Ben Franklin Didnt Quite Get it Right

When Ben Franklin said "a penny saved is a penny earned", he didn't quite get it right. Actually, a penny saved is worth more than a penny earned. Do you find this statement shocking? I am about to prove to you that what I'm saying is true.

Most people erroneously believe the best way to strengthen their financial health is to increase their income. On the contrary, saving money by cutting costs will get you there quicker. You see, it's very simple. When your income increases (with some exceptions like the part of it you put into your 401k), that extra money is taxed. On the other hand, any amount you save by cutting costs is not taxed. Therefore, $20 saved by cutting costs is worth more than a $20 increase in income.

The following (although over-simplified) example will illustrate this principle. Let's suppose that Jack and Cindy have identical jobs and incomes. Let's also suppose they shop at the same grocery store and pay about the same amount for groceries each week. Now, Jack gets a $20 per week pay increase and Cindy does not. However, at about that same time, Cindy finds a new grocery store where she is able to save $20 per week on her grocery bill. Assuming nothing else has changed, Cindy is now better off financially than Jack, even though she did not get a raise and he did.

How can this be? It's because Jack has to pay taxes on his $20 raise but Cindy does not have to pay taxes on her $20 grocery discount. Assuming Jack is in the 25% federal tax bracket (and disregarding any possible increase in his state or local taxes), he will be able to put only $15 into his piggy bank each week whereas Cindy will be able to put the whole $20 a week into hers!

Bottom Line: It is more blessed to receive a discount than to receive an equal amount in a pay increase!

Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.

How To Be A Millionaire - The Top Secret Of Wealth Creation

Have you any idea how many people search Google every single day for terms such... Read More

Get Rich Slowly

Is it hard to get rich? If you're young, not really.Its fun to play with... Read More

You?re Eating Your Retirement Money

Ever think about how eating all those fast food meals for lunch are effecting your... Read More

The Old Monied Dupont Nemours and Roosevelt Families Buy a Tax Haven

This 4,000 acre sale (now a marina and resort town - with an airport for... Read More

Build Wealth - Formula To Success

A mole travels one road, according to the way nature intended him; and a squirrel... Read More

Wealth Building Strategy

There are many of us who are working on our wealth creation strategy. Wether it... Read More

10 Ways to Save $50 Per Month: The Art of Pinching a Penny Until It Screams

1. Save up to 50% per month on convenience cleaner cloths by cutting them into... Read More

Simple Tips on Saving

Simple tips on saving can very often make quite a big difference to your finances.... Read More

How To Grow Your Mental Power and Let Your Brain Make You Rich

No one has complete control over their thoughts. But with practice, with deliberate attention, far... Read More

Does Money Grow On Trees?

"Money Doesn't Grow On Trees."Some of us even believe it. An orchard owner would say... Read More

16 Mantras for Building Financial Wealth

Everyone wants to be wealthy, but most of us do not have anyone to guide... Read More

Building Wealth: Its An Inside Job ? Part 2

Let's quickly review the principles discussed in the first part of building wealth. We established... Read More

Don?t Work for Your Money, Make it Work for You!

Well, the New Year is around the corner and so are New Year's Resolutions! It's... Read More

Q and A: Financial Independence Tips For Women From Coni Cecil

As a woman Netpreneur, I sat down via e-mail with article-announce regular contributor, Internet marketer... Read More

The 11 Best Money Saving Ideas of All Time - Part 4

At any time in history, no matter what the current state of the economy, no... Read More

8 Tips for Keeping More of Your Hard Earned Money

Masters degree not required...just a little common sense, a $5.00 calculator and a realistic plan... Read More

Who Else Wants To Know Oprahs Secrets To Wealth & Success?

Before I had a lot of money, I was really quite happy," said Oprah Winfrey.... Read More

Saving Money By Spending Wisely

Why is it that the older and richer people become, the more conservative they are... Read More

The Morphing of Thought and Cash

Here are some thoughts about the morphing of thought and cash. What do I mean... Read More

The Top 10 Steps to Extraordinary Personal Wealth

I recently came across startling figures about the average American's finances. Only 4% of us... Read More

The Three Step Plan To Prosperity

You have $100 in your bank account, your rent is past due, your creditors are... Read More

Business Ownership, Cash in Your Pocket - Today!

Yesterday we learned that 74% of all wealth is created by people who own their... Read More

Increase Your Business with a New Old Method: Vaastu Shastra

Whether an established conglomerate or a fledgling company, a business in the red or black,... Read More

Finding Financial Freedom

Do you ever get this in your email box: Find Financial Freedom! Make $150,000 from... Read More

What Do You Mean By Diversity?

The word 'diversity' is a unique one. It can represent many things, depending upon its... Read More

Residual Income - Part Three Finding Leaders

In my last article on Creating Residual Income I mentioned that employees are a pain.That... Read More

Jobless? You Stand To Be Rich!

This is a true story about a homeless man from Illinois. This man slept in... Read More

Who Wants To Be A Millionaire?

Steve Martin once delivered an opening monologue for Saturday Night Live in which he answered... Read More

Why Get Rich When You Can Be Wealthy?

"Any fool can rich, the wise get wealthy." Chris WidenerGetting rich is the main goal... Read More

Five Straight Steps to Opening an Offshore Bank Account

Despite what you may have read or heard, anyone is free to open an offshore... Read More

7 Golden Rules to Financial Prosperity

Not Enough Money?I believe that most people haven't got enough money for everything they wish... Read More

Easy Ways to Save $1,000

Vacation season is upon us and it can be tempting to pull out the plastic.... Read More

Personal Budget Programs

Do you have financial problems? Then a budget is the answer if you are tired... Read More

The 11 Best Money Saving Ideas of All Time - Part 1

At any time in history, no matter what the current state of the economy, no... Read More

Re-discovering the Fundamentals of Financial Planning

To lose weight in the 80's, we went on low-calorie diets. In the 90's, we... Read More

10 Ways To Find The Money Hiding In Your Paycheck

No matter how tight things are financially for you; no matter how bleak you think... Read More

Understanding the Three Different Types of Income

Part of learning to become financially free is to begin to understand that there are... Read More

The 11 Best Money Saving Ideas of All Time - Part 3

At any time in history, no matter what the current state of the economy, no... Read More

Why You Need To Buy and Sell Gold Coins (Part 4)

Top Investment PerformanceThroughout history, many coin collections have produced substantial long-term profits for their owners.... Read More

Is Accumulating a $1,000,000 Net Worth Easy? Yes and NO

Is accumulating wealth as easy as following a 3-step plan? Yes it is and no... Read More

Let Me Inspire You - You Aint Seen Nothing Yet! (PART-1)

You know about compounding right? You understand what pyramiding your result on a weekly basis... Read More

Pay Yourself First - If the Only Thing You Did Was This, Youd be Rich

Bottom line. No exaggeration. No hype. If you want to be rich, all you have... