Though I am unsure of where I first heard the financial advice “It’s not what you earn, it’s what you keep”, every time it pops into my head I am in awe of its simplicity and truth. It is also slightly intoxicating for an entry level person in the workforce who is years away from banking good money—perhaps a large salary is currently out of my reach as I work through the ranks, but what actually counts is how much of that salary I am keeping. It puts us all on a level playing field.

A shift to this sort of thinking would radically change things. The best example I can come up with to illustrate the difference this shift in thinking would make is in the dating world. Imagine how different dating would become if the financial metric of interest changed from how much money people make to how much money people put into savings. Suddenly Mr. $150, who only banked $1,000 in the whole of 2010 would be picked over for Mr. $30,000-per-year-Nonprofit man who manages to bank $400 of his income per month.

Don’t get me wrong; the VP who makes $150,000 has the potential to offer financial security, material comfort, and savings because of his/her large income. But potential and behavior are two different things. The person who only makes $30,000 per year has a pattern of saving behavior that, in my opinion, offers much less of a financial risk.

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At the end of the day, if you or your potential mate is merely the middle man/woman between your employer and your debtors, you might want to question why.

19 replies
  1. Harri @ TotallyMoney
    Harri @ TotallyMoney says:

    I love the date analogy!

    As long as you see ‘what you keep’ as wise investments, useful savings and a growing sum for when retirement comes as a percentage of what you earn, then I wholly agree- what you keep is far more important than what you earn.

    Ultimately it comes down to attitudes towards money and the future.

  2. Little House
    Little House says:

    Great analogy. It is definitely in what you keep, not what you make. This is a really hard concept for most people to grasp. Heck, I’ve only begun to understand it over the past couple of years and it’s been a hard transition.

    I don’t imagine ever making a six-figure salary as a teacher, but I can budget my money in such a way that I keep 15-25% of it if I work the numbers just right.

  3. Iain from Smart Dividend Growth
    Iain from Smart Dividend Growth says:

    It is a simple concept but one that many struggle to learn. Instead of focusing on the cash flow levels and defining your success by how much you get paid people should instead focus on how money can help you obtain your life goals.

  4. krantcents
    krantcents says:

    This is always true! As your income increases you tend to spend it more on bigger mortgages, fancier cars, and more dining out. You should increase your savings too.

  5. Suba
    Suba says:

    Nice analogy. PF really is simple math – spend less than you earn and save the rest. But it is such a struggle to learn.

  6. MoneyCone
    MoneyCone says:

    Absolutely! Numerous stories of lottery winners going broke and worse off than they were before they won the lottery because they couldn’t grasp this simple concept!

  7. Crystal @ Industrial Special Risk Insurance
    Crystal @ Industrial Special Risk Insurance says:

    This concept is why my husband and are wealthier than most of the people we know under age 40. Banking more than $30,000 a year vs nothing at all makes a teacher’s salary look great!

  8. Kellen
    Kellen says:

    Of course, having a higher income means that of two people who both save 15% of their income, the higher income will be saving more. But you’re right – that tends to not happen. People need to realize that how much they’re making now is not going to be how much they’re making when they’re 85 and living in an expensive nursing home.

  9. retirebyforty
    retirebyforty says:

    Good point about the dating world. I bet many people would still choose the high income person rather than the high saving person though. People are very short sighted and easily impressed by cool cars/toys/gadgets.

  10. Mom's Plans
    Mom's Plans says:

    I first heard that phrase on your blog, and I love it. I notice many people who aren’t making a lot complain that if they made more, they would be able to do xyz. Yes, that is true, but the high income earners who actually save quite a bit are still to be commended as many people across all income levels have trouble doing that.

    • FruGal
      FruGal says:

      I’m glad I introduced you to it!

      A lot of truth in what you say. Sometimes my articles are semi-attacked by commenters who think they do not make enough money to save money. Ofcourse some of them are in a place where they cannot save money. But I would venture to say that most of them could be saving something.

  11. Brave New Life
    Brave New Life says:

    Couldn’t agree more. A penny saved is a penny earned.

    Most people I know are surprised to find out I’m an engineer, because they assumed I was a low income earner. Nope, just a low income spender.

    • FruGal
      FruGal says:

      Oooh I like that phrase–low income spender. That is me as well! Although doing two bathroom renovations at once can make you second guess yourself….:)

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