One of the most prevalent pieces of advice touted by so-called gurus is to “Cut costs, live below your means, and you’ll be rich.”
From ditching the little things that make you happy to downsizing your lifestyle, the mantra of “spend less, save more” is preached as the cure-all for financial woes.
Here’s the stark truth:
When you’re strapped for cash and trying to achieve financial success, cutting costs simply won’t cut it.
To help you keep away from financial sticky wickets, I’ll show you why cutting costs isn’t enough and what you should do instead to truly take control of your finances.
Why Cutting Costs Alone Won’t Cut It
Let’s jump right in:
1. You can only cut so much
No matter how frugal you are, there’s only so much you can put aside as long as you aren’t making enough money.
When you’re living paycheck to paycheck, practicing personal austerity can feel like an uphill battle and can only take you so far.
Sure, cutting costs may allow you to save some money, but no matter how much you save, it never seems to be enough.
Even worse, inflation is constantly eroding the purchasing power of your money. So, if you’re solely relying on cost-cutting to secure your financial future, you might find yourself constantly chasing a moving target.
2. Cutting costs limits you to a life of mediocrity
Cutting costs means cutting out joyful experiences. Cutting out joyful experiences is never sustainable; it is not a healthy way to live. Nobody really enjoys living poorly.
That’s why I don’t subscribe to the “live below your means” mindset. It is a permanently poor mindset. But even more damaging than the poor mindset is that this advice kills the spirit.
It contracts you and makes you small. It makes a person less of who they are, not more. It sentences a person to a life of mediocrity.
3. It can lead to a scarcity mindset
Constantly focusing on cutting costs can create a scarcity mindset, where you feel like there’s never enough money to go around.
Scarcity mentality is dangerous for financial success. The more you focus on lack, the more of it you’ll experience.
Also, scientists found that a scarcity mindset can affect your mental health. It lowers your intelligence quotient (IQ) by as many as 14 points and hinders brain function by affecting problem-solving, information retention, logical reasoning, and decision-making.
4. Cost-cutting doesn’t address the root of the problem
If you’re struggling financially, the root of the problem might be that you’re not making enough money.
Cutting back on expenses won’t address this underlying issue.
The Ultimate Solution to Your Money Problems
Here’s the thing:
The poor thinks of cutting costs while the rich thinks of increasing income.
Instead of focusing on cutting costs as a means to financial stability, the focus should be on increasing your income.
Several years ago, I was working a poor teaching job and struggling to make ends meet. I tried my best to reach income goals by cutting back on expenses, but no matter how much I saved, it never seemed to be enough for my long-term financial dreams.
It wasn’t until I started looking for ways to actively increase my income that I was able to start building a solid financial foundation and eventually became rich.
Why Focus On Increasing Your Income?
The answer is simple—increasing your income provides you with more options and opportunities.
When you have more money, you can do more things. You can invest in yourself, support your people, buy things that make you happy, give to the causes you care about, and generally lead a better lifestyle.
Even more, when you’ve been able to successfully increase your incoming financial flows, you can quit your job and attain time freedom. You can walk away from a life of struggles and start living a truly fulfilling life.
On the other hand, without making enough money, you won’t get much of these options no matter how many frugal living tips you are applying.
In short, when you focus solely on cutting expenses, you’re essentially playing defense in the money game. You’re trying to prevent losses rather than actively seeking gains. This mindset can make you lose the financial battle before you even start fighting.
Instead of focusing on caressing the little money you’ve been getting, turn your attention to increasing your income.
Ways to Increase Your Income
Here are the top ways to increase your income:
1. Investing
There are numerous investment opportunities available, ranging from real estate and the stock market to forex trading and cryptocurrencies.
While some investment opportunities require significant financial commitments, there are also many options for individuals with smaller budgets or who are new to investing.
2. Starting a business
Whether it is online, offline, or at home, starting your own business can be a great way to increase your income and gain more control over your career.
Be it a side hustle or a full-time business, put on your entrepreneurship hat and offer some value in exchange for money.
3. Getting a better job
One of the most straightforward ways to increase your income is by getting a better job. This may mean switching industries, switching companies, or switching positions.
However, no matter how high up the corporate ladder you are and no matter how much you are making at your job, I always advise that you don’t completely neglect the first two options above.
Conclusion
The solution to your financial problems is not to cut out necessary expenses and live a limited life because you’re trying to be careful with money. Depriving yourself of joyful experiences is not a healthy way to live.
If you follow that path, you’ll still run out of money eventually, especially as inflation keeps eroding the purchasing power of your money.
The solution to your money problems is to intentionally ramp up your income. This way, you will have more than enough to live beautifully, give abundantly, help people accordingly, and still have plenty of money to save for milestone projects and your kids.
