Thursday, July 20, 2017

Is a penny saved really a penny earned?

"A penny saved is a penny earned," as the saying goes.  But what does that mean?  This proverb's intent is to highlight the value of saving by suggest that the value of saving money is equal in power to that of earning it. But is it really true?

Recently, I've been combing through our budget looking for places to save money without causing any added difficulty to our lives.  I just spend one hour of my life to get a $20 monthly savings on our cell phone bill.  Can we really say that this $20 savings is the same as earning $20?

If I spent one  hour working and earned $20, I would make $20 one time and one time only.  I've really done quite a bit better than that.  I spent one hour of my time, and now I am going to reap a $20 benefit every single month.  When comparing this savings to work (aka earning), there is really no comparison.  Let's follow this example through.  This one hour I spent working to get $20 off my cell phone bill is going to benefit me to the tune of $20 every single month. Over the course of the next year, I will have reaped a $240 benefit because of this one hour spent creating the savings.  If I also spent 1 hour today earning $20 in cash, in order to make that same $20 next month, I will have to work another hour.  Over the course of the year, I would have to work 12 hours to gain the same $240 benefit that I got through one hour of time spent finding a savings.

This doesn't even begin to consider the influence Uncle Sam has on the scenario.  While everyone's tax situation is different, I typically only take home 70% of what I've earned.  So, while my $20 monthly savings really is $20 a month, the earnings might look a little different.  In order for me to take home $20, I really have to earn $28.58.

This is quite the philosophical rabbit-hole we've explored; however, I think the point is entirely clear.  Never underestimate the power of savings, especially if you can create a reoccurring savings.  If you can spend might spend less time saving money then you would otherwise spend earning it!


  1. Preach on! Preach on! There is NO substitute for savings.

    I love posts like this. Thank you.

    1. Thank you so much! I couldn't agree with you more! Sometimes it could be easy to underestimate the power of savings, but it truly is a powerful tool!