefinitely, you need to be indispensable right now and react to make sure that as the sands shift, you continue to be indispensable for the particular sands for that particular moment. Most bosses and co-workers have baggage and issues that can sink you no matter how ‘indispensable’ you are. If you think that keeping a job has nothing to do with how submissive and nonthreatening you are to the status quo, you are sorely mistaken. I worked for a company that wanted to take out a full-page ad in a magazine proudly declaring that for 30 years, nothing had changed with them, as if their success and stability could be judged based on the fact that they’d been around forever. People love that stuff! They love keeping things the same. As long as you have those who adhere to the status quo, you can only be indispensable if you don’t rock the boat. And there are TONS of companies out there that have been limping along for years in the status quo neighborhood.

    For readers of this site, they want something more than that. But try to find those companies that want you to change and grow. Really. I read a lot about how companies want their employees to do things, but really? Where are they? Anyway, my point is that the current buzzword of being indispensable does not automatically translate into raises and perks beyond your wildest imaginations. Nor is the answer just ‘working harder’ and not being ‘lazy’, which in and of themselves are lazy observations that show the person who wrote them didn’t work hard enough to see all the issues affecting why people feel disincentivized to work hard enough to become ‘indispensable’!

    Tossing around the words that other people are ‘lazy’ and need to ‘work harder’ I’m sure gives many people that smug and warm feeling of momentary self-righteousness that makes up for the warm and smug feeling they get from their $3 lattes, if one is not within reach, or if one is, then they’re laughing while they double their pleasure by smirking at all of lazy people who just don’t want to work hard!

  153. 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!

  154. [...] Or are you always focusing on how to be more productive (see the comments on this post)? [...]

  155. 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.

  156. One of the reasons I seldom read this site (although I do enjoy the posts about one person’s daily spending habits) is because the focus is always on making more money and sneering at the blogs that support frugal living. I’m on disability, and I cannot make more money because it’s not physically possible. So for me, reading about how to best manage and save my money is worthwhile. I will not, however, be making my own laundry soap.

  157. 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.

  158. Earning more won’t help you if you don’t have financial discipline. It’s the old cliche, it’s not how much you earn but how much you keep.

    Back in my 20s and 30s, I worked as a contractor in the software industry and made good money. I banked about 60% of my earnings per year. However, I met many contractors who made more than I did who lacked discipline and lived large. One even had a Hummer – the original one. That must have put him back at least $130K. I’m sure when the market tanked in 2000 and technology workers were being thrown out by the boatload that he looked in his driveway every morning and asked, “Why the hell did I buy that?”

    After becoming disciplined in your spending, you can then concentrate on earning more. Otherwise, you’ll go nowhere.

  159. 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.

  160. Ramit,

    Commented earlier on this, but have been thinking of the question since I read the article. Decided to write my own post with a somewhat different answer.

    Side question. Do you ever stop reading comments? After 150 or so, do you start noticing redundancies?

  161. 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.

  162. I have been using the sites that encourage frugality because I am trying to change my long habit of my budget being the typiacl paycheck to paycheck budget… my income rises and I find all of a sudden I realy deserve certain things. I would estimate my income has doubled over the past 10 years. Had I kept being as frugal as I had to be making half this ammount I would have a fortune saved up… no instead I now have monthly bills that mirror my incoming pay. Of course I would like to earn more money but if it is going to have me work another 20 hours a week and my spending just rises to match it – what good is it. So my personal mission has been to cut back on everything I can realistically but no I’m not getting rid of my gym membership that I use and substitue it with barbells made out of tomato cans with cement I made from chipping and old scrap of cement using a rock to save the price of buying a hammer. OK maybe that is a bit extreme but some of these frugal sites are close to that mentality. Life requires balance not extremes…
    If I can retrain myself to take my surplus income and invest it to make more money rather than have my material needs rise to meet my income then it will be worth it to attempt to make more income.

  163. 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.

  164. Ramit, I think you advocate balance here in the sense that you should spend less on the latte’s because you have a dream vacation you want to take. I’m with you about the whole frugal movement. I really don’t have the time to make my own deodorant, soap OR grow a garden. Time is very limited for me.

    Now, I have to balance my comment with this statement…”Every situation is different”. I can understand the single parent with school aged kids not being able to earn extra money on the side. After work, the younger kids have homework which takes up (at least for me) the entire night. By the time 10pm is here, I’m burned and have to start over the next day. So, in this case, a person that is trying to get out of debt HAS to spend less to achieve that.

