By Carol H Cox
When our budget is out of whack, getting it back in balance by spending less is usually easier than working extra hours to earn more. Let me say that again a little differently: Spending less money is easier than earning more money.
This may seem obvious, but it’s the opposite of what many of us do. The Internet is full of suggestions on how to make an extra buck in the gig economy. From ridesharing our cars, to delivering groceries, to completing online surveys, there is no shortage of ways that we can occupy our time to make more money.
But is making more always the answer? Maybe deciding to consume less is something we need to consider first. When we need to come up with a little extra money in our monthly budget, it’s more efficient to not spend on something than it is to work extra hours at our job or do some side-hustle to bridge the gap.
I believe that most of us know this to be true deep down. But it’s kind of nebulous in our minds, a hazy idea not very solid. So let me put some concrete numbers out there to show you how it works.
I did a simple exercise. Using an online paycheck calculator, I experimented to see how many extra work hours would it take an individual who earns $25 per hour working in California and with a tax-filing status of single to earn an extra $100 after taxes.
The numbers were worse than I imagined. To earn an extra $100 after taxes, that individual would have to work almost 10 extra hours, earning an extra $250 before taxes. (About $150 gets consumed by withholding for federal and state income taxes, and Medicare and Social Security.)
Rationally, I think, most people would rather give up going out to dinner a couple of nights for a month instead of having to work an extra 10 hours for the money.
But the knee-jerk reaction is often to make more money. Maybe it’s that we’ve internalized the belief that more is always the answer, and giving up something means having less of something. And more is assumed to be better than less.
The flip side of this is that in order to be able to spend more, we’ll have less free time. Sometimes we forget that our time is our most precious resource (we only get so much of it in a lifetime). Do we really want to spend chunks of it working overtime, or delivering food, driving around strangers, or walking somebody’s dog to earn a few extra dollars?
There are lots of ways we can save money. Here are just a few spend-less ideas that come to mind:
- Dropping one or two subscription services (e.g., Hulu, Netflix, Prime, Ipsy, Blue Apron, Spotify, etc.).
- Making a smartphone last an extra year or two before upgrading.
- Axing a seldom-used gym membership.
- Making coffee at home more frequently instead of buying at a coffee shop.
- Drinking fewer alcoholic drinks out every month.
- Buying more generic instead of brand-name products.
We really do have a choice. We don’t have to be a slave to the spend-more mentality. And spending less means not having to give up more of our valuable free time.
Others of you may see things differently. What are your thoughts?