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Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life. There's a weird cultural meme that's convi

Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life. There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go about it. I'll tell you this much, if buying an iPad makes you broke, then not buying that iPad sure ain't gonna' make you rich. This meme is just kind of annoying as it relates to the middle class, but it's downright dangerous when applied to the poor. It's useless to apply ideals of thrift to people making minimum wage, a level of earning at which no amount of saving can cover even predictable periodic expenses.

bradshaw1965 12y ago
There are pressures from both the earn and the spend side, but the surest path to misery is living above your means. Dickens had it pretty much nailed with, "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."
dimva 12y ago
Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years. That means you'll be a millionaire by the time you're 40 if you start doing this right after graduating college. 3% happens to be the rate that stocks have historically appreciated above inflation, so by doing this you'll be a millionaire in today's money. Don't believe me? Try it: http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx http://www.bankrate.com/calculators/savings/simple-savings-c... EDIT: For the poor, there are many structural problems that lead to a cycle of poverty, but it is possible to escape even that with very good money management. I dated a girl whose parents came to America on a raft, with a fifth-grade education. They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s. In short, don't knock thrift. Yes, earning more is always great, but savings combined with compound interest is magical.
- dionidium 12y ago
  That's great, but I hope you'll appreciate that earning $100k+ on a single income in your early twenties without kids isn't exactly the median household I'm talking about. As you point out, you've still got plenty of money remaining to live in one of the most desirable neighborhoods in the country while eating out for every meal. You're doing fine.
- pyronite 12y ago
  $48,000 a year in investment is $18,000 more than the median total income for an individual in the United States. What you are able to do is exactly what the vast majority of Americans are unable to do.
  - dimva 12y ago
    Sure, but the article specifically mentions couples making $211k/year combined ($160k euros) spending it all. People making $30k/year obviously can't save as much as me, but they could save something. I saved money even when I was in college, working only in the summers and paying for food/housing myself. I think I made like $10k/summer. Of course, my lifestyle was much less extravagant than it is now - I never ate out and lived with many roommates.
- webwright 12y ago
  "Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years." Might want to consider that inflation averages about 2.5-3% annually... So effectively you're treading water there in terms of investment (though saving is good).
  - seanflyon 12y ago
    The grandparent post specifically referred to 3% over inflation.
- djokkataja 12y ago
  "They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s." I'm assuming that they weren't still working at 7/11 in their 50s. Median income in the United States is ~$50k/yr pretax[1], so saving $4000/month is unrealistic for the majority of people in this country (since they would have to be saving every cent they earn without paying taxes, housing expenses, food expenses, healthcare, etc). [1] https://en.wikipedia.org/wiki/Household_income_in_the_United_States#Household_income https://en.wikipedia.org/wiki/Household_income_in_the_United...
webwright 12y ago
"The road to wealth is earning." That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending. The road to wealth is spending dramatically less than you make in an ongoing way.
- GFischer 12y ago
  Reminds me of Dickens: "Mr Micawber's famous, and oft-quoted, recipe for happiness: "Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." http://www.telegraph.co.uk/finance/personalfinance/9066005/What-Charles-Dickens-said-about-money-12-memorable-quotes.html http://www.telegraph.co.uk/finance/personalfinance/9066005/W... Edit: didn't only remember of it myself, bradshaw1965 beat me to it: https://news.ycombinator.com/item?id=8232898 https://news.ycombinator.com/item?id=8232898
- dionidium 12y ago
  Sure, but saving is the half of the road that applies after you start earning :)
  - webwright 12y ago
    Virtually everyone I know is earning. Almost no one I know is spending considerably less than they earn... So I focus on the harder part!

bradshaw1965 12y ago

There are pressures from both the earn and the spend side, but the surest path to misery is living above your means. Dickens had it pretty much nailed with, "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

dimva 12y ago

Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years. That means you'll be a millionaire by the time you're 40 if you start doing this right after graduating college. 3% happens to be the rate that stocks have historically appreciated above inflation, so by doing this you'll be a millionaire in today's money. Don't believe me? Try it: http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx http://www.bankrate.com/calculators/savings/simple-savings-c... EDIT: For the poor, there are many structural problems that lead to a cycle of poverty, but it is possible to escape even that with very good money management. I dated a girl whose parents came to America on a raft, with a fifth-grade education. They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s. In short, don't knock thrift. Yes, earning more is always great, but savings combined with compound interest is magical.

dionidium 12y ago
That's great, but I hope you'll appreciate that earning $100k+ on a single income in your early twenties without kids isn't exactly the median household I'm talking about. As you point out, you've still got plenty of money remaining to live in one of the most desirable neighborhoods in the country while eating out for every meal. You're doing fine.
pyronite 12y ago
$48,000 a year in investment is $18,000 more than the median total income for an individual in the United States. What you are able to do is exactly what the vast majority of Americans are unable to do.
- dimva 12y ago
  Sure, but the article specifically mentions couples making $211k/year combined ($160k euros) spending it all. People making $30k/year obviously can't save as much as me, but they could save something. I saved money even when I was in college, working only in the summers and paying for food/housing myself. I think I made like $10k/summer. Of course, my lifestyle was much less extravagant than it is now - I never ate out and lived with many roommates.
webwright 12y ago
"Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years." Might want to consider that inflation averages about 2.5-3% annually... So effectively you're treading water there in terms of investment (though saving is good).
- seanflyon 12y ago
  The grandparent post specifically referred to 3% over inflation.
djokkataja 12y ago
"They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s." I'm assuming that they weren't still working at 7/11 in their 50s. Median income in the United States is ~$50k/yr pretax[1], so saving $4000/month is unrealistic for the majority of people in this country (since they would have to be saving every cent they earn without paying taxes, housing expenses, food expenses, healthcare, etc). [1] https://en.wikipedia.org/wiki/Household_income_in_the_United_States#Household_income https://en.wikipedia.org/wiki/Household_income_in_the_United...

webwright 12y ago

"The road to wealth is earning." That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending. The road to wealth is spending dramatically less than you make in an ongoing way.

GFischer 12y ago
Reminds me of Dickens: "Mr Micawber's famous, and oft-quoted, recipe for happiness: "Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." http://www.telegraph.co.uk/finance/personalfinance/9066005/What-Charles-Dickens-said-about-money-12-memorable-quotes.html http://www.telegraph.co.uk/finance/personalfinance/9066005/W... Edit: didn't only remember of it myself, bradshaw1965 beat me to it: https://news.ycombinator.com/item?id=8232898 https://news.ycombinator.com/item?id=8232898
dionidium 12y ago
Sure, but saving is the half of the road that applies after you start earning :)
- webwright 12y ago
  Virtually everyone I know is earning. Almost no one I know is spending considerably less than they earn... So I focus on the harder part!