Where Is Dirt, There Is Cash

Why do most personal finance bloggers write about saving small amounts of money?

Maybe because they have nothing else to say? Not exactly. Most people probably talk about saving few bucks in the grocery store because that’s all they do for improving their finance. It doesn’t take much effort – buy brown rice instead of white, buy from Costco, carpool to save gas, buy used stuff and save $5. Tremendous.

Photo by Daniel Y. Go at Flickr

Easy Solutions Don’t Work

When something is too easy, the effect of it is too small. That’s a physical law, a law in business, in life and everything. If you want to build muscles, lifting 0.5kg weights is not going to have any effect because it’s too easy. If you want to make money online, getting a ready template and putting up some affiliate products will not work. It’s too easy and everyone can do it (and so did everyone which resulted in millions of affiliate sites competing for the same customer). It’s much easier to just scatter some seeds on the ground rather than tilling it first, but the first method gives much less crops than the second, if any at all.

The “hard pays more” rule is one of the most important rules when it comes about money. Hard work pays more, because less people are willing to do it.

Then why do people expect to fix their finances by doing the easiest things? Do you really believe saving $0.5 today will have a big impact on your wealth tomorrow?

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The Dirt That Works Best

If you want to be wealthy, you’d better get your hands dirty. Saving is easier than earning more, that’s why most people prefer it. Saving on small things is easier than saving big and regularly that’s why most people prefer to save few bucks on grocery shopping.

But the truth is that the harder things work better. Earning more is in general more efficient than saving because it is not limited to some amount. You could make $100 more, but you could also make $100,000. While if your salary is $2,000, you can save $2,000 per month at your best.

Working smarter works better than working harder, because finding the way to work smarter is harder than just working hard the way you already know. That’s why it’s easier to make $100 more this month than $100,000 more – you can just work a hour more per day for example and achieve it. But the effect of making extra $100,000 is so much bigger.

Saving can also be efficient, but if done the stiff way. Saving regularly, say $250 per month, can help you a lot if you add cumulative and compounding effect. Of course, committing yourself to save $250 per month is a stiff task. It’s so much easier to buy a piece of brown rice today and think you’ve done a big deal.

Saving also works if you save a big amount once. If you are buying a new car and decide on a model/make that is $5,000 cheaper you are doing a big push to your finance. Just imagine how this $5k can turn into $50k for few years if invested wisely (use the calculator). But it’s too hard to change your cabrio for a Mini Cooper, isn’t it?

There is money in dirt they say. It’s ok to make small savings but don’t fool yourself that you are making big progress. Get your brain working and your hands dirty and you may start seeing how your finances improve. And don’t forget the same principle works for almost every area of life.