Wednesday, July 23, 2008

Earn more or spend less?

Our financial planner, Tom Fisher, has a great blog post up about whether it makes more sense to strive to earn more or to work on spending less. The conclusion, as one might expect, is "it depends," but the more important message is that this is something that can be thought of and analyzed rationally:

In my opinion, most people never stop to figure out what they have to give up in order to earn more money. Often, we just find a way to make more (take a second job, work more hours, look for a new job, etc.) instead of actually figuring out how that will affect our lives. Our brains are not very good at connecting soft questions – like getting what we want – with quantitative ones. Surely it’s better, though, to do this kind of analysis first and better understand the consequences of the choices that we’re making for our lives.

He also provides a simple example of the type of analysis that someone can do to figure out the trade-offs for himself.

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