A Paycheck is a Double-Edged Sword
By Jim Bauer
@porwest (90867)
United States
March 6, 2024 9:18am CST
I know it sounds crazy to say that, right? Can a paycheck actually be holding you back from ever getting anywhere financially? You bet it can, depending on how you happen to think about a paycheck.
The problem with a paycheck is that, unless you are keeping and investing some of what you make, you have to always get another one. But you're never really ever getting ahead. You're just feeding the dragon, so to speak, and he's always hungry.
It doesn't mean never earn more if you can. It doesn't mean never bother to ask for a pay raise. It doesn't mean not finding a better job. It just means that if the only plan is to earn a paycheck to pay for things and spend it all, you'll never get away from needing more and more of them, and more and more money you have to earn.
Having money is about building wealth and creating wealth. And that comes from an understanding about money and a mindset. Not from a paycheck alone.
The more you save and invest, the less important each paycheck becomes. And the more opportunity each paycheck provides to move the financial needle ahead and actually arrive at a place you want to be.
The key to having money is finding ways to create more of it rather than earn more of it. There is a difference. A dollar spent is worth zero. But a dollar saved can be worth $1.08, and over a longer period of time due to compounding, it could be worth $5.
It's just another thing to think about when it comes to money. Would you rather your money work for you rather than you work for it? It doesn't necessarily mean stop working and stop earning. It just means making every paycheck actually matter.
9 people like this
8 responses
@Dena91 (16636)
• United States
6 Mar
Mike has always been a great saver. He has begun investing over the past few years or so.
By being a saver, we were able to always pay our cars off early and our home which saved us money. And it afforded him to retire early before his SS kicked in. We are blessed.
2 people like this
@moffittjc (121582)
• Gainesville, Florida
7 Mar
My daughter has been buying stock in the company she works for. She asked me last night how much I thought it would be worth when she turns 65. I did some research, and this company's stock has done no worse than 12% annual growth in its 90 year history (it's a privately held company). So I told her, let's assume the company will only continue its growth forever, but at 10% instead of 12%. She only owns about $4k now (she just started buying stock about a year ago), so I did the calculations and told her if she didn't put another penny in the company, her stock would still be worth over $140,000 when she turns 65 She immediately sat down and wrote a check for $500 to purchase more stock (they just opened up this quarter's buying period). The girls makes less than $19k a year (she's still in college and only works part-time), but she gets it. The girl is going to do alright in her life.
1 person likes this
@moffittjc (121582)
• Gainesville, Florida
11 Jul
@porwest I hope it serves he well when needed.
1 person likes this
@porwest (90867)
• United States
12 Jul
@moffittjc People with good money mindsets generally don't ever lose that sense. In fact, they get better at it and more knowledgeable about it. Especially if they are results oriented. When you see the results are in your favor, you not only want to keep doing that, but you also want to do more of that.
When I made the realization that saving my money and investing it could one day replace my paycheck, that was a REAL motivator to FULLY grasp how one actually accomplishes that and set a clear and calculated path to making sure it would actually happen.
1 person likes this
@lovebuglena (44524)
• Staten Island, New York
6 Mar
Saving money is good but if all a person does is save money and only spends it on necessities then what's the point? Money is meant to be spent. It will be useless in the grave. Though it will help pay for it.
Of course, we can't just spend everything. We have to be frugal about it. But we have to live. It shouldn't just be about paying bills and saving the rest just for in case we lose our job or can no longer work.
1 person likes this
@lovebuglena (44524)
• Staten Island, New York
8 Mar
@porwest your money doesn’t make money if it sits under your mattress or in a no interest bank account.
If your earned money constantly makes you money then I guess you don’t have to worry about running out of it. But then it depends on how much money your money makes.
1 person likes this
@porwest (90867)
• United States
7 Mar
I think, based on your comment, you don't understand how money works. The key is to save enough to live entirely on what your money makes. If you save enough, you can quit your job and still spend what you want.
If you are living for the day, but still having to work your tail off, there's a lot less living you are going to be able to do since you will still be mostly busy working. When what you save earns enough to REPLACE your paycheck, now you are on to something.
Saving has never stopped me from spending. It has simply allowed me to actually AFFORD to spend. I never feel like I am cash strapped and when I WANT to spend, I can and not have to worry about it. The more I save, the more I make, and the more I can spend.
Beyond that, owning stocks, for example, offers me other ways to make even more money. Let's say I want to blow $500. I can take it out of savings or sell a part of an investment OR I can simply sell a covered call options contract on an underlying stock and get the money for free and still keep my money and keep my stock.
It's part of the reason the rich get richer. Once you have money, money makes itself.
1 person likes this
@porwest (90867)
• United States
8 Mar
@lovebuglena But of course. The money has to be somewhere where it can make more money. As for how much money your money makes, the average annual return of the stock market is 8%. So, for all intents and purposes, it should make at least that much. Depending on how much you know about all of the different market strategies, average annual returns can be much higher. My average annual return, for example, is around 16%.
But, that is acheived through a combination of long and short positions, dividend yields, proceeds from the sale of appreciated stock values, covered call options contract premiums and so on and so forth.
@LindaOHio (178568)
• United States
7 Mar
We've always been financially proactive. Our goal has always been to have no debts. I think we've done pretty well. Have a good day.
1 person likes this
@2ndchances24 (8929)
• Cloverdale, Indiana
6 Mar
I tried to tell my husband the same thing back when
he was spending more than he was bringing in to
pay the bills, & he would always argue with me on
why this that & everything else is going on why he
wasn't bringing in the $ we needed to pay the bills.
Now that we are retired & have been working as
hard as we can to make ends meet to HAVE some
extra $ to sit on for our bigger bills & extra food or?
things are going good for us for the time being so far.
We don't need to stock up on a lot of money at our
age, but stay on top of the bills & supplies we need
So we're managing with what we get each month.
1 person likes this
@porwest (90867)
• United States
13 Jul
@2ndchances24 I guess. I don't know if there will ever come a time when I want to sit and stare at the same four walls every day.
1 person likes this
@2ndchances24 (8929)
• Cloverdale, Indiana
12 Jul
@porwest well at our age now it's all about just doing what
we do at home & enjoy the time we have together which
isn't very much from back when we were younger.
1 person likes this
@wmaths (563)
• Italy
6 Mar
Hey there! Absolutely, it might sound a bit unconventional at first, but your perspective on paychecks makes a lot of sense. It's like breaking free from the paycheck-to-paycheck cycle and giving your money a chance to grow and work for you.
The idea of not just earning money but actively creating and building wealth is empowering. It's a shift in mindset that encourages us to see the bigger picture and think about long-term financial goals. I love how you emphasize the importance of saving and investing, showing how every dollar saved can potentially become more over time.
It's a reminder that there's more to financial success than just earning a paycheck. Making those paychecks count by wisely managing and investing the money is key. Thanks for sharing this insightful perspective on money – definitely something to ponder and integrate into our financial strategies! ???
1 person likes this
