written by KCLau @ KCLau’s Money Tips

Cash flow chart involves simple mathematic calculation: Saving = Income – Expenses. Savings is the priority since it appears first in the equation. To increase saving, we can either increase income, reduce expenses, or doing both at the same time. Which option requires your most attention?

Focus on Reducing Expenses

If your main focus is on cutting down your expenses, it is all about frugality. I found that many of the personal finance blogs preach about how important it is to live frugally. Is it worth your effort? When you don’t know how to increase your income, cutting down expenses is the easiest route to increase your net worth.

50 things you can do to reduce expenses

  1. eliminate cell phone
  2. cancel newspapers, magazine and other periodicals subscriptions.
  3. use energy efficient lamps
  4. purchase generic prescriptions when possible
  5. buy in bulk when shopping for grocery
  6. terminate your gym membership
  7. read books at library instead of going for movie
  8. cut your vacation
  9. stay at home whenever possible
  10. stick to your budget
  11. cancel your TV subscription
  12. use email instead of phone whenever possible
  13. compare before you make any purchase
  14. plan menus for the week before you shop grocery
  15. prepare shopping list to avoid impulse buying
  16. go to the store just once a week
  17. do not go to restaurant when you are hungry
  18. plan the use of leftover food
  19. buy clothing at the end of the season
  20. shop at discount stores
  21. buy used item whenever possible
  22. use public transportation, if available
  23. have good health habits
  24. avoid smoking
  25. avoid drinking alcohol.
  26. play board and card games, they are cheaper
  27. attend concert only if it is free
  28. make your own home accessories
  29. consider less expensive housing
  30. Pack school and work lunches
  31. review insurance coverage. Are you over insured?
  32. reduce trips outside the home
  33. use 10% less than usual
  34. stop shopping… not even window shopping
  35. change to cheaper brands
  36. look for discount coupon
  37. buy only when you are offered rebates
  38. drink plain water only whenever you dine out.
  39. don’t keep more than ten bugs in your wallet
  40. cut all your credit card except one
  41. do your own car maintenance such as changing oil
  42. stop going to a hairstylist
  43. rides bike instead of car
  44. avoid silly bank fees
  45. don’t buy a car
  46. just rent a small room to stay
  47. share room and split the rent
  48. stay with your parents
  49. start blogging and it will cut all your other entertainment
  50. ask for discount every time before you pay for something

Hard work and no fun!
Wow !!! There is a lot of hard work. But do you really have fun doing all those frugal things? I can only agree with item no.49, which had saved me a lot of money.

How much can you save? It is limited.
No matter how hard you try, you can only cut down your current expenses completely. Most people will celebrate if they can cut 10%. 30% is already too much for most people to compromise their lifestyle. Crux of the matter is, by concentrating on reducing expense, what you get is hard work, no fun, and only be able to save as much as the amount you didn’t spend.

Focus on Increasing Income

If you change your focus to increase your income instead of reducing your current expenses, you will see a whole new world of opportunity.

25 things you can do to increase incomes

  1. invest in stocks
  2. invest in real estate
  3. increase your knowledge
  4. sell items you no longer need
  5. get a part-time job
  6. rent out spare room
  7. join MLM
  8. start a business
  9. learn how to sell
  10. make money online
  11. get a raise or a second job
  12. change your thinking
  13. raise your rates
  14. get extra work
  15. get money from public aid or charities, if you are qualified
  16. go back to school to acquire additional skills
  17. buy an established small business
  18. arrange a better feng shui at your home and your work place
  19. start a make money online blog
  20. invest in mutual funds
  21. take your company public
  22. pay less tax
  23. learn forex trading
  24. invest in ETF
  25. get sponsorship from family members, if you dare.

Tough job but a lot of fun!

How much can you probably earn and save? It is unlimited!
Sky is the limit.

Are you a great saver or an income pursuer?!

So, how much time do you spend in a day to increase your income? 8 hours? 12 hours?
Is it viable to cut down the effort to live more frugal? And spend the time saved to actually work out some plans to increase your income?
I am definitely an income pursuer. How about you?

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Personal finance author and trainer

    30 replies to "Should you focus on Increasing income or reducing expenses?"

