Updated on 08.26.14

Seeking Higher Pay or Learning How to Spend Less?

Trent Hamm

This week, The Simple Dollar attempts to address challenging questions in personal finance by looking at both sides of the story and figuring out some of the factors you need to look at to make a decision.

Every time I write a post about frugality, I usually get a comment or two complaining that it’s a waste of time and that you should be spending that time furthering your career. On the flip side, when I discuss entrepreneurship, others point out the numerous challenges with entrepreneurship options and state flatly that you’re better off just spending less.

Which side is right? Clearly, both sides seek the same goal: a bigger gap between your required expenses and your income, which is really the one true way to financial freedom. However, the paths to get there are so widely different that people who are adamant career builders often don’t see the value in frugality, and frugal folks are often not burning with desire to build up their careers. Let’s look at both arguments.

Spend Less!

Every time you spend a dollar less, you have a dollar more with which to invest and build towards your future. That old Ben Franklin adage, “A penny saved is a penny earned,” is spot on.

It’s not that hard to come up with extra money for debt repayment or investing. Every day, just actively make choices that don’t involve spending money needlessly. If you find opportunities to spend less, take them. If you can make choices that save money over the long run (like installing energy efficient stuff at home), do it.

There’s a difference between being frugal and being a cheapskate, though. Spending less doesn’t mean spending nothing at all – it just means maximizing the value of every dollar that you do spend. It’s the difference between buying a $1,200 washing machine that uses very little energy and water and will last twenty years and a $200 washing machine that eats electricity like it’s going out of style, gobbles down water, and breaks down in six years. Which one is cheaper over the long run, thus saving you some serious scratch over time?

The best part is that anyone can practice frugality – it doesn’t require any special skill at all to install energy efficient devices, select expensive purchases based on total cost of ownership, clip coupons, make simple food at home, reuse things, cut down on entertainment spending, and so on. Anyone can do these things – it does not require an entrepreneur’s skill, a socialite’s networking, or a devotee’s attention.

Earn More!

You can spend time being frugal and all, but no amount of frugality is going to compare to doubling your salary. Focus on your career and not on clipping coupons, and you’ll be just fine. No amount of frugality can compare to the dynamic changes in a person’s financial situation that can occur due to strong career choices.

Career and entrepreneurial success requires commitment and significant work over a long period of time, as well as at least some skills in communication with others. Channeling your passions, however, can make this possible – and open up incredible financial doors for you.

You don’t grow into a role of prominence and wealth by clipping coupons from the Sunday paper, you do it through hard work, diligence, and passion to make something of yourself. Frugality can save you a bit of money, but strong career choices can transform your life.

My Take

I’m a big advocate of frugality, and I think that maximizing every dollar you spend to get the most enjoyment possible out of it is truly a great way to live. That’s why I talk about frugality a lot on The Simple Dollar.

I agree that diligence with your career is one very strong road to financial success, but it also requires an intense focus that requires sacrifices, sacrifices that many people aren’t willing to make. I would not sacrifice spending almost every evening with my children for any sort of career, for example.

It’s great to work hard and find entrepreneurial opportunities, and those are usually the surest roads to wealth. But great financial wealth isn’t necessarily a goal everyone has. For me, the wealth of my family is what I treasure the most.

That doesn’t mean I don’t work hard and look for opportunities to build a better career, I just know that it’s merely a means to an end for me. Frugality, on the other hand, is something that I can do as a complement, and it will still be with me even if my career choices don’t quite turn out like I hope.

In other words, it comes down to goals and what you want out of life. If you seek wealth and prestige, career building is a much better use of your time than frugal tactics. However, if you have other goals and values in life, frugality is something that anyone can apply no matter how their life is.

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  1. I think you are much better off striving for a higher income than you are focusing more on saving alone.

    Although my rent has skyrocketed from $700 to nearly $1475 and my other expenses have increased as well, I am saving more now because my income has increased substantially as well. I place greater importance and emphasis on generating more income than saving alone, although a reasonably frugal lifestyle doesn’t hurt!


  2. Mrs. Micah says:

    I’ve been enjoying these comparisons a lot. To me–“both” would be the idea answer.

    I think, though, that I’d rather enjoy life frugally than simply seeking higher pay. The first pays off whether you’re in a lower or higher pay grade, and it’ll last in an economic downturn or through a round of layoffs. It’s a life skill. The second is great, can improve one’s quality of life, but isn’t a skill and won’t help you in hard times.

