Home > Cutting Spending > It’s because I spend less, not because I make more

It’s because I spend less, not because I make more


I have a dear friend named Sam who enjoys chatting about money when we get together every week or so.  Whenever I lend some advice about how to handle her financial issues, she swipes aside my comments because in her words, “Of course it’s easy for you because you make so much more than me”.  Sam happens to be a teacher and I’m an engineer, so I do make a bit more than her, but the point I’ve been unable to get across is that my finances are sound because I spend less than her, not just because I make more than her.

As you can tell, I enjoy talking about personal finance and money, but I’ve yet to let on to anyone in the real world that I like talking about them this much… So I generally stay quiet now-a-days when she brings up money.

So let’s lay out the facts and see whether I am wealthier because I make more, or because I spend less!  I’ve already explained that her chosen profession, teaching (an incredibly noble one), tends to make less than engineering, but is that the cause of her issues?  (I’ve made a few assumptions for rounder numbers)

Salaries after Before/After Tax:

  • Me: $55,000/$45,000
  • Sam: $41,000/$34,000

Annual Spending:

  • Me: $22,000
  • Sam: $34,000

Amount Leftover to Invest:

  • Me: $23,000
  • Sam: $0

Sitting Pretty

As we all know, the size of the difference between what you earn and what you spend determines how wealthy you will be in the future.  It also determines the number of years you have to work before reaching financial independence.

I’ve been able to add a health amount to my assets this year, and I will continue to do so for the next 10-20 years, and then hopefully I’ll be able to live off of the interest it throws off.  But that’s because I’ve made some sacrifices and lived below my means.

Sam’s Problem

My friend Sam, on the other hand, spends everything she has each year, and she complains to me that she’s unable to save up a down payment for a house.  Life just isn’t fair, and I’m in a better position because I chose a higher paying career field!

I do feel for her, that teaching pays so little for doing so much, but I have little sympathy for her lack of assets.  It’s the mindset that you need to spend everything you earn that bothers me.

I earn $11,000/yr (after taxes) more than Sam, but Sam spends $12,000/yr more than me!  The bigger problem is Sam’s high level of spending, not the fact that she makes less than me!

What would you do?

So now every time we talk about money, I can’t help but think, if you embraced frugality, you could certainly afford the house you’re dreaming of.  It may not happen overnight, but if she saved $12,000 for 4 years, that would certainly be enough of a down payment for a $200,000-$250,000 house.

Since they aren’t giving too many raises in her district, I’d also advise doing something during the summer, when she doesn’t have to work.  With a little creativity she might end up earning more than me and being able to afford a nice house within 2 years.

The possibilities are limitless when you take a cold, hard look at your finances, and agree to a little sacrifice.  Like I’ve said before, if you believe you can do it, you will find a way to make it happen instead of blaming the fact that your current salary isn’t high enough.


  1. December 24, 2012 at 11:24 AM

    Totally agree! I had a teacher friend that NEVER had enough even though she was making close to 50K. Then, she went into administration and makes close to 100K and still doesn’t have enough because she let her lifestyle creep up. Sam could definitely consider spending a year to earn administrative credentials to make more money but nothing will change if her spending habits aren’t in check.

    • December 24, 2012 at 11:39 AM

      That’s a great idea! I’ve actually suggested that before and she told me that the math doesn’t work out, that the raise wouldn’t be worth the cost of the degree. I feel like she’s making excuses at this point, but its her life, so im not going to get pushy. Thanks for the advice!

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