    If a person has become debt free though, I don’t see why they can’t enjoy the fruits of their labor as well as save for the future. Thanks for bringing this to light.

  165. 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!

  166. I’m not sure why PF sites focus on frugality so much, but one important reason why it’s not effective is that it’s easy to break. I can go for weeks without getting a latte, but then blow all the savings in one night out or one trip to amazon.com. When I realized this, it became much easier to let go of worrying about the small things and make guilt-free purchases, while focusing on bigger gains.

    There’s also a certain sense of hopelessness (How could I ever earn start my own business?), so penny-pinching gives a false sense of control (which others have mentioned).

  167. 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 ;)

  168. In my opinion why they focus on spending less is because in reality the economy is tough right now it is hard to raise your income so one option to accumulate wealth is reducing your expenditures. People needs to stretch their money until everything goes back to normal.

  169. 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? :-)

  170. My upcoming book is focusing on earning more as well as other finance topics

    To answer the question is much more easier to spend less… little effort. However, earning more actual takes a skill and/or risk and most people tend to shy away from risk

    Anyone can emabrace spending less

  171. 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.

  172. Yes, I agree with most commentators here.
    Because more spending leads to debt or more debt, and the inverse hold true; less spending less debt and more savings.

    Spending less is not the same as being cheap,

    It is a basic mathematical formula: if you have 10 minus 15 you have negative 5 balance. If you have 10 minus 3 you have positive 7 balance!

  173. 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

  174. Easy.
    Instant Gratification.
    Lazy.

    The foundation is the problem – improper education. We all earn, spend, and (hopefully) save money, but yet no one is taught the proper information. It is the single-biggest deficiency in our secondary and college education system.

    We can’t bark out orders with regards to saving though cutting back on spending. We have to teach people to respect the dollar AND compound interest. Once they understand they will reduce spending on their own.

  175. 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.

  176. Because people feel safer trying to control (contract) than expand (try new things to earn more).

    And because we believe in limitations!

  177. [...] 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 [...]

  178. I cover these types of things. I need to work on execution though.

  179. 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.

  180. 1. Narrow Point of View – The bloggers who are writing about spending less are coming from a point of view that has already dismissed the notion of earning more. Since they don’t see it a viable option, they won’t recommend it except for the occasional “have a garage sale” suggestion.

    2. The truth hurts – Telling people that they need to earn more is a hit to their ego. It’s a sore subject because they already know deep down that they are under earning, hence the usual retorts about their other commitments, lack of skills, etc. that they use to avoid confronting something new and scary.

  181. 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

  182. I would guess it’s because saving money is something that you can do at any moment. It has a certain immediacy to it.

    Whereas earning more money is usually something that requires time to plan and execute before anything fruitful comes.

  183. 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.

  184. It’s safe & guaranteed and, thus, has a wider market.
    If you don’t buy that cup of coffee, you have categorically saved $2 at a loss of $0 (and, of course, a cup of coffee).
    If you try to make more money, there are much fewer guaranteed wins, and more guaranteed losses.
    I think that’s why the ‘cut costs model’ prevails so much more. It’s more obvious, and it is safer. People like guarantees

  185. 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.

  186. Glanced at the comment at 1 and think mine might be similar – if you are being frugal, you will get a short-term effect immediately. More significantly, you are automatically ‘working hard’ and ‘being sensible’ which is universally seen as a good thing, and paradoxically puts you in a comfort zone in a way that working to have more. Thinking about wealth and being rich, even if it’s just the basic increase asset / decrease liability model of ‘rich dad, poor dad’ takes a certain understanding and boldness to adapt, and a shedding of old values. This is all difficult.

  187. 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.

  188. Most personal finance sites suck. There’s an overwhelming number of them run by people who really don’t know much of anything about finance — they simply found themselves in debt, decided it was too much to deal with, and went looking for help on the internet. What they found was the “online personal finance community”.

    And they liked it. And they wanted to participate, so they started their own sites. But they have no real new knowledge nor research of their own, they simply apply the lessons they’ve learned from the rest of this community and write the same stories as everyone else. And so, once one person stopped buying lattes and wrote about it, everyone else did the same thing, and they all wrote about it, too.

    It’s a self-perpetuating cycle of mediocrity and regurgitation.

    Sure, there are a few sites out there that don’t do this. By number, they’re a small minority.