  3. Barry says:

    Not to straddle the fence, but you really should do both. More income coupled with frugality should equate to a higher rate of savings, debt repayment, etc. More income without frugality will likely lead to increased spending, and no net increase in savings and/or debt repayment.

  4. Frank says:

    As others have said, I agree that *both* is the way to success.

    I think frugality is something you can learn and benefit from forever, however working for an income, even if it’s a really large income, is finite because you can only work so many hours and for so many years and ultimately don’t we all want to quit the ‘day job’?

  5. dong says:

    Both is the easy answer, but it’s sort of cheat on the point on the post. I think in the end you can’t approach frugality or earning more money with just money in mind.

    I think you’re going to be miserable if you only want to be frugal because you want more money. You have to want to be frugal. You have to want to live efficiently and simply. I don’t think those are odd things to want, but you need to be in the right mindset.

    Same with earning money. If you work harder and harder to just to earn money at some point you’re going to be miserable. You need to want the success.

  6. Rick says:

    While I too think “both” is the correct answer, I think being frugal has benefits beyond simply saving more. Some of the topics Trent and others have discussed in the past apply: live simply. *Stuff* just clutters your life. If you get rid of the things that you don’t really *need*, then you can focus more and enjoy more the things you have left. And you can spend more time doing those things that really matter, like spending time with your family.

  7. Jayne says:

    I think you are right on in your analysis. For me personally, I have taken more of the frugal path for two reasons. One, I’m not really a career person- don’t care to be- and I love that frugality has put me on firm financial footing anyway. Yeah, it will take me longer, but I’m young enough (26 yrs. old) to save for a comfortable retirement and my tastes are pretty simple. Which takes me to my next point- which is that I really, really like being frugal and living simply. It fits my personality. So I think the answer to this (obviously) will be different for everyone.

  8. All of these ideas are great. And I agree that the best answer is to do both. But I would guess that most people that are looking for answers for money problems would say that the best thing would be to increase your salary, because more money solves your problems, right? Most people that are able to budget their money would say that being frugal would improve there savings and that this is the best way to go.

    I would not only agree that the doing both is the best idea, but that the only way to to truly become wealthy would be to combine the ways in which you increase your savings and or investment money along with ways to be more frugal.

    An example that I always come back to, is the person that increase their salary and then all they do is buy a new car or a bigger home and then they are in more debt, and no better off than they were before the salary increase.

    I think that it is more important to learn to manage the money that you are making. Learn to save where you can. And learn to invest what you have properly. By doing this you have are increasing your financial intelligence which is the best way to increase your savings/investments or just your general wealth.

  9. Debbie M says:

    It also depends on where you’re starting from. If you have a part-time minimum wage job and are homeless, earning more is probably the way to go. If you have a full-time job of, say, triple minimum wage or higher and are living paycheck to paycheck, focusing on frugality may give you more long-term rewards and skills.

    It also depends on your interests. If you can find a job you love that’s higher paying because it hogs all your time, but you love it, and now you can afford to pay for maids, chefs, personal shoppers, etc., then higher pay sounds good. If you’d rather spend more time doing your own work (like DIY, cooking, thrift store shopping etc.) than working for pay, then frugality sounds good.

    Finally, you could cycle through them. Sometimes a short period of working way too many jobs, during which time you have no time to spend money, just until you catch up can be a good idea. Or until you save a down payment on a house or until you have children.

    And of course it’s common to focus on both while you’re between jobs and neither while you have a job.

  10. dave says:

    you can always, and i mean always, spend more than you earn. our household income is around $200k a year, and until we started living frugally we were broke. spend less, that’s the way to go.

  11. V says:

    Yoda says, “Do or Do Not, there is not try.”

    Mr. Miagi says, “Left side of road – safe.
    Right side of road – safe.

    Walk in middle of road, sooner or later – squish, just like grape.”

    You can’t do both kids. If you want a declining standard of living, live the way of a frugal person, if you want an increasing standard of living, live the way of an earner.

    The fact that we have government sponsored inflation means you will need to choose one or the other or sooner or later you squish like grape.

  12. Imelda says:

    Debbie makes a good point. Nevertheless, I weigh in on the side of frugality. It’s a lot harder to double your salary than it is to practice frugality. I also think that it leads to a better way of life than constantly seeking more money does.

