I‘ve long had a bit of a problem with the phrase “spend less than you earn.” While it offers a sound financial basis on which to operate, it bothers me on a couple of levels. I much prefer “earn more than you spend.” It may seem like a nit-picky distinction, but in my mind, it is a question of perception. Our attitudes toward money can reveal a great deal about how we actually handle money, and one of the basics of financial literacy is understanding yourself and how you feel about money. Here are some of things to think about in terms of adjusting your mindset to one of earning more than you spend:

Active Approach to Money

While frugality, and a frugal lifestyle, does require activity to a certain degree, in my mind spending less is more about passive actions: not buying something, not spending money, or using coupons to save a little more (although coupon clipping and looking for sales is anything but passive). To me, spending less is more about not doing something than it is about doing something. When you say that you are spending less than you earn, you are basically not doing something — not spending money.

On the other hand, if you earn more money than you spend, you are actively engaged in doing something — earning money. It is an active approach. You say that you want to be able to spend x amount of dollars, or put x amount of dollars into a retirement account. Then you go and find ways to earn that money so that you have what you need to reach those goals. To me, earning more than you spend implies that you are taking more action, and possibly taking greater control of your financial future.

Eliminating Limits

When you spend less than you earn, you are limited. Yes, you can cut back on wasted money, and improve your situation. However, you can only cut back so much. You can only reduce your spending to a certain point. Once you have reached that point, you can’t simply “spend less” in order to improve your finances.

Earning more than you spend doesn’t subject you to those limits. If you have the time and the will, your earning power is potentially limitless. You can always earn more, even if you can’t always cut more spending from your budget. Cultivating different income streams can be a good way to help increase your earning power. And you can always increase your earning power.

Deprivation vs. Abundance

While you can’t just think your way into financial security, your mindset does help you get there. To me, a spend less than you earn mindset points to deprivation. You are living in a state of constantly saying “no.” While being able to say no and being able to delay gratification are very important attributes, it is worth noting that when you are always focused on scrimping and saving, you soon lose track of other things.

Shifting to an earn more than you spend mindset implies abundance. It implies that you can earn more in order to meet your needs, and some of your wants. It’s a way of thinking of money in terms of positive action, and thinking of money as a means to an end. No, you don’t want the idea of making a buck to consume you to the point that you neglect the mostly-free things that make life worth living (family, friends, quiet time doing something you enjoy), but you can change your view. The idea that you are earning can help you feel as though you have abundance, rather than feeling deprived because you are always having to cut things out.

Bottom line: The financial terms that you use to describe your situation reveals a lot about how you view money, and how you interact with it. It is also worth noting that, once you do have your spending behaviors mostly under control, you can get more value out of finding ways to increase your income, rather than just merely cutting your spending further.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.