What’s worth more: The $100 you save, or the $100 you earned? What would YOU rather have the option to do? Here’s what’s better, enjoy! Add me on Snapchat/Instagram: GPStephan
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I think it’s safe to assume that most people would just rather make the extra $100. If there’s something you want, instead of scaling back and saving your existing income, just work more and make an extra $100…seems simple…but in reality, that $100 isn’t what you think. Let’s start here…to earn that extra $100, chances are, you’re going to have to spend your time making that extra $100. In this example, we’re going to take the typical single California resident earning about $55,000 per year, or $27 per hour.
This means that to make an extra $100 in income, it requires you to work 3 hours and 42 minutes. But wait a second… unfortunately, you also have taxes. Since we’re focusing on the top end of your $55,000 per year income bracket, 22% is subtracted from federal income tax….9.3% from state income tax…6.2% for social security tax…and another 1.45% in medicare taxes. If you’re self employed, you tack on another 7% and then cry yourself to sleep…
That means for the typical employee, $100 earned is only $61.00 after taxes…and just like that, you lost 39% of your income. If you’re self employed, the number is closer to HALF…you lose almost 50% of your income to taxes.
This means, in order to MAKE an extra $100 AFTER taxes, it requires you to EARN $165, WHICH AT $27 an hour, equates to just over 6 HOURS of work. Now, compare that to the $100 you already have in your bank account. Most likely, that $100 you have is already after tax money. That $100 is equal to $100.
Not only that, but when you compare the two…do you think it’s EASIER working over 6 hours to make $100 after taxes at $27 an hour…or is it easier to just find a way to not spend the existing $100 you already have? Chances are, you can find a LOT of ways to save $100 that won’t take you over 6 hours to do.
This means that the time it takes to SAVE $100 is drastically less than the time it takes to MAKE $100 after taxes. And from an ROI perspective, spending your time focusing SAVING MORE will have a much greater outcome than focusing your time on EARNING MORE. And doing this is much better at increasing your net worth.
What intensifies this even MORE is that anything you spend $100 on is paid for with after tax money…meaning that the $100 item you bought, is really worth $165 worth of gross income.
The main purpose and takeaway of this video is really just to show you the power of FIRST focusing on reducing your expenses and saving money, because THIS often has the best ROI, THEN focusing on making more money SECOND. Not only does SAVING the $100 require less time and less work, but it’s WAY easier than earning an extra $100 after taxes. So you need to think to yourself…would you rather spend $100 less, or spend your time earning $165 more? And when you look at it this way, it’s really like every $100 you save is worth $165 earned.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
Get $50 OFF + FREE Coaching Call FOR A LIMITED TIME: Code THANKYOU50 - The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
I think it’s safe to assume that most people would just rather make the extra $100. If there’s something you want, instead of scaling back and saving your existing income, just work more and make an extra $100…seems simple…but in reality, that $100 isn’t what you think. Let’s start here…to earn that extra $100, chances are, you’re going to have to spend your time making that extra $100. In this example, we’re going to take the typical single California resident earning about $55,000 per year, or $27 per hour.
This means that to make an extra $100 in income, it requires you to work 3 hours and 42 minutes. But wait a second… unfortunately, you also have taxes. Since we’re focusing on the top end of your $55,000 per year income bracket, 22% is subtracted from federal income tax….9.3% from state income tax…6.2% for social security tax…and another 1.45% in medicare taxes. If you’re self employed, you tack on another 7% and then cry yourself to sleep…
That means for the typical employee, $100 earned is only $61.00 after taxes…and just like that, you lost 39% of your income. If you’re self employed, the number is closer to HALF…you lose almost 50% of your income to taxes.
This means, in order to MAKE an extra $100 AFTER taxes, it requires you to EARN $165, WHICH AT $27 an hour, equates to just over 6 HOURS of work. Now, compare that to the $100 you already have in your bank account. Most likely, that $100 you have is already after tax money. That $100 is equal to $100.
Not only that, but when you compare the two…do you think it’s EASIER working over 6 hours to make $100 after taxes at $27 an hour…or is it easier to just find a way to not spend the existing $100 you already have? Chances are, you can find a LOT of ways to save $100 that won’t take you over 6 hours to do.