    In addition to Trent’s points in the favor of frugality, you have to remember that an increase in salary almost ALWAYS leads to an increase in expenses. You may end up with a little more in savings than before, but it won’t be nearly as much as you thought.

  13. 60 in 3 - Fitness and Health says:

    I’m with Barry,
    Do both. Try to spend less while also making more. You don’t really have to sacrifice your entire life just to have a successful career. So make more money and then practice frugality to make sure you’re saving all that extra income and not spending it.


  14. Amanda says:

    I’m definitely in favor of frugality. As Dave says, you can be broke no matter how much money you make unless you’re careful. Easier to be careful, especially if you’re already at the peak of your career.

    That said, if you’re in a low income bracket and you know you can do better, by all means strive to get a better job as well!

  15. RNA says:

    “If you seek wealth and prestige, career building is a much better use of your time than frugal tactics.”

    That’s a rather narrow view of why people might focus on their career. My husband has devoted his professional life to perinatal health research, and the pay just so happens to be lucrative as well as is the case for most medical/scientific fields. But much more important and rewarding is the contribution he and colleagues have made to our knowledge of, say, what kind of effect certain foods and medicines can have on developing children.

    So I’d throw my hat in with the “both are important” crowd, and add that spending time on one’s career (even in the evening) does not mean that family and every other responsibility is neglected.

  16. Peter says:

    Trying to get out of debt, being frugal helps and is necessary, but bringing in more money makes a big difference as well. We really have been better able to attack our debt since the kids are all in school full time and my wife went to work part time.

  17. Jeff says:

    I vote for “spend less,” and for one reason. It is much more likely to earn less (with a logical minimum at $0), than it is to control how you can earn more.

    Plus, if you spend less, you can save more, enabling your children (or yourself) to have a potentially better future.

    Going in the opposite direction, you are essentially chasing money. For some reason, no matter how much you have in that endeavor, it never seems enough…

    It’s all about lifestyle and being comfortable with your spending. If you don’t have that under control, a lot of other decisions will be made “for you” rather than “by you.”

  18. Mrs. Micah says:

    Indeed, RNA, I like your point that following your passion can lead you to a higher-paying career. :) And seeking higher pay doesn’t always mean neglecting things. I would say that Trent is spot on with the generalities here–I’ve known a lot of families who thought that earning a certain amount was so important that the parents barely saw each other or the kids. But it doesn’t exclude the many outliers.

  19. Scully says:

    It’s good to read all the comments on here and see that people do weigh the two options deeply. I can say this is one of the instances where you can get to have your cake and eat it too. For me, I had to first be frugal while on my “day job”, figure out what expenses in my life were unnecessary and cut them out. Once this was done, when I got a part time job it was much easier to channel all my extra money towards debt payment. It was comforting to know that even if I quit my part time job, I would still not have to struggle. Also, as Trent points out, there is a difference between being frugal and being stingy and mean with your money. Bottom line is, it’s not about the money, its about what you value most, brotherly love and kindness, and most of all, self knowledge.

  20. Macinac says:

    Someone made a comment about inflation, and I want to second that. Back when I was just starting to work in 1965 someone commented that with $100,000 in the bank earning 5% you could just cruise because you’d get $5000 a year in interest – an OK year’s pay in those days. Now that five grand would be minimal subsistence for most Americans. Therefore, unless you have a scheme that provides for your needs outside the money economy, you need a rising income just to stay even. If thru frugality you can overcome the effects of inflation then you have nirvana.

  21. UltraRob says:

    Except for CEO’s and movie starts making many millions a year, you can always spend more than what you make. It seems some of those making millions still can do it.

    It’s a balance. I’m thinking of quiting my current job and taking one that pays somewhat less. My current job expects 50 hour weeks and they think 60 isn’t unreasonable. The manager at the other company doesn’t want people working over 40 hours because she thinks they need a life. I agree.

  22. MS says:

    Awwwwwww! Debbie M stole my answer! Seriously, it’s a question of where the opportunities lie. If you’re making minimum wage, there is a lot more room to grow the income and precious little room for additional savings. If you’re spending all of your six-figure income, then there is a lot more room to cut expenses.

  23. John says:

    One thing that nobody’s mentioned yet is how a progressive income tax confuzzles the situation. Here in the US of A, the proportion of one’s income paid in taxes increases with one’s income. I thought I’d be psyched to hit six figures, until I saw what it did to my take-home pay.

