In today’s episode, we’re focusing on how you can grow the gap between what you earn and what you spend.
Many people in the personal finance space argue about whether it’s more important to earn more vs. save more.
This argument is like chocolate vs. vanilla. Cats vs. dogs. Pepsi vs. coke.
You get the idea. Everybody takes a side.
I want to circumvent that issue and focus on what matters, which is growing the gap between your earning and your spending.
Let’s start with the spend less side of the equation.
The problem is that most people try to tweak around the margins. Here are some examples (do any sound familiar?):
- You go to a restaurant, and the entree you really want to order is $18. There’s a cheaper option for $14, and even though it’s not the one you want the most, it looks good enough, so you order that.
- The server asks if you want anything to drink. You look at the wine list. The cheapest glass is $7, so you get that. Your friend orders a glass that’s $11, and even though you don’t say anything, you think to yourself, whoa.
- You take out a load of laundry, but you leave the dryer sheet in because you figure you can use it twice.
- You’re at the airport, you’re super hungry, and you forgot to pack the snacks you normally take with you. Rather than spend $9 on a burrito, you stay hungry for the next 3 hours until your flight lands.
Those are examples of moves that’ll make you feel better about your finances — but won’t make much of a spreadsheetable, trackable dent.
The better approach is to focus on the big four:
- Housing
- Taxes
- Transportation
- Food
That’s how you spend less. In this episode, I dive into strategies about how to save on the Big Four.
Okay, so that’s the saving side of the equation. What about the income side?
You can learn about earning more by listening to episode 85, where Nick Loper describes various types of side hustles.
To quickly summarize that episode, you can start with side hustles in the gig economy, which include things like:
- Driving for Uber or Lyft
- Renting out a space on Airbnb
- Renting out your car on Turo
You can also try a side hustle in the expertise economy. These feature high-skill work, such as consulting, freelancing or coaching within your area of expertise. Some examples of websites that offer these services are:
- Clarity.fm
- Wyzant
- Thumbtack
Then there’s the stuff economy, which involves delivering physical goods, such as:
- Etsy
- Amazon FBA Program
For more details about that, you can go back and listen to episode 85.
Enjoy!
– Paula
P.S. Want the slides from my WDS presentation? Click the button below to download them.
Resources Mentioned:
- How to Side Hustle Your Way to Success, with Nick Loper
- Freshbooks – Bookkeeping for Small Businesses
- Why “Earn More” vs. “Save More” is the Wrong Debate – Afford Anything article
- Small Business Credit Cards
Thanks to our sponsor, Freshbooks!
You’re busy. You don’t need to junk up your schedule with mundane tasks.
Here’s a question: if you’re an entrepreneur or someone with a side hustle, how much time do you spend organizing invoices, chasing your clients down for late payments, and messing with receipts and reimbursements?
Yeah — more than you’d like to.
Save time by using Freshbooks, an easy-to-use, cloud-based accounting system that takes the stress and hassle out of bookkeeping and, especially, invoicing. You can create an invoice in a few seconds, and Freshbooks’ automated system will handle the rest. They’ll help you get paid faster, with less hassle.
Wanna try them for free?
Visit Freshbooks.com/paula for a free 30-day trial. Please mention this show when they ask how you heard about them.
Laura
This was a great one! Can’t believe you’re sharing for free! I am trying to figure out how to work parts of it into my Problem Solving course that I teach.
Jem
Awesome episode! Where is part two of this 3hr presentation?
Erin
Hi Jem, that episode is here: https://podcast.affordanything.com/89-10-years-to-live/
Bonnie
Hi Paula. Thank you for your always inspiring podcasts. They are my go to source for practical motivation as we work towards FI! In this podcast you mention the big 4 costs to watch. But what about health insurance? My husband and I are in our 50s. We are poised to start our FI life after years of dedicated work and focus towards crushing that gap concept you mention. However we have found researching potential health insurance options to be much more daunting and expensive than the rest of the big 4 costs. Most estimates put it at 15% to 25% of our any annual FI income. Ouch! I don’t hear much about health insurance savings strategies on FI podcasts. I wonder if it is our age. Most in the FI community seem to be a good bit younger than us (and much smarter than we were at that age!). For us, health insurance would need to be added to your list of 4 big costs to work. If you have any suggestions or know of any resources for smart ways to manage health insurance costs as FI peeps ready to wander the world we would be grateful!
David @ VapeHabitat
Yes, Paula is one of the few people on the web to inspire me and let me hope everything will be better than I even deserve.
PM
Hi Paula,
I’ve just started listening, but really appreciate your podcasts. One question for small business/side hustles. You recommend opening a separate CC and checking account, do you also recommend creating a DBA? Thanks!
Erin
Hi PM – one of the more recent podcasts may contain the answer you’re looking for: https://podcast.affordanything.com/98-ask-paula-side-hustle-episode/ Hope that helps! =) If not, you can always leave it as a question for Paula to answer.