Bigger in than out

We focus so much on one side of the financial equation that we miss the effect of the other side.

Last year I declared a new direction for Joy in the Journey Radio to help LDS singles live better practical lives through four focus areas — what I call the spirit, the heart, the mind, and the body.  And this week I felt it appropriate to focus on an area of the body I haven’t yet addressed — finances.

We’ve all heard the standard advice when it comes to money — pay your tithing, save, and cut expenses where you can.  For many years, I fell right in line with that counsel.  But as I get older, I can see it’s not quite right.

You see, it’s not quite complete; it’s missing an important element.  Like the way many of us approach weight loss with diet and exercise, the way many of us approach finances is just backwards.

We focus more on cardiovascular exercise when scientific studies galore have shown real weight loss correlates with diet and strength training exercise.  Likewise, many of us focus on saving and cutting expenses when real financial improvement comes with increasing our earnings.  We focus so much on one side of the financial equation that we miss the effect of the other side.  And when you look at both sides, it’s not hard to see it’s bigger in than out.

Do the math

Let’s do a little math.  Many people approach improving their finances by cutting costs.  Let’s see how well that plays out with this example: Suppose your job pays $35,000/yr.  You pay tithing and spend $22,000/yr to live after the state takes its portion.

You were eating out once a week at $10/meal, but now you’ll cut that back to once a month.  So you’ll spend $120 for the year instead of $520, a savings of $400.  And let’s say you secure a friend to give you the $20 haircut you get every three months.  Now you’ve saved an extra $80.  And you decide to wear more sweaters in the winter to cut back on your heating bill, saving you another $200.

So overall you’ve saved $1000 for the year.  That sounds impressive.  After all, most people don’t consider a full grand chump change.  But that’s what it is when you consider the effect of increasing your income.

Let’s say you pursue one of the best ways to increase your income — get a new job.  Your new gig pays $45,000/yr — a not uncommon increase.  Without changing your lifestyle, you’re still spending $22,000/yr to live, but now after tithing and the state, you’ve got an extra $7250/yr.  Still think that $1000 you had to scrimp to save isn’t chump change?

In this hypothetical but still very realistic scenario, cutting back gave you an extra 3% in spending power.  But getting that new job gave you an extra 21%!  The effect of increasing your income greatly outweighs the effect of saving.

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Get your hustle on

Now, that doesn’t mean you shouldn’t save for a rainy day.  It does mean you shouldn’t rely solely on cutting back to improve your finances.  The core of your approach should address what’s coming in, not what’s coming out.

And it’s easier than you think to get a better job.  One class in the Church’s welfare program teaches people how to get a job if you’re unemployed or how to get a better job if you already have one.  Many who’ve taken the class get results in less than 30 days.  Think of it!  If you’re willing to do the work, you could be earning significantly more by this time next month.

Transitioning to new employment isn’t the only way to bump your income significantly.  Many people who don’t want to replace their current job augment it by engaging in side hustles.  They trade time for money (consulting, editing, and yard work are examples) or build a business (like making jewelry or writing a book).  Not everyone succeeds in starting their own business, but some people have quit their day job because they created a better one for themselves.

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Pursue your options

You’ve got lots of options and lots of opportunity to pursue whichever you feel is best for you.  The Lord wants all of us to have prosperity, because then it becomes easier to raise families, serve in the Church and our communities, and help other people.  I truly believe your prosperity is an important element of your best life.

So consider your ways in approaching your own finances (Haggai 1:5-7) .  By all means, save where you can.  Just recognize your influence over your spending power is bigger in than out.  What will you do to improve your income?  Focusing your efforts there will bring you more and better success.  And that will bring you more joy in your journey.

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You can listen to the monologue from today's episode of Joy In The Journey Radio here.  Please also feel free to continue the conversation by leaving a comment below.  Want to hear more?  Listen to the whole show by going to the show page for this episode.