    I think it was Andrew Tobias who pointed out that a penny saved is actually TWO pennies earned, because you’d have to earn two pennies to keep one! In it’s simplest form, saving a dollar puts an extra dollar in your pocket, whereas earning another dollar only gets you 80 cents. And under a progressive income tax, earning a 2 dollars doesn’t get you 1.60, it gets you 1.40, while saving 2 dollars let’s you keep (that’s right) 2 dollars.

    Does that mean you should let the gub’mint quash your ambition by taxing your earnings? Not necessarily. If you can fit entrepreneurship into your career plans and get taxed favorably as business, then it’s not as much of an issue. But for the vast majority of workaday Americans (and others with similar tax laws) taxes are a huge factor in the “earn vs. save” issue.

    Personally, Yoda and Miyagi aside, I do both. I maximize my heavily taxed earnings while living frugally and investing in starting my own business to take advantage of favorable taxation. I’ll bet I was the highest paid guy on the bus today packing leftovers for lunch and reading a library book.

  24. Todd says:


    I enjoy your blog and obviously you love your washing machine, but I think your analysis of the washing machine purchase is seriously flawed and you should quite using it as an example.

    Why is your analysis flawed?

    Flaw 1 – You used a 5 year life for the cheap top loader washing machine at $400 and a 12 year life for the front loader at $1200 a pop. The average top loader actually lasts 14 years* while your front loader on average will last 11* years (very similar to your 12). PS – My POS washer has lasted 8 years already.

    Flaw 2 – You then assumed savings of only $400 over 20 years. The savings per year for an energy star model could actually be as $100 over a 1994 model washer.

    Flaw 3 – You assumed you had to spend $1200 to get the energy star model front loader. I don’t know what consumer reports says about ge but the energy star front loader with a 3.5 capacity at home depot is $550. You can pick up a top loader cheapo for $299 (not energy star).

    Flaw 4 – You ignored the time value of money. This is a huge flaw.

    New assumptions based on the flaws above-
    a.$1200 Trent washer lasts 12 years
    b.$299 Cheapo washer only lasts 6 years (less than the 14 year average life of a top loader
    c.Funds saved on the cheapo are used to pay mortgage at 6% (discount rate)
    d.Cheapo costs $100 more per year to operate
    e.Energy star models are the norm in 6 years and FIL buys a cheapo one negating the difference in energy usage.

    Under these assumptions you father in law is $200 ahead of you in present value $’s

    Alternatively, he could just buy the $550 energy star model at home depot when his POS breaks and have an extra $650 in his pocket (that’s what I would do).

    Under either case, he is ahead of your $1200 washer. Like I said, please quit telling us how far ahead you are by blowing $1200 on washing machine. With the exception of that, I enjoy your blog.



  25. infix says:

    Frugality is more of a sure thing. You can bust your a$$ at work and still not end up with much of a raise beyond a COLA. Wages have been flat in real terms for the last 10 years at least.

    Besides, when you get paid more, you get taxed more.

    I’m not saying one shouldn’t look into ways to makre more money, just that more often than not they don’t pan out.

  26. robtwister says:

    You can think of them (frugality and higher income) as complementary to each other.

    By living frugally and making every penny count, you train yourself to be more focused and to simplify your life. And this increased focus and simplification leads to you becoming more productive which leads to a higher income.

    I don’t necessarily think in terms of ‘higher pay’, but rather, in terms continuous self development. Then the increased wealth will follow naturally, whether through salaried income or from improving your business.

  27. Reagan says:

    In “Millionaire Next Door,” the authors call higher income “good offense” and lower spending “good defense.”

    Championships (e.g., early retirement) require both.

  28. MossySF says:

    As someone who followed the entrepreneur path, I will say frugality is more important. You don’t start a business and immediately lease a Mercedes SL500 as your company car. You watch and pinch every penny. You cobble computer equipment together from spare parts. You mop the floors yourself. And you’d better tighten your belt on the personal side also because during months customer demand is down or are late paying because their accounting department sucks, you still have to pay rent/mortgage and put food in your mouth.

    Even after your company matures and you start earning a nice income, you still have to save a ton to prepare for inevitable growth pains and marketplace changes. I can tell you from experience that when new opportunities come knocking, it costs money to open the door. That big new client requires your infrastructure be in place right from the start — not 6 months into the contract after they’ve finally paid you enough money to upgrade your staff/hardware/software/inventory/etc.

