Money Girl Philippines - Income less Savings equals Expenses

Income – Savings = Expenses

EARNING MONEY doesn’t not come easily, but the simplest and easiest thing to do is to SPEND.

Many tend to follow the age-old equation “INCOME – EXPENSES = SAVINGS.” Wherein the amount left with you after paying for your monthly cost of living goes into savings. People always save out of surplus income.

Anyways, here’s a question: What do you think about these mathematical equations below? Do you see any difference between these 2 ‘similar’ equations?

equation 1: INCOME – SAVINGS = EXPENSES

equation 2: INCOME – EXPENSES = SAVINGS

And the answer is: Which is a priority – TO SPEND or TO SAVE?

If your priority is to spend first, follow equation 2 and only to save what’s left.

If your priority is to save first, follow equation 1 and only spend what’s left.

If you want to become wealthy, follow ‘INCOME – SAVINGS = EXPENSES.’ Make saving and investing your priority. Develop the discipline to save first before spending; if you spend first before saving, there will be nothing left over to save after all the expenses.

“It’s not how much money you make, it’s how much money you save.”

photo credit: This little piggy via photopin (license)

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