Work More vs. Spend Less -- Which Is a Better Way to Build Savings?

by Maurie Backman | Updated July 25, 2021 - First published on April 30, 2021

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Here's how to figure out the right savings strategy.

If your savings account could use a boost, you have a couple of options. You can either spend less money on an ongoing basis, or you can work more so you can put the extra money you earn into the bank. The question is, what's a better route for you?

Spending less

First, let's be clear -- spending less isn't an option for everyone. If you're already living a very frugal lifestyle, there may not be expenses you can cut back on.

But let's assume you do have an opportunity to spend less money month after month. Is that a good way for you to build your savings?

On the one hand, reducing your spending may be less stressful than picking up a second job. That way, you won't have to worry about fitting a side gig into your already-busy schedule. Plus, you may find there are certain expenses you can cut back on without it impacting your quality of life too much. Taking a budget vacation over a nicer one, for example, may not bother you if you're the type who can simply appreciate the upside of getting away.

On the other hand, spending less could negatively affect your lifestyle. Say the only meaningful expense you can cut back on is rent. If you move to a smaller apartment, you might save money, but you might feel claustrophobic living in a tiny space. Similarly, if you decide to cut back on restaurant meals and entertainment to boost your savings, you might miss out on social opportunities and find yourself bored and restless often.

Working more

These days, there are many side hustle opportunities workers can go after, so if you're looking to boost your earnings, a second gig is a viable solution. And some side hustles are extremely flexible -- you can do them at your own pace and set your own hours.

The upside of working more to boost your savings is that you won't have to give up the things you love. If you really enjoy takeout meals and hate cooking, you can keep ordering in and use your extra earnings to boost your savings instead.

But taking on another job could impact your mental and physical health. If you push yourself to work too much, you'll risk getting burned out, and you may put yourself in a position where you're not getting enough sleep. A second job could also compromise your performance at your main job. For example, if you push yourself to pick up rideshare fares till all hours of the night and show up to work exhausted every morning, you might put your primary paycheck at risk.

What's the right call for you?

If you want to grow your savings, the money has to come from somewhere, so you'll either need to spend less or earn more. If you're not sure which route to take, you could always try each one for a short period and see which suits you better. For example, you could tighten your budget for two months and see how it impacts you. Then you could take on a side gig for two months and see how that pans out. You may find that you'd rather give up some expensive weekend plans or shop less but preserve your precious free time. Or, you may find that you're willing to work more if it buys you extra spending flexibility.

And then there's the combination approach to consider. You can always try cutting back on some expenses and taking on a side gig that only eats up a few hours of your week. You may find that sacrificing a little in both areas is a better solution than going to more of an extreme in just one.

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