Back in the heyday of personal finance blogs there was a great debate that stormed through the pf blogosphere and that was the debate over whether one should spend less than they earn or earn more than they spend.
Spend Less Than You Earn
The philosophy of spend less than you earn was to essentially create behaviors and philosophy in which an individual learns to control their spending, develops disciple and always has “breathing room” with their personal finances. While I think this approach is great when you are starting out, I never thought it was realistic. The problem with this approach is that it doesn’t really factor a simple fact of modern life.
The truth is, as people have harshly learned these past few years, that we live in an era of central banks that constantly and endlessly debase the currency. Since 2021 inflation has been brutal on everyone’s wallet and having the discipline to “spend less than you earn” will only allow you to reduce your quality of life over time.
Earn More Than You Spend
The approach I preferred is to always earn more money than I can spend. Today, I have millions of dollars, rental properties, residential properties and other investments that make it difficult to spend more than I earn. The key is to build enough wealth that it snowballs into a self-sustaining money machine. Of course, it’s always possible to go out and buy a Rolex or expensive sports car but I’ve never been driven by material possessions. I much prefer to spend my money on life experiences and sharing those with my family.
I wish so many of the personal finance bloggers that I followed wouldn’t have sold out or quit because I’d love to see what their philosophy is now, decades later.