This means that the time it takes to SAVE $100 is drastically less than the time it takes to MAKE $100 after taxes. And from an ROI perspective, spending your time focusing SAVING MORE will have a much greater outcome than focusing your time on EARNING MORE. And doing this is much better at increasing your net worth.
What intensifies this even MORE is that anything you spend $100 on is paid for with after tax money…meaning that the $100 item you bought, is really worth $165 worth of gross income.
The main purpose and takeaway of this video is really just to show you the power of FIRST focusing on reducing your expenses and saving money, because THIS often has the best ROI, THEN focusing on making more money SECOND. Not only does SAVING the $100 require less time and less work, but it’s WAY easier than earning an extra $100 after taxes. So you need to think to yourself…would you rather spend $100 less, or spend your time earning $165 more? And when you look at it this way, it’s really like every $100 you save is worth $165 earned.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
drug dealers can't relate
I make roughly 50-55k a year and I only get taxed 20%? Can you make a video on taxes please?
But wait! There's more! If you can save $100 every month for the rest of your life, you'll require less retirement savings and you can retire earlier or more securely.
39% tax on a $55k income in California? Really? That is more than Norway (where health care is maximum $350 a year, education is almost free and every leech who wants can leech of my tax money).
The difference is even bigger than that. The dollar earned, when spent, will also have to cover sales tax (9% in IL), but saving a dollar avoids the sales tax as well. Additionally, if one tithes, that’s another 10% coming off the earned dollar. Great video, this is an important topic for people to understand.
Great video man
Your channel has helped me financially more than any other channel. Already have a plan to start making passive income in the next few months. A plan to buy rental properties in two years which I'll have plenty saved for 3 mortgages by then and about to start credit churning to get free travel. Still waiting on the first credit card. Also just picked up a cheap prius paid in full to save on gas lol.
This is Probably one of my favorite videos on the channel👍
As usual good breakdown. On that topic I came across the book Fifty Inventions that Shaped the Modern Economy that discussed would seventy thousand dollars about a hundred years ago or with inflation a few years ago would be better to have. Than it said today you could buy less of a house but still you have more access to modern things. Glad to be back after a break (and a broken computer) from your channel. Now I am in catching up on your content seeing I am one of the few who watched all your videos and commented on them.
Which one is worth more: saving $50K or earning $50K? The same question but different amounts. You can only save so much, saving is capped by how much you need to survive. If you earned $100 today, you can do the same thing and earn another hundred tomorrow. Taxes or no taxes, earning is always better than saving. But doing both, is truly one of the habits of the rich
If you focus on saving money and not earning, you won't much money to save. If you focus on earning money and not saving, you won't much money left after taxes and spending. The key is do both. Spend less than you earn, and invest the savings.
I thought you meant earning 100$ passive income. :o)
You forgot that when you spend $100 on something, you have to pay an extra $9 on sales tax. so it's actually $109 instead of $100 on the $100 thing you spend.
Prefer saving 100 definitely !!! Money earned = time lost, money saved = time earned. Can always earn more money, but we can't get time back.
Can anyone please explain what is a cash business ?
Holy crap the white circles in your pupils are trippin me out. Had a feeling u were a robot
whats up man, you have to change your title, is it a typo? you have "$200 earned" typed
Saved 100
this video is worth its weight in gold, thanks graham for making this video!
Ya know.. I truly think this depends on your skills, and depends on your goals in life. In my case, I've saved roughly 3 full years of income in the bank, I have a solid down payment for a house way beyond my means, but because of the mortgage rules I supposedly don't have the income to support the mortgage even with renters covering it or mostly covering it. It's kind of a balance. I think it's easier to have financial freedom if you save, because you already have contingency.. but at the same token, you can only get so far with only saving, or only having high income skills. Someone with high-income skills isn't going to keep it without saving, and someone penny pinching isn't going to have much to save only earning minimum wage.
the 100 dollars you saved is net, the 100 dollars you earned is gross.
As Benjamin Franklin always said, a penny saved is 1.65 pennies earned.