What Happens When You Think of Saving Money as Making Money

by David@MoneyNing.com · 12 comments

making money is the same as saving money

Would there be any benefits if I thought of saving money as a source of income?  The similarities are not exactly obvious between the two but there are actually a few advantages of doing so.  Let’s think together here and see what we come up with.

Why It Makes Sense to Think Of Saving Money as Making Money

  • Although you can argue on which is more effective to building wealth, saving money is really just the same as making money.  If I have to buy a TV and I get a good deal by saving $400.  Mathematically, it works out the same as getting a $400 windfall.
  • Doing so forces you to focus on what is most important, the bottom line.  It doesn’t matter whether you saved money, made money or spent money because all you care about is incoming and outgoing of wealth.
  • It puts a higher emphasis on saving money because people who budget will have to log down how much they saved as a source of income, forcing them to think about those activities when they do their budget analysis.

Why It Makes No Sense

  • Most of the money saving tips are really about spending less money.  While it may let you keep more cash in the bank, the most effective way to keep all your money is not to use it in the beginning.  Creating a link between saving and making money does nothing to keep you from spending it.
  • You might end up buying more things because it puts way too much emphasis on the savings that you made.  It might make you feel that you are actually making the money that you save.  In a push to increase the amount of earnings, you may end up spending more money.

After listing out the pros and cons, I feel that if you have the discipline, you can make this work in your favor.  However, if you do not, then you will likely end up buying more things.  The important point to remember is that keeping the most money ultimately what we are after, whether it’s money saved or money made.

The idea just popped into my head so I just started writing it down in a form of a blog post as a way to brainstorm.  What do you think of this idea?  Is it doable and are there any advantages or disadvantges other than the ones I’ve listed?

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{ read the comments below or add one }

  • Rick Flair says:

    Wooooo Hooooo!
    If a chicken and a half laid an egg and a half how long would it take a grasshopper (with a wooden leg) to kick 1000 seeds out of a watermelon? True or False
    Answer: False, Ice cream does not have bones…

  • Connie Abbott says:

    If spending less on items that you need enables the wife to stay home with the kids, then in effect it’s like helping to make up for the second income that for so many families is a foregone conclusion. Without having to make a second income because of frugal buying (of essentials), you further save on commute, clothes, conveniences, and other related costs of a person out in the workplace. Just recently I’ve used my time at home to refinance our mortgage and shop for less-expensive insurance, which all has reduced our monthly expenses by about $400/mo. I wouldn’t have had time to do that if I worked. When I grocery shop, without obsessing over it, I regularly save a high percentage of the cost of food, which we then eat at home rather than go out. If I had to go earn that money (and pay tax on it), this would all be hugely altered and the net benefit of my working would be minimal if any.

  • Davd says:

    My opinion is that some time in life, people who have money should start to spend it and not worry about leaving it to others.

    I made it so why shouldn’t I enjoy it. AND, I am now!

    Also, unlike most all others, I gave my kid a considerable amount of cash when she turned 21 and she made it grow.

  • Kevin J. Timothy says:

    Whether you decide to save money or spend lavishly there is a law of returns that most seem to overlook. One has to be a controller of money. A compulsive money saver is controlled by currency. The real way to see a financial increase in your lives is to give. That’s right, give. It’s real and it works. If you want to see more money in your lives, help others with the money that you already have. And do it with the right heart. THEN, you will see things changing.

  • Mal says:

    I think you make a valid point. If one does save on shopping deals, then even though money was spent, the savings can be applied elsewhere or to another item.
    Whether it be a need, or a desire.

  • wyche128 says:

    If you spend money and save because you bought it on sale, you should take the savings from that deal and store it away in a savings account. That in essence will be making money

  • magnesium says:

    I agree with the opinion that saving money means not making it. I think money exist for spending but not for saving

  • marci says:

    The only way I can see that ‘saving money’ is ‘making money’ is if it is truly saved, ie, tucked away, and making me interest or dividends, etc.

    Otherwise, it is just spending less money than one would have spent. And I don’t think that spending less is really the same. You can call it stretching your money further…but you’re still spending.

    Otherwise, it could be said that ‘not making money’ is ‘saving money’ …meaning, as I chose to not make much because I don’t want to go up a tax bracket and give so much of it away in taxes, you can’t really say I’m saving that money that I’m not paying in taxes, because I’m grossing so much less money to do it. (Actually, I just don’t want to give up an extra day a week only for money that I don’t really need to make)

  • Aaron Stroud says:

    Nicole beat me to my point. Saving $400 is worth far more than $400 of income. Some people have to earn a couple hundred extra just to pay their taxes.

    When I started learning about investing, I use to imagine investing money so I could enjoy the dividends now. Eventually I realized that would just raise my taxes and interfere with compounding interest.

    Now I think about saving money in terms of goals, instead of interest payments or dividends. Before spending money, I decide if this is the absolute best way I can spend the money to maximize the benefits to me.

    Sometimes buying the item is worth it. Other times I decide I’d rather have more money for retirement investments, paying off the house early, or saving towards a specific big item purchase.

  • Sam says:

    Well I think of saving money as making money simply because money I saved, I reinvest right-away. Right now, money I saved from my salary is what I use to buy domain and hosting to make blogs–> which hopefully would give me a nice passive income in the future..for my family..well I hope this will be successful.


  • Joseph @ DebitversusCredit.com says:

    My wife follows this theory strongly. She is always talking about how she saved so much money when she purchased [insert item here] on sale. On the one hand I’m glad that she didn’t spend full price for it, but on the other hand I think that it’s silly to assume that because you spent less money you saved money. She still spent money. I understand the theory and it could definitely be argued day and night but I personally don’t think of any type of spending as saving.

  • Nicole says:

    In the old days we used to call it “a penny saved is a penny earned.” 🙂 But in fact, it’s more than a penny earned when you consider income tax. You have to earn more than $400 pre-tax to take home $400.

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