Tuesday, September 8, 2015

How to increase your Income, the Inverse way

Sometimes I find it hard to understand why people feel that saving more is a very arduous task. It really isn't as tough as it sounds.

When people think of increasing their savings, most people will naturally wonder about how to increase their income, while few think of where their expenses could be trimmed instead.

The formula only has 2 inputs:

Income - Expenses = Savings

For most people, the Income part is the tough part to change. Can you force your salary up? It really is dependent on many things, not least things that may be out of your control, such as how much your superiors like you and if you have any scheming colleagues out to get you. You can get a second job for side income, and of course you can also invest for more income. However, like I said, this is the tougher part to change.

The easier part to change is exactly the Expenses portion. If you earn the same amount, but you spend less, you will save more! This really isn't rocket science or quant finance. I think reducing expenses is the easiest way to increase your savings and it could also be better for you in the long run.

Both SS and Jes have wrote very good and timely posts about this I think that they are very useful, especially since they give some very practical suggestions and solutions.

The basic principles of how to cut down expenses is the same. Switch to a similar, but cheaper alternative. If that expense is really unnecessary, consider eliminating it altogether.

Other than just saving money, there are also other benefits of trimming expenses:

- Downgrading coffee brings you back down to earth and makes you less of a snob
- Swapping taxi rides for public transport on the way home also can make you less of a snob
- Preparing your own food can be fun, therapeutic, healthier and also help improve a life skill
- Limiting eating out with friends allows you more personal time and reduces the rush in your life
- Skipping dessert would probably free up some calories in your diet

Saving money doesn't mean that you need to take a big hit in your quality of life. Happiness is a perception and if you are able to train your brain to acknowledge both the monetary savings and the other benefits of these expense trimming activities, it would be easier to stick with them and incorporate them as good long-term habits.

However, I think this is also a good time to bring up that you should not be penny-wise, pound foolish. A lot of people are great at all these kind of small things, but yet they can drop $10,000 on a random stock tip that they read in an article somewhere. Or a $5000 handbag / watch. Or a $5000 vacation. The more money is at stake, the more time I would advise someone to slowly think about it and fully understand their actions and risks.

You don't necessarily have to get a better job, second job, higher salary or start a business to increase your savings. It is very possible to increase your savings just by looking at which expenses you have that can be trimmed.

Start on the easy things, then work your way up!


  1. It is important to know your monthly expenses so that you know how much spare savings for investment.

  2. Thank you for sharing! This article is very informative and helpful. Good work!


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