Do you like pinching pennies, cutting corners, and saving money in general? If yes, I’m not surprised. After all, many of us who read personal finance blogs (and own them!) like to save money. It’s a big part in helping us build up savings and ultimately our net worth.
However, how can we save money if we aren’t making money? I know that we can and should live within our means, and that should probably apply to people at most income levels. But again, if we aren’t making money, we aren’t saving money! Clearly, having an income is important.
What happens if we don’t have income? Here’s a sequence of events that can happen:
- Bills don’t get paid.
- Our basic needs don’t get addressed.
- Our wants…well, forget about those!
- We are raiding our emergency fund
- If the emergency fund is depleted, we are raiding our savings or retirement
- If savings or retirement funds are depleted, we are borrowing money
- If we borrow money, we are digging ourselves in debt that will require income and even more savings to help out from under the debt.
- If we can’t borrow money, we’re begging for money
- If we can’t get money by begging, we’re out of luck
- If we’re out of luck, we’re…..well, I guess we can’t go further than this!
I think you see where I’m going with this!
Certainly, most of us won’t face a continuous straight line down this path if we lost income for a very short period of time. But it can be painful to do so. Losing income wreak havoc with our plans to increase our net worth, and to reach the financial freedom goal that many of us are aiming for.
You can’t save, or build net worth, if you don’t have income.
This is why I think it’s important to:
- Get a good education (that is a good value, not one that’s overpriced).
- Find marketable skills
- Build a career
This means acquiring income, growing income, and even protecting it. I know, it’s easier said than done in these economic times. But if we don’t pay attention to our income generation efforts, the rest won’t fall into place.
The exception to this could be later in life when we have accumulated enough savings to survive losing income, and might even not worry about it. At that point, our income might even come from our savings. Hopefully it will! But to get to that point, we need to save money – and to do that, we need to make it!
Readers, what is your first priority in terms of your finances? Is it making money, or is it saving money?