  189. Is there a reason you cant do it all?

  190. Not sure if anyone has said this already or not, but I think the first step of learning how to save money and not spend is brilliant. Of course just doing that isn’t going to make you an amazingly rich person unless you play your investment cards right, BUT I believe the principle of the advice is worth it’s weight in gold. People are spending money like it grows on trees, racking up debt like it doesn’t mean a thing.

    The hard part about not spending money? Self control–something that nearly nobody has these days–budgeting and saving teaches self control and the value of money. And budgeting DOES teach a person about personal behaviors and spending habits.

    To generate wealth; however, I believe you have to take risks, and spending money is one of them. People who understand money and self control and spending habits I feel can have the upper hand on those who just spend money and drop Franklin’s on every new venture and money-earning possibility that comes their way.

    Taking control of your money by saving and budgeting also helps relieve financial stress–worth it’s weight in gold. There is great value in learning the ‘basic financial principles’ of saving and budgeting.

    As far as the other parts of your question as to why they don’t cover other areas? I think there’s 2 parts to that.

    1) Their’s such a huge need in today’s society for people to get a grip on reality and quit spending needlessly that the financial people can say ‘save and budget’ as much as they want and for 90% of the people out there, that advice doesn’t get old.

    2) A lot of these financial counselors most likely don’t have a lot of experience in the other areas of business building and aren’t as savvy at the other areas as they are in the finance. And if they are, they’re not willing to exert the effort to do so because they’re happy in their comfort zone.

    Well, that’s my two cents, or three, or four.

    Cheers!

  191. 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.

  192. “Why is the vast majority of personal-finance material focused on cutting down on spending?”

    Cutting spending is closer to the ground and revolves mostly around changing habits.

    Increasing income is riskier and needs greater understanding of businesses and practices that aren’t well understood. To advocate ways of making more money would require experiencing activities beyond the routine. That would be more time intensive than writing about expense reduction.

  193. 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.

  194. Ramit,

    I’ve wondered what the hangup with is about frugality. Yes, it’s important to earn more and live up to our potential. But why does it have to be one or the other? Can’t we do both? What does Ramit have against wise spending?

    Then I realized: What I call “frugality” is what you call “conscious spending.” And what you call “frugality” is what I call “being cheap”.

    So to anyone out there, I don’t think there’s anything wrong with LESS. I mean, heck, Leo and ZenHabits has proven the power of LESS. But it needs to be a conscious less, not just less for the sake of less.

  195. 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.

  196. It’s been said before, but I want to reiterate that the reason that the majority of personal finance sites focus on spending less is because spending less is the only realistic option for the majority of people. And it’s applicable to virtually everyone. Let’s be honest, Ramit – your site is necessarily restricted to a specific minority of privileged people. Not everyone can earn more money. Some people can’t afford the time investment to pursue higher education, to start their own business, or to get a second job. People have disabilities, people have kids, people value what little free time they have. Most personal finance sites are focused on efficiency because that is all most people need, want and can manage.

    Think about it for a minute, how would the world work if everyone followed your advice? We can’t all be entrepreneurs – the world needs garbage collectors, the world needs assembly line workers. This is to say nothing of the fact that if everyone was able to get paid more, it wouldn’t make a real difference because it would just push up the cost of goods and services in concert. On a strictly personal level the pie isn’t always fixed, but in a global sense there are limits.

    • Danny, I agree somewhat, but mostly disagree. Nobody’s saying everyone should be an entrepreneur, because of course that’s unrealistic.

      But everyone can earn an extra few hundred dollars per month. Even an unskilled babysitter or pet-sitter can do that.

      Is earning money important to them? That’s another question. People claim lots of things are important, but our behavior reveals differently

      I DO agree that there are a variety of reasons why people focus on cutting rather than earning, and they’re not simply technical. They’re psychological, motivational, and logistical, too.

  197. Thinking about what not should be spend is another set of mind principle. Our usual thoughts is on how to spend less. maybe it could be better of if we also think on how not to spend?

  198. 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!

  199. Holy cow! Obviously lots of people here equate frugality and cutting back as being “cheap” and lazy.

    IMHO the reason most PF blogs talk about reducing spending is because it’s easy and it works! Are all of you against something simple that with minimal effort and some thought actually works? And it works because most folks already make plenty of money to live on. In a nutshell:

    *Most people don’t need to increase their income*

    The problem is that they’re just throwing money away without any focus, often on crap. So whether you want to call that focus conscious spending, frugality, budgeting, or a spending plan gaining some amount of focus with respect to your spending is likely to truly help most people. Look at those folks following Dave Ramsey, they’re knocking out tens of thousands in debt in under a year. They obviously don’t need to make more money, just pay attention to the money they do have and how they’re spending it (though some do go a bit extreme).