    • Kenny

      My definition of FRUGALITY = never allow others to earn your money easily but you must learn to earn from others instead. In short, always go for value for money products. Sometime expensive product not equal good quality. Blindly follow trendy products is definitely drying up your pocket and is meaningless just because you want to show off. Leave by yourself and not others.

    • Chin Koon

      I don’t know if anyone have the same situation like myself, I usually save 85% of my income rm1.5k and I living with my parent. I also income pursuer like doing collecting recycle used item for sales but not much every month. I do trade in stock but still not much luck I have. I am lucking enough to live near work place about 1km from my house, i drive so every month petrol it about rm150 but this is too much for me too. I am reducing all unneccessary expense like not movies,eat outside, or anything but I will spend money if I see value. Now I am saving hard enough to buy house to live coz house price in Melaka now way to high like new laucnh rm250k. to much.

      I think my goal to save is from my mom.Thank mom

      • KCLau

        Frugality is a good habit everybody should practice to perfection.

      • Shawn

        Did you spend only RM225 per month? Don’t bullshit!

    • Jasper

      Hi, KC,

      I always remember what Robert Kiyosaki said that LIVE BEYOND YOUR MEANS rather struggling to reduce your expenses! I invest in real estate, stocks and mutual funds, but so far I have the best returns in property investment compare with others, what do you think?

    • […] Should you focus on Increasing income or reducing expenses? […]

    • Alvin

      Make a point in your life saving is partly automatically process in your earning. For example, did Tony Fernandes worry about his saving every month? That our goal in life…No worry about saving.

    • Chong Kong Hui

      I’m a believer of “Income Pursuer” many years ago thus got no problem in balancing the expense and saving. However, it will be MUCH BETTER if i am Income Pursuer at the same time “Frugal” on expenses, then, the amount of saving will be UP UP UP at a much faster rate.

    • Eleven ways to cut your spending…

      Recessions are a death warrant for the dollar. Each one causes the dollar to shrink more and more. The following are ways you can stretch that dollar to make it go further. You’ll utilize some of these ideas and others you’ll shake your finger no at….

    • Jeremy

      I believe most of the people already an expert on frugality but less focus on increase income, because increasing income need hard work also, at least at the beginning, else I think if your income per month >rm10k reducing monthly expenses will be helpful maybe…

      I doing three things to increase my income
      1. Working oversea. (Fortunately we have an haven beside us Singapore)
      2. Start a small vending business. (Not buying franchise)
      3. Trading forex (It is challenging in a good way)

    • 2+P

      What about invest in gold?

    • SE

      I hope to become an income pursuer and not just a saver..still learn how to increase my income, hope to learn from here too..

    • Laibin Eku

      Suddenly i have a lot of ideas after reading just the introduction! Thank you Mr. Lau! God bless You!

    • Will

      Millionaire Mindset

      Rich people focus on their net worth.
      Poor people focus on their working income.

    • LOKE

      It is the best if we can increase our income and reduce our expenses at the same time…. When we increase our income without controlling our expenses, it is pointless…

    • Mama

      Government already spend our money or keep it in their pocket so they ask us to save la…

    • Thrift

      I use to be a frugal saver, but since last yr, I’ve learnt its way better to be Income Pursuer..
      Unfortunately..not many people know of this..
      maybe that’s why the government can blatantly suggest people to “save and change their lifestyle”


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    • BT Khoo

      Why choose between the two, why not focus on both inreasing income and reducing expenses at the same time

      • KCLau

        Hi BT Khoo,

        You can actually do both. The idea is about spending more time to increase income, which will bring you greater effect in the future.

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    • Relax

      work oversea to increase active income.
      there’s heavy sacrifice but worth it.

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    • […] KCLau’s Money Tips – Should you focus on Increasing income or reducing expenses? […]

    • Mr. DebtBeater

      I struggle with balancing this as well. When first getting started, I think most people will find themselves needing a mixture of both more income and less spending. Just in the last month I found myself doing many things on your list here (or at least considering them) and it’s definitely helping. Now I have a few more to consider trying out. Thanks! 🙂

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