In the FI community there are many people who focus on cutting spending and championing frugality. Conversely, there are many that focus on growing your income and earning potential. The whole point of both arguments is to have a large percentage of your income to devote to saving/investing.

The way that I see it is that these are just 2 sides of the same coin and are actually steps that follow one another in a cycle:

Step One: Trim down your spending to a more efficient lifestyle.

Step Two: Once you’ve maximized the amount you can save from your current income, the only place to go is up! Grow your income.

Repeat the cycle to cover any unnecessary spending you may have overlooked or check in with any lifestyle inflation that may have happened once your income increased.

Savings Growth Cycle

Spend Less

Step One: Trim down your spending to a more efficient lifestyle.

The best way to trim down spending is to take a look at all of your recurring costs every month and see if they really bring you as much joy as the time and energy that they cost you to afford them every month. For example, I have never paid for cable and I still think that I watch wayyyy too much TV. Thank you Netflix. I don’t miss it and if I really want to watch a football or soccer game, I can go to a bar for the cost of a beer or find it online. My point is that you have to start digging into what you spend and see if it’s really worth it your time and effort to pay for it.

For example, let’s say you make $20/hour for a 40-hour work week (or $800/week).

Take that and add in your commuting costs, time preparing for work and doing activities specifically work related. Perhaps that’s an extra 10 hours. That takes you to $800/50 hours per week, or $16/hour.

From there you subtract the costs of working: gas from the commute, new clothes and accessories for work, national group memberships, like the Society of Women Engineers (SWE), and work specific happy hours/dinners. Now you’re down to $12/hour. Use this figure to do any calculation for how long you have to work to pay for something.

So that cable that’s $140/month doesn’t cost you 7 hours or your time. It costs you almost 12 hours. Is it worth it for you to be at work for 12 hours per month just to pay for cable? That’s the question you need to ask yourself, not just about your current costs but, your future ones as well.

Is that new tech gadget worth 6 hours of my life when I know it will be used for a couple of weeks and then put with the rest of the shit I don’t use anymore?

Which leads me to my next point that we all have too much shit. I’d bet that if you took a look around, you could find items that you bought and never used. Gym equipment that you swear you’ll use when you start your new healthy life on “Monday.” Sell it, donate it. Purge the shit and purge your “need” for it.

Once you go through all of these kinds of expenses and trim the unnecessary fat from your budget, then the way to continue to grow your savings rate is too increase your income.

Earn More

Step Two: Once you’ve maximized the amount you can save from your current income, the only place to go is up! Grow your income.

One of the most common ways to grow your income is to start a side hustle. Take a look at what you like doing outside of your 9-5 job. Do you like to write, read, code, knit or do crafts? Do you have a different skill that you could teach others? There are truly hundreds of different things that can be done as party of a side hustle. You just have to find your niche. The biggest benefit to this kind of venture is that there is no ceiling. The possibility to earn more is only as limited as the time and resources you’re willing to put towards it.

My current side hustle as a krav maga instructor doesn’t yield much money at this point but, that’s more due to my lack of effort to truly monetize it. This is one of my goals for next year. I realize this hustle is still time intensive but, it is something that I am passionate about not to mention just plain old fun.

Other things than can be done to raise your income could be as simple as asking for a raise at work. There are resources on how to ask your employer for a well deserved raise. Here is just one example.

If you do feel undervalued/underpaid or your employer denies your request for a raise, then my advice would be to start looking for a new job where you are properly compensated for the time and skillet you are willing to provide a company.

Rinse and Repeat

Reevaluate and Repeat is the “final” step to this process. This basically just means that as your income grows, take the time to check in that your spending isn’t getting out of control just because you’re making more money. The whole point of growing your income was to save more, not to spend more, right? Giving yourself this periodic check can be useful just to ground yourself and reassert your values behind your FI goal.

What are some of the expenses that you’ve cut from your life?  How about some of the ways you’ve grown your income?  Let me know in the comments below!