A Dollar Saved is Two Dollars Earned but Two Dollars Earned is Twenty Dollars Saved

by David@MoneyNing.com · 18 comments

earning money

Once in a while in personal finance literature, we will come across an article about the advantages of saving money.  The phrase “a dollar saved is two dollars earned” or something similar often comes up since it’s so catchy.  After all, the savings are after taxes, and it’s always about how much you can keep and not about how much you earn right?

While many of those articles are true that savings is certainly very important, I feel that it underplays the importance of earning money.  People seem to forget that in order to save, we need to earn the money first.

Earning money is about giving us choices.  With money earned, we have freedom.  We could spend it if we really like, but if we care about our future, we should save it.  Saving a dollar is probably equivalent to earning two dollars, but if we don’t earn it, where is that dollar coming from?

We look for all the ways to save money.  We spend so much of our time to read about how to save money and actually doing those things to save a few dollars.   We, however, seldom read about how we can earn more money and spend even less time actually trying.

Let me tell you that spending a few hours a week extra to earn more money will give us so much.  It will enable us to choose between keeping the money and spending it.  It will give us freedom and confidence that we probably will do better at our primary jobs, snowballing this positive cycle to an even higher income.

Earnings and income are also cyclical in nature.  Once we spending the time to earn more dollars, it usually means we will periodically receive more.  For example, if we start a part time job and earn another $500 a month, we will get the same $500 extra each and every month.  Saving money on the other hand is a one-time event.  If we spend the time to save ourselves $500 dollars, we will need to spend more time to save another $500.  That’s why while a dollar saved is two dollars earned, two dollars earned is twenty dollars or more saved.

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{ read the comments below or add one }

  • himagain says:

    I wrote this basically in answer to Marci above, but then read a LOT more:
    Here is the keypoint for all to consider:
    By 20 years from now, your $1000 p.m. will purchase equal to maybe(!) $100 p.m.
    Ask someone over 70 what they earned in their 20’s. What a house cost, a car, rent.
    The only traditional way to win is via investment property.
    Never sell it. Capitalise it.
    Start with just freehold land.
    Finally, what if you become ill – need an operation?
    Get over the idea of a “The Good Life” when you retire.
    Focus on getting/being/staying healthy NOW. (See above)
    The USA in particular, is going to make the Greek problem look simple within 3 years.
    Your only real hope if you aren’t supported by a wealthy family infrastructure, is to plan to be long gone from the USA as soon as possible, if you have any form of superannuation.
    OR, at least get outta town!
    Most of you are wasting money on rental on properties you neither need nor really can afford, or even worse, “buying” to live in. ( On average you will pay out twice as much per month buying a non-investment home. )

    The fatal error for most Western retirees is the dream/hope that they are going to have The Good Life and live at a standard they didn’t even have when earning!

  • Jean marie says:

    I am a 51 year young single parent of now grown children and I must say I don’t get it at all I don’t even get the chance to live pay check to paycheck because I’m constantly helping my children out, and due to my sons illness and being hospitalized I am now job less home less and penniless and powerless ,so I guess I would wonder how I can accomplish working and being avaiable to my 18 year old son , I have had some good jobs and understand a bit more on putting my financial needs first its just hard to maintain a position when your son could be hospitalized again this however has been a pattern for me to give to Thera before myself so I’ve really never educated myself on savings Amy advise would be helpful reading this and reading the feedback gives me hope thanks jm

  • Theresa says:

    I have a second job, and while having that extra money is nice, I am working 55-60 hours a week. I have one day off, and I have to use that day to catch up on everything I didn’t have time to do during the week – cleaning, laundry, shopping, etc – so I usually never have a day to do nothing. I am doing this because I’m young (25) and don’t have children, so I have the time/energy to keep it up for now. But it won’t last forever, and frankly, I wish I made more at my primary job in order to quit the part time!

  • Asana says:

    The entire logic of the article is entirely wrong. The only logical way to explain savings is if you earn more than you need you will have more to save. But in no way do savings equate to earnings. If you are hungry and need a slice of pizza to fill you up saving half of it won’t really help the situation whereas if you can afford to buy a 16 slice pizza you can save 15 slices or feed 15 other people. In other words the best use of a resource is to create more resources. To Paraphrase Jesus “Invest your talents and don’t bury them”

  • shakylegs says:

    I realize I should have also made a “saved” scenario” in my comment above:

    If it took a whole year to earn $50,000 with $37,500 fixed costs to save $7,500 (remember your fixed costs continue relentlessly whatever you do) Then one dollar saved is equal to four dollars earned. It gets worse, if you save only $1,000 out of the $50,000 income, the one dollar saved is then worth fifty dollars earned; in other words “a dollar saved is worth fifty earned.”

  • shakylegs says:

    Quote: “if we start a part time job and earn another $500 a month, we will get the same $500 extra each and every month.”

