How to Earn More & Spend Less

All personal finance advice can be boiled down to “earn more, spend less.” That’s really the key formula that we all need to master.

However, there are lots of reasons why this rather simple plan can be hard to enact. Lay offs, recessions, high cost of living, gender and racial pay gaps, high health costs…the list is practically endless.

Let’s talk about how to reach financial freedom in our complicated world with a simple money plan.

What is Financial Freedom?

Financial freedom when you have enough money in assets so that you don’t need to work for a living anymore. Some people call it early retirement, some call it financial independence, some call it the dream.

It all boils down to having enough money to your name that you are not required to clock in at a job to pay your bills. Wealthy people in general are financially free. If Taylor Swift never sold another album, she would have enough money to fund her lifestyle for the rest of her life.

Why Earn More, Spend Less Is Your Roadmap To Financial Freedom

It’s simple math, really. The more you earn and the less you spend, the more you’ll be able to save and invest. Saving and investing is how people build wealth, and that’s why I’m low key obsessed with talking about money.

However, most Americans struggle with money. 77% of Americans feel financial anxiety according to one 2024 study.

That’s generally because most Americans feel they don’t earn enough and that the cost of things is rising. Which is true! Median household income in the US is just under $75,000 a year.

People in general also have a hard time working on long term goals, like saving for retirement. When you’re 26, retiring at 65 feels like it’s a million years away. Humans tend to think in the NOW, rather than the distant future.

So that’s why “earn more, spend less” is simple, yet tricky at the same time. So let’s talk about how you can both increase your income and decrease your spending.

How to Earn More: Financial Changes to Make

One of the easiest ways you can make more money is by having your money make money!

Ok, that sentence was a little confusing so let me explain. Using things like investing and high yield savings accounts (HYSA) is a way to put your money to work making more money.

That’s because of compound interest. The money you put into the market, or the HYSA earns interest, and then you begin to earn more money off of the new total, including the interest.

So if you invest $100 and earn $10 in interest, you would earn money off of the new total of $110. Even though you yourself only put in $100! That’s how compound interest works.

I use a HYSA to keep my long term savings in and have earned thousands of dollars in interest over the years. That’s my money making me MORE money.

The two HYSA accounts I like and use are:

Atmos, which is environmentally friendly and helps invest in solar companies

Wealthfront, which is not environmentally friendly but has a high interest rates

Earn More With Side Hustles

You can also increase your total income by diversifying HOW you earn money with side hustles.

I used side hustles to great success when I was working on paying off my student loan debt.

A side hustle is simply a job that is not full time that makes you money. It could be something like babysitting or tutoring, or consulting on businesses.

Here are 19 side hustle ideas for you to get started!

How to Spend Less: Financial Changes to Make

I always tell people that managing money is an exercise in creativity. Since we all have different financial needs and goals, spending less money is going to manifest in different ways for all of us.

Firstly, find a money management strategy you like. To earn more and spend less you need to have a really strong understanding of your overall financial picture, and a money management strategy will give you that clarity.

I use both a personalized spreadsheet and the FREE budgeting app Empower to manage my budget. Here’s a screenshot over the dashboard, with my personal numbers removed.

You can link all your bank accounts, debts, and credit cards to Empower, so it will pull all that data and put it in one place for you to look over. You can see on the left hand side of the photo that I have multiple bank accounts for different savings goals, like my emergency fund and travel.

Empower also tracks the purchases I make on my credit card, which can help me see when I’m spending a lot in one specific area. Below is a screenshot of my clothing spending in May!

Having this level of detail is the key to making any financial changes. If you see that you went to target 15 times in one month, you know that cutting back on Target trips will help you save more money.

You can use whatever budgeting and tracking system you like! I‘ve used Empower for over a year and it’s free, so it works for me.

How to Spend Less: Lifestyle Changes

Much like losing weight and keeping it off for the long term is about making lifestyle changes you can stick with, and not crash dieting over two weeks, spending less money is all about finding lifestyle changes you can stick with.

I like to think of it as simplifying my life. Every lifestyle choice I have made to save more money has really helped me live more simply, peacefully, and in the present. Consumerism and the endless shopping rat race only serves to benefit corporations, not you!

Some ways that I have cut expenses that you can use as a jumping off point:

Hosting clothing swaps instead of buying new clothes

If someplace is 5 miles or closer to home, bike there instead of driving

Cutting back on random Amazon purchases

Living with a roommate to save on rent

Do a month long shopping ban

Try one of these 7 sustainable living strategies to cut down on waste and save more

Cook at home more and eat out less

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