Personal Growth

Which Matters More: Having Money or Making Money?

Everywhere you look, there's advice on how to make more money: get a degree, ask for a raise, start a side hustle. The advice on how to keep that money — by saving, investing, and spending less — isn't as glamorous, but it's equally as important. More important, if you ask money guru Sam Dogen of Financial Samurai. There are some very good reasons to focus more on the money you have than on the money that's coming in.

Mind over Money

Here's the elephant in the room: your job isn't guaranteed. You could get fired. Your company could go bankrupt. There are a hundred different reasons you might come into work tomorrow and leave with your things in a box. Even if your job security is ironclad, emergency expenses come up that could turn your paycheck into peanuts.

If you put away a certain amount of money from every paycheck (aim for 20 percent, according to the 50/20/30 rule), you'll be in better shape if disaster hits. And if disaster doesn't hit, you'll be in a good financial place once it's time to retire. This feeling of security in the face of adversity isn't just a feeling: a meta-analysis published in Clinical Psychology Review in 2013 found that the likelihood of having a mental health problem, like depression or anxiety, is three times higher among people who have debt, and a 2018 study published in JAMA found that a sudden financial loss was associated with a higher risk of death. Ignoring your finances isn't just a bad idea; it's a health concern.

This mindset can also start a positive feedback loop. "When you just focus on making more money every month or year, chances are you're a worker bee and more short-sighted than the person trying to generate wealth through equity in a business," writes Dogen. The truth is that real wealth is earned in the very long term, through saving and investing. After all, there's a reason that the majority of the world's billionaires come from the finance and investments industry. They spend their days trying to grow other people's money, so they know a thing or two about building wealth. When you focus on having more instead of making more, you'll make smarter decisions across the board.

Make It Rain (Tax Exemptions)

Of course, there are other, more technical reasons to focus on what you have over what you earn. As Dogen points out, the government taxes you on your income, not your savings. Even if you have millions in the bank, you'll only be taxed on the interest. Same goes for healthcare subsidies and child tax credits and other nitty gritty tax details — the smaller the number on your paycheck, the more you'll get back from the government.

The best advice is never the flashiest, but there's a reason boring rules like "don't spend more than you make" and "save a portion of every paycheck" have never gone away. It's made a difference in Dogen's life, for one. "I thought I would feel rich once I hit $100,000. I did for a nanosecond, but saw temptation and taxes take a lot of it away," he writes. "I've made much higher incomes and thought I would feel more secure too, but I didn't really. Instead, every single dollar I put away towards savings or stable investments made me feel much securer instead."

Read more of Sam Dogen's money advice in the ebook, "The Best Of Financial Samurai: Slicing Through Money's Mysteries." We handpick reading recommendations we think you may like. If you choose to make a purchase through that link, Curiosity will get a share of the sale.

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Written by Ashley Hamer April 26, 2018

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