    In this present economy “get a part time job” is a facile statement. A better way to think of “a dollar saved is two dollars earned” is this:

    You have your monthly earnings. You also have your fixed costs: taxes, insurance, housing, food, transportation, etc. But we all waste money one way or another. So let’s say you make $50,000 a year, and your fixed costs are 75% of that, but waste the remaining $12,500. Maybe not waste, but you can call them “life’s little luxuries.”

    To continue: It took a whole year and $37,500 to earn that wasted $7,500 (remember your fixed costs continue relentlessly whatever you do.) To make up for the wasted money you will have to work a whole additional year (with no waste) to just break even.

    Even if you do not waste money, but your fixed costs are equal to your income, then you are on a treadmill to nowhere. In previous economies we could all count on the house as our “nest egg” but no more.

  • Joseph says:

    I have read many comments that say, “make yourself valuable at your job to make more money”. However, that is not an accurate statement. In too many cases I have come across, I have done this by putting extra hours in (with no pay for it), taking on more responsibility, being proactive, and going the extra mile to do the best job possible. I usually get the “Wow, you are a great worker/employee” speech, and then when time came for annual reviews and raises I still received nothing more than a 3% cost of living increase. Too many employers out there are looking to milk you for all you are worth, and not pay a dime extra for it. Getting raises and promotions have less to do with the job you do than with the financial fitness of the company, their budget, your relationship with you supervisor, your supervisor’s idea of your skills, and often, simple old favoritism. Yes, this is a jaded and pessimistic view, but unfortunately, it is also correct.

    • Delio says:

      Well said Joseph.
      Too many employers out there are looking to milk you for all you are worth, and not pay a dime extra for it. Just like to add, squeeze and grind

  • Thrifty Gal says:

    Don’t forget that having a second job might have costs. For instance, if you have little time between your first and second jobs (assuming you go to both on the same day), you might end up buying a meal out because there is no time to go home and prepare dinner between the two jobs. Also, you might have to pay more in child care, if you have children.

  • Nse victor OKon says:

    Thanks for your posts here. They are lovely. But I want you to tip people more on how to earn more money adn how to utilize their times effectively well because it takes the rcih man the same hours in a day to become rich and the poor man the same hours to remain poor. What is the difference between the two?

  • CD Rates says:

    No matter how much you earn, you should always put some away. Earnings (even for big-time CEOs) can change drastically. You can also have an unexpected events that have large expenses.

    Savings 3 – 6 months of living expenses is always prudent.

  • magnesium says:

    From my point of view in order to avoid saving one should earn money enough

  • Chad @ Sentient Money says:

    A second job is only one option. You could ask for a raise, start a side business, start a blog, etc. Don’t limit yourself.

  • Ann says:

    I think you’re on the right track. Folks should keep in mind, though, that the more energy they expend on a second, part-time job, the less they’ll have to expend on their primary job. It might be better to make yourself as valuable as possible in your current position so that you can be promoted into a higher paying position.

    Also, a second job can sometimes conflict with your current schedule. Your primary employer deserves to schedule you first, without consulting with you over your other job schedule. When they conflict, you really must honor your primary employer’s schedule. This could result in the loss of the second income.

  • Top CD Rates says:

    Creating passing income is the key. There are many ways to do it. I think the interent still provides one of the best. You will have to invest some time upfront, but overtime, your actual time spent can decrease. You don’t have to invest a ton of money upfront.

  • marci says:

    In my case, the older I get, the more my Time is more Precious than Money. That’s why I cut my work week from 5 to 4 days per week – 8 hrs less.
    It gets to a point where one has saved ‘enough’… enough to feel comfortable that it is enough. Everyone has a different point of view on what that figure is. For me, it is insuring that I have investments that will bring in $1000/month til I am 103… I live on that take home pay now very easily, with $$ to spare each month, so I feel it will be adequate when I retire. As the $$ invested will keep growing til retirement, there will be more monthly income at that time.

    When you get near that point, the money is superfluous… it is not (to me) worth trading my time to earn it. Time spent with my family and grandkids is much more important to me. I will however keep looking for ways to save/stretch what I have so that it can go into savings for the future.

    Just consider me ‘out of the rat race’ 🙂

  • used cars says:

    Investing money earned is also always important. No risk, no gain.

  • Praveen says:


    This is a good article because so much is written about saving, but not as much is written about trying to earn more money.

    But I did want to make a couple of points:

    1. Getting a part-time job is equal to getting $500 every month only in the sense that once you get hired for a job, you don’t have to reapply every month.

    But, a part-time job is not a passive, recurring income. It is an active income – you are trading hours for dollars.

    It isn’t like writing a book, for example, and then selling it every month without having to re-invest labor.

    So, “$20 earned with each $1 earned” doesn’t really apply with a part-time job.

    2. You can make savings conform to “a dollar saved is 20 dollars earned” by concentrating on cutting re-curring expenses.

    For example, you could save $100 by avoiding a one-time purchase. However, if you spend an afternoon to change your phone plan and shave $10 off the monthly rate, your savings will automatically recur monthly.

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