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It doesn't matter how much you make. Really?

March 31st, 2012 at 07:48 pm

I used to think it doesn't matter how much you make. What matters is how much you save.

Well, it is true to certain extent. Now I know, it is SO MUCH easier to save when making more money.

When I started working for current employer, I was a temp making $14 per hour. Then, I was offered an Executive Assistant job, making $18.5.

I followed all the good finance advice. I packed my lunch and ate at my desk every day. I contributed 20% of my salary to 401K. I cut coupons and looked for deals. I mailed rebates to get free stuff, and get free samples. But our saving didn't grow that much.

I realized I need college degree to be promoted to manager position, I went back to school and got my degree in Business Administration while working full time. It took me 8 years to finish my school work but I received a couple of promotions during those years, one to become a financial analyst when I got my Associates degree, and a manager position when I got my Business degree.

Then, I was offered a director position in Bay Area. Now, my base salary is above 100K and I also receive 15% bonus (this depends on company performance). I still contribute maximum amount to 401K, clip coupons and look for deals.

But what a difference between making 40K a year and 100K plus a year. It is so much more easier to save money and have a nice cushion in cash account.

So, yes, how much you save matters. And, how much you make also matters A LOT - which I didn't know when I wasn't making anything. Now I know.


7 Responses to “It doesn't matter how much you make. Really?”

  1. MonkeyMama Says:

    This is so true. I think frugal types tend to downplay the income side. I like the diet analogy. It's easier to lose weight with both diet and exercise. It is easier to save money with higher income and less expenses. It is very similar.

    My parents drilled this into me, because they *really* understood this. So they gave me great guidance when it came to income and job enjoyment, and work/life balance.

    As with anything, there is lots of middle ground. Too often people just assume "high paying" means "high stress executive," or something of that nature. I think I have a great and amazingly low stress and highly flexible job, doing what I love, for a really nice wage.

    OF course, my dad grew up poor, and was a highly paid Bay Area engineer for decades, so I think he felt the same as you, and why my parents really emphasized education. I think the income he made just blew his mind - he was one of the first in his family to go to college.

  2. Maismom Says:

    Thanks, MonkeyMama. I was one of those who "downplay" the income side when I wasn't making any money. I was totally underestimating what the power of earning power can do, and positively impact your cash flow and balance sheet.

  3. Jerry Says:

    This is so true. It CAN be done with a lower income, but it leads to a heck of a lot easier and faster job when there is discretionary income to work with! By the same token, I have known people with very high incomes who were completely irresponsible with their money, and had no insurance of a financial future at all. Without that sense of frugality and financial knowledge, even a very high income will not suffice. Good for you and nice work!
    Jerry

  4. CB in the City Says:

    It's just a simple truth that the less income you have, the more, percentage-wise, must go to needs. Much harder to save.

  5. patientsaver Says:

    Yes, there is a great deal of truth in what you say, and what MM said. You can clip coupons 24/7 and still not approach a fraction of the savings you'd gain from a better paying job.

    Along the same vein, there's a difference between working hard and working smart.

  6. Jonaton Says:

    I make $4,000 Net per month and save $2,500 each and every month. I have a friend who makes $10,000+ per month but saves nothing (And complains all the time). I tell him your analogy above, BUT oh how I would love to be making $10,000 per month as I would then be able to save $8,500 ! Yeah it would be A LOT easier.

  7. Jenny Says:

    I hate it when people say to me "you can save money no matter what your income is". Yes, but it depends on your budget (expenses, etc.) People who are barely paying their bills usually can't save anything. I also believe there are different savings levels - car repair fund, college fund (if you have kids), retirement funds, emergency fund, etc.

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