What’s more important controlling your spending or earning more, when trying to increase your wealth?
In my experience, you can’t out earn a bad-spending habit.
Certain amounts of people have great spending habits instilled in them at a young age from their parents. They learned those habits so young that they may not realize everyone doesn’t have those habits or skills developed yet. Meaning there may be some wealthy people who don’t even know they need to advise people to first work on their spending habits before focusing on earning more.
Some of us have to learn good spending habits as adults. And I propose that learning good spending habits and money management skills should come before focusing on how to earn more money.
I’ve had the experience of getting a lot of money while having cheap bills and having nothing to show for it. I’ve also had the experience of not making as much money and having very high bills and tripling my net worth in less than three years. From those experiences, I know how powerful our spending habits and money management skills are at building wealth.
Developing the skills and habits of managing your current money will give you the confidence to know you’re ready to manage larger amounts of money.
When I realized I mismanaged money so bad earlier in my life, it made me nervous to earn more or take a second job. I was nervous because I felt I was likely to exhaust myself working multiple jobs and not have anything to show for it, since that had been my past experience.
So I did something unexpected.
I decided to slow down whenever I felt like hustling harder. I decided to slow down and learn how to manage what little salary I was making before trying to earn more.
I wanted to be truly sure I could manage small amounts of money, so when I was ready, I could focus on earning as much as possible without the fear that I would lose the money due to bad money management skills.
How would I know when I was managing my money well and ready to focus on earning? I would be living below my means, my debt would be consistently reducing, and my savings would be increasing.
To track those three factors. I created a monthly spreadsheet that tracked my total debt, my total savings, and subtracted my total savings from my total debt to get my net worth.
Eventually I did learn to manage my money well. I had eliminated all my debt, consistently increased my net worth, and consistently increased my savings. I now feel confident that when I earn more that I will have something to show for it because I first learned how to manage small amounts of money.
I hope this article convinces you to take some time to evaluate your money management skills ASAP. I missed out on a lot of money in my younger years because I thought I could out earn my bad spending habits.