    So anyone who thinks they can be an entrepeneur and avoid frugality is sorely mistaken or is extremely lucky.

  29. Peter says:

    It is generally more effective to save $100 than to earn $100. This is because of income tax. In Canada, in the lowest tax bracket, you need to earn around $140 in order to keep $100 in your pocket. Employment deductions and taxes take the rest. If you save $100 you keep all of that $100. So saving $100 is that same as earning $140! Saving rocks.

  30. guinness416 says:

    I have a very nice paycheque, but the benefits – employment matching, health/dental, generous expenses, paid education, opportunities to train people, office ski trips, etc – I get could never be achieved by “being frugal”. It’s been my experience that the higher my income the better the benefits, which may not be the case for everyone, but must be considered.

  31. guinness416 says:

    Er, “employment matching” should of course be “retirement matching” above.

  32. jayfoss says:

    There’s one point I don’t see in this post — which is that one doesn’t always control one’s career but you do control your spending. As you work hard on your career, you’re going to be hit by changes in management, industries, etc. As ou get older you’ll also find fewer opportunities, in many industries.

    Working hard for advancement AND keeping spending under control means a hiccup in your career development is not going to be a disaster.

    Thanks for a great article! Go simpledollar!

  33. Barry says:

    Even minimum wage earners can waste money. That’s why it’s important to practice both frugality and the pursuit of higher and/or additional income opportunities.

    As to V’s comments, frugality does not necessarily mean you have to have a lower standard of living. Frugality doesn’t require “doing without”… you just use the things you have more wisely, waste less, etc. Don’t mistake frugality for being “cheap”. And doing both will not end up squishing you like a grape. Look at Sam Walton… he did not live lavishly, and he could hardly be mistaken for road jelly… ;-)

  34. Christa says:

    I totally agree with Trent on this one.
    Spending less is more important than the sacrifice of your family.
    Well Said!

  35. DivaJean says:

    I vote for spending less. I could earn more in seeking a higher paying position in my company- but I would be sacrificing time with my family as it is expected I would work 20 more hours/week.

    I would much rather have us pinch pennies (we do until Lincoln is crying in pain!) to allow for more family time.

  36. To echo the statements of several others, the best path is to be frugal while working to increase your income. But increasing your income doesn’t need to consume your life.

    Instead of spending more time working at your job in the hopes of getting a raise, why not take advantage of the many opportunities to add to your income online? It’s not easy, and it’s not for everyone, but it’s worth considering.

    I also agree strongly with your point about priorities. Spending more time with my family is my main goal. Making more money to give them a better life is important too, of course. But making money at the expense of spending time with them is counter-productive.

  37. tejas says:

    “Stretch your legs only as much as your blanket is!”. This is a proverb in my indian(asian) native language – marathi. In this context, it means you have to always look at your pocket, before you spend.
    I agree with Trent. You should pursue career and better opportunities to create wealth, if you can balance that with piece of mind and other values in life. But practicing frugality is a virtue, which does not ask of you anything more than practicing frugality (watching what you spend and how much value you get by that expense).

  38. Uncle B says:

    Tender spot hurting a lot? Other side too? bruises on your face and body throbbing? Is that blood running out your nose, skirt above your head in the wind, panties torn and soiled, titties swelling and turning blue by the minute, lost on the roadside, hoping not to die? Did you recognize the tail lights of the limo that threw you off? Was it the same limo that picked you up at election time, promising a good decent clean ride? Will you ever learn? Last time these guys did this to you, your babies were killed in Iraq and your retirement fund spent to do it, your taxes went up, you did not get destroyed by the weapons of mass destruction, they were never found. Poor little America. Our heart-felt prayers from Canada go out to you!
    (Don’t muzzle me, let the truth out! cut me copy me paste me spread me like grease!)

  39. steve says:

    Financial awareness is necessary. While I am pleased that I saved $1 on my 10lb bag of potatoes at the supermarket tonight (as compared to my usual brand), that $1 of savings, even repeated over 30 years, is not enough to fund my retirement. I will be looking to improve my income if at all possible–to always be improving my position, whether on the expense side (through frugality) or on the income side. both are parts of a sound personal fiscal policy.

  40. Maddie says:

    Nice post! Spend less is the key because even in the worse times you’ll be able to adapt and be fine.

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