Myth No. 2: A penny saved is a penny earned

[Bruce L.]

So, I was browsing the Internet and found this article on Bankrate and since I know there are some wealthy BPers on this forum, I thought I would ask what your opinions are. I'm a saving and a believer of a penny saved is a penny earned and have massed a decent sum of money investing in real estate, but I no where close to considering myself wealthy.

"The real key (to wealth) is earning," Siebold says. Unfortunately, if you are making $50,000 per year, it will be nearly impossible to accumulate large sums of money, even if you save all your extra pennies.

"People need to stop always looking at the expenses portion of their budget. … It is usually the shortage of income that gets people into trouble," Cardone says.

http://www.bankrate.com/finance/savings/money-myths-3.aspx

[J Scott]

I can't find it now, but I wrote a long post about that topic a couple years ago. I'm a big believer that saving a few bucks here and there (even religiously) isn't a recipe to achieve wealth. Certainly it's a recipe to achieve long-term financial comfort and to ensure that your nest egg continues to grow, but saving isn't going to help you generate shorter-term financial freedom or wealth.

If I have a choice between giving up drinking Starbucks coffee everyday (okay, I don't really like Starbucks, but let's go with it as an example) and figuring out a way I can earn an extra $1000 per year to cover my Starbucks purchases, I'll go for the latter.

The reason being, I'd never waste time striving for an extra $1000 per year -- instead, I'll strive for an extra $50,000 or $100,000 per year. If I miss my goals and only make an extra $20,000 per year, I'm still $19,000 ahead of where I would have been had I just stopped drinking coffee.

Perhaps not the best analogy, but you get the idea. I'm not saying that increased saving is a bad thing (it's a good thing, especially when you're starting out), but increased earning is what generates the big bucks.