- Building wealth isn’t all about cutting expenses to save money, says financial planner Eric Roberge and his wife Kali.
- In an episode of their podcast "Beyond Finances," the Roberges said they’d rather find ways to increase their income than cut their spending.
- It’s still important to keep expenses low, they said, but increasing your income will yield a greater long-term benefit.
Saving money isn’t the sole ingredient in building wealth.
In fact, according to financial planner Eric Roberge and his wife Kali, pinching pennies alone won’t get you very far.
"In addition to saving money, we really focus on increasing our income," the couple said on a recent episode of their podcast "Beyond Finances." Cutting expenses, managing your cash flow, and not giving into lifestyle inflation is important, Kali said, but "if you can’t increase your income, I think it’s always going to be a struggle to get to where you want to go."
The Roberges said they enjoy traveling and consider it a priority in their budget, but cutting back on expenses, including rent, to afford travel or other luxuries is finite. You can only "realistically cut so many expenses," Kali wrote in a tweet.
"If you want to keep saving at a really high rate but you also want to enjoy things like travel, you can’t just pinch pennies until you magically manage to shuffle up enough money to go take your trip," Kali said.
That’s the same advice Grant Sabatier, the blogger behind Millennial Money who retired a self-made millionaire at 30, shares in his book "Financial Freedom: A Proven Path to All the Money You Will Ever Need": "No matter how much you cut back or how often you crash on a friend’s couch or grab free food from catered company events, the amount of money you can save is limited by how much money you are making."
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Earning more money allows the Roberges to earmark some to spend on travel and save for the future or other financial goals. "In our case," Eric said, "I would much rather spend time figuring out how to grow our family revenue than I would on trying to spend time figuring out the best credit card hacks for travel — it’s just night and day."
In some cases, Eric said, spending less on everyday expenses is necessary, but if you’ve hit a limit and it’s possible to earn more money, the benefit will be much greater.
"If you can take the cap off of that and increase your income — it’s not always easy to do that, which is probably why people don’t pay attention to it — but if you can do that, it gives you a lot more room to both spend and save," he said.
Sabatier also says a higher income is "more powerful" than low expenses, in part because it allows you to also increase the frequency and size of your investments.
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While the Roberges acknowledged that having the ability to increase your income is a privilege, it’s one that shouldn’t be taken for granted. Cutting your expenses and daily spending takes continued effort — it’s a short-term solution — whereas increasing your positive cash flow is a long-term solution, they said.
"It might be a little bit harder short term, but it’s much more efficient long term," Eric said. "Spend the time now to make the plan, and then take action on that plan, versus just trying to find a quick way out."
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