If you wish to improve your financial wellbeing, you can either reduce your spending or increase your income. You need to balance both approaches, but I believe that people default to cutting costs and underweight the importance of growing income.
Saving requires us to watch every dollar we spend very closely. This can be hard in a number of ways:
- It requires a lot of decision-making, which can take a lot of energy.
- It can cause anxiety if we’re not doing it well or it’s causing us to miss out on things we’d really love to do.
- Every decision to NOT spend money is a one-time benefit (you either have the money or you don’t).
Getting a raise or working in a new job with a higher salary has a number of benefits:
- Only one big action is required (ie, get the raise), compared with saving which requires heaps of mini-actions.
- You can approach life from an abundance perspective (what CAN I do with my money rather than what CAN’T I do with my money).
- The increased income is recurring, which means you will enjoy the extra income every year.
So if you want to save an extra $5,000 this year (and every year after), go for the raise!