There is an old saying to remind us that our challenges may have more than one solution. “You can raise the bridge or lower the water.”
When trying to lose weight you have two options; reduce your caloric intake or increase the amount of calories and fat that you burn through increased activity.
You might equate personal finance to being on a diet, but in reverse. With finance you are not trying to lose money, you are trying to gain wealth.
To gain wealth you have only two options; you can increase your income, raise the bridge, or decrease your expenses, lower the water. The key to growing wealth is not which you choose but the relative difference you achieve between the two.
Raising the bridge, sustainably, can be difficult. Most of us already have a full time job, a family to raise and an hour and half long commute.
There are methods to generate some quick cash but few are sustainable. For example, you can have a yard sale, list stuff on E-bay, or return recent purchases to the store.
With a little more time there are local opportunities to make income like mowing lawns, shoveling snow or babysitting.
With more time and a little money to invest, you can explore building a side business such as selling crafts, starting a window washing service, or cleaning houses.
Lastly, with even more time and effort you can invest in yourself, obtain additional education and then progress in your career or change careers altogether.
Unfortunately, none of these options are ideal; they either provide little extra income or require a great deal of time and effort to achieve significant results. I’m not advocating that you don’t make an effort to earn extra income, just be realistic about how much you can earn and or how long it will take.
On the other hand, lowering the bridge, decreasing your expenses, can happen immediately. You can free up extra cash within your next pay or billing cycle.
Start with the often cited turning off of the lights, turn down the thermostat in the winter and turn up in the summer. Brown-bag your lunches and quit buying snacks at the convenience store. No more bottles of water, don’t stop for a cup of coffee, cut coupons and prepare smaller portion sizes at home. Eat out only on special occasions and take a “staycation” instead of a vacation.
Some expenses are necessary, many are not. Cell phones, cable or satellite, that extra pair of shoes or an evening at the bar are luxuries.
Extra income or not, if you are committed to a better financial future, you will make the necessary sacrifices to get there.
If you are like most Americans, debt is a concern. Even more, it is an anchor on your efforts to achieve financial progress. But every time one debt is eliminated, your relative difference between income and expenses grows and so does your chance for attaining the wealth that you desire.
For every dollar in expenses reduced, you have one more dollar to pay down your debt, add to your emergency fund, or invest for your retirement. In time, you will find yourself in a position which you can afford your latte without sacrificing your future.