As you work toward financial independence (where you no longer have to trade your time for money) You’ll encounter two different camps when it comes to how to make more money. Camp 1 touts the power of frugality as the key to securing your financial future. “You can always cut back on expenses” they scream as they embrace having an empty fridge, squeeze the most out of every dollar, and work on flexing their frugality muscle. It’s champions are financial bloggers such as Mr. Money Mustache, The Minimalists and Frugal Mama. While they would probably never say no to making extra money, they focus on building wealth by slashing their current expenses.

Camp 2 fires back, saying “you can only slash your expenses so much, you can make an infinite amount of money.” They focus on developing new streams of income, increasing your take home pay, and developing a side hustle. Some of them build wealth through rental properties, some sell used cell phones, and others have taken on a second job. Their champions include I Will Teach you to be Rich and FI Fighter, and they make a compelling argument. Today we want to ask the question of you, is frugality or making more money better as a tool to reach financial independence?

In The Red Corner-The Frugality Nation

Frugality, a characteristic that is often valued but rarely embraced in our culture, there are many who feel it is the key to securing contentment now and in the future. They don’t have time for expensive coffee or designer clothes, because they are too busy hitting up their local thrift store for all their clothes and always making their own coffee. They bike to work, coupon and are masters of the good deal. For them frugality is the most powerful tool in their belt to develop wealth. So what are their strongest arguments, how can they convert you to their frugal ways:

  • Everyone can cut back on their expenses.
  • You don’t have to work more hours to put more money in your pocket.
  • The American lifestyle isn’t sustainable, everyone could due to be more frugal.
  • Frugality is a mindset that benefits more than just your bottom line.
  • Taking care of what you have avoids waste and keeps junk out of our landfills.
  • Frugality forces you to spend money only on what you need, not what you want.
  • There are finite resources on our planet, including money. Frugality encourages us to do more with what we have rather than demand more.
  • Frugality is more than self sacrifice, it is about developing the freedom to say “no.”

Seems like a compelling list of arguments doesn’t it? Who among us wouldn’t like to keep more coin in our pocket? The philosophy of the frugality mindset is to build wealth by reducing what you spend on essential expenses. You also adopt the frame of thinking which says “this can always be had at a better price.” Who says you have to spend $100 a month for your cell phone bill, the frugality nation always has an alternative. Sure you may not have the best of the best but you will get what you need at a better price. It isn’t uncommon to see people who take this to the extreme who can save upwards of 50-60% of their income. This is admirable, but don’t forget about their counterparts.

In The Blue Corner-The Make More Money Nation

If you want to have more money than simply make more money. That is the anthem of the money making nation. They refuse to accept that the only income available to them is what they make at their day job. There is always money to be made, you just have to be willing to roll up your sleeves and get to work. Here are some of their arguments:

  • Who wants to live off rice and beans? Frugality is for suckers.
  • You can only slash your expenses so much, you can theoretically make as much money as you want.
  • We help develop the economy by pumping capital into it.
  • Entrepreneurship is encouraged, and our wealth building philosophy centers on it.
  • Everyone can make more money, this is America isn’t it?
  • Frugality is just a synonym for being cheap.
  • Creativity and ingenuity are at the center of what we do.

The Make More Money nation centers on one idea, that money can always been found.  It isn’t uncommon for them to have a second job or a side hustle. Sure they may only save 20% of their income, but when you make lots of money that 20% represents a bigger number than the frugal monk master who makes half of what they do. It isn’t that they don’t care about frugality, it is that they are looking to consistently build wealth and improve their situation.

You Decide

We pose the question to you, which philosophy is more effective at helping someone build wealth? Is frugality the way to go, or should you focus on making more money? Which side do you lean toward?

Frugality or making more money, which is the better route for someone looking to get to financial independence?