    You have to stop the arterial bleeding first, then you can clean up the multiple little cuts until you’re comfortable. Then you can tackle getting more, if you find you need it or want it.

    But stop complaining about “easy” or it being “lazy”. Lazy is knowing you can save fifty a month with a five minute phone call and not wanting to bother because you don’t want to look “cheap”.

  200. 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.

  201. 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.

  202. I this teaching people to spend less (decrease “costs”) rather than to make money (increase “revenue”) is wrong in the sense that it teaches people to aim low (“oh, I just need enough money to survive, which is ironically why someone isn’t rich”).
    I read some other article that talked about this and said that spending more money actually opens your eyes to a whole different world. And I read another one that said that most people making more money than middle class felt that they needed more money relative to middle class people to “just get by”.

  203. 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.

  204. Dear E.

    I think its great that you are reading articles about money. That’s the way to figure out what your own philosophy is and move forward. But remember that choosing to prioritize your spending instead of working evermore harder to chase the almighty buck is not what everybody wants and its definitely not aiming low. There are plenty of jobs out there that are rewarding because of how much you can affect people’s lives that are not that highly paid. As Clayton said, people who start their own business usually don’t have a problem managing money. That might be because they believe in what they are doing. Also, I don’t really believe that spending alot of your money to live a little rich is not going to do anything more than stoke the desire for what you can’t (at least now) afford. As the Buddhists say, desires are endless. When you figure out who you are and how you are going to effect change in this world, then you won’t feel so much like an outsider looking in. Because you will be doing what you are meant to do. Otherwise you are just selling your time(= life) for a job that has little real meaning . Just recently I met with my financial advisor to see when I can retire. Spending less has enabled me to consider retiring now, with the idea that I can spend twice as much money as I am currently living on for the next 30 years, and still never run out of money (within certain parameters!). I would never tell you not to work harder and work smarter, for sure, but the one thing I would tell you is to make sure that your money is ALWAYS working for you.

  205. 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.

  206. Hey Ramit,

    I just wanted to say that after reading through, or skimming through these comments, the single most impressive fact to me is that you are reading all your comments. It shows me how committed you are to this project and is one of the primary reasons I find myself continually returning here.

    • Thanks Matt. This is one of the most exciting things I’ve done since I’ve launched iwillteachyoutoberich 5 years ago, so I’m really happy to see the positive response.

  207. I tried to comment earlier, but I don’t see it showing up. Anyway, I just wanted to say that I agree with many of the people on here about the relative cost of saving versus trying to earn more. However, having said that, earning more can have a strong psychological effect of making you feel prosperous and want to earn more.

    I just finished reading your book, and it seems to be a very basic guide for people who know absolutely nothing about finances. And this is great for the vast majority of people. But some people are beyond that and should be looking at it from a larger perspective.
    For instance, we should be looking at how the system came to be and how we can turn the system on its head to benefit from it.

    Whenever I have visited a casino, I don’t think about the possibility of winning a large sum of money like most people do, I think about how to make a casino! Those guys are the guaranteed winners! We should be trying to break out of the system instead of becoming further entrenched. The idea that 401(k)s will somehow make you “financially independent” is, quite frankly, insulting. Sure there is money to be made in that casino gamble, but I’d much rather open my own casino than play at their game.

    I hope you have a chance to check out my site, Fruitfulista.com
    Cassie

  208. 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.

  209. I agree, there is a point where you have to ask yourself.
    Do you work to live, or do you live to work.

    I love my free time and time with my family and friends. and have to be convinced of the worth of something before I give it my time.

  210. 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.

  211. Most of the comments are dead on. Most people don’t like leaving their comfort zones, cutting unnecessary spending is a lot easier than going out and earning more money. Also earning more money is not as easy for people with blue collar jobs. A lot of these jobs are capped at a certain wage and unless the people doing them become some type of management they won’t see a raise. Of course if that’s the case one could say that they could go and look for another job somewhere else but most people don’t want to go through the whole interview pimp themselves out process a second time around so they stay where they are at. Earning more money inevitably means that a person has to be more assertive and take charge of his or her life and figure out to do next. That is a daunting prospect to many people and one of the easiest to put off indefinitely.

  212. [...] should focus their attention on cutting expenses or earning more. Recently, two articles, David and Ramit, had me thinking about this [...]