One thing that is constantly talked about in the personal finance blogosphere is the question of which is the better way to increase your net worth. Is it cutting your expenses wherever you can, or is it in being creative and creating new income streams?

Certainly there are benefits to both frames of reference, and to sell one or the other short is probably not a wise choice. So let’s break it down and take a look.

Cutting Expenses

Finding ways to cut your expenses is an old personal finance blogosphere standby. The advice varies quite a bit in scope. You’ll get some more common suggestions like cutting cable TV, finding cheaper cell phone providers, and packing your lunches instead of eating out. On the other side of the spectrum you’ll hear advice that is a bit more extreme. You’ll read posts about re-using plastic bags, making your own laundry detergent, and using less toilet paper.

Increasing Net Worth

Admittedly, most of this advice will probably be able to save you money. Some I’m probably more likely to try than others (can you guess which?). At some point, however, I think you have accept that you can only save so much money by cutting expenses. If you really want to get ahead, you’re probably going to have to find a way to increase your income, aren’t you?

Increasing Your Income

Increasing your income is probably the best way to increase your net worth. I think in many cases people focus so much on cutting their expenses that they forget the other side of the equation – making more money. How can you go about creating extra income?

The opportunities for making extra income are numerous, and you’re only limited by your own creativity. Making extra income is great, but if you don’t cut expenses, are you really ever going to get ahead?

Which Is Better?

The question remains – which is more effective at helping you create a larger net worth – cutting expenses, or creating new income?

I think the key to creating a larger net worth is to find ways to diversify your income, and increase the amount of money that is coming in. After all, you can only cut so many expenses before you run out of things to cut.

On the other hand, I think you also need to find a healthy balance in your spending as well. If you’re spending more than you make, you’ll never get ahead. Just look to celebrities like Michael Jackson or Ed McMahon – who despite making millions, still had problems with money.

Moderation in everything! Find ways to create new income. Find ways to cut unnecessary expenses. Be thankful and create wealth so that you can give, live and prosper!

What do you think? Am I off base in saying that creating new income is the best way to get ahead? Do you think that more emphasis should be placed on cutting expenses? Tell us what your thoughts are in the comments.


This is a guest post from Pete over at Bible Money Matters. You can check out his site at or you can subscribe to his RSS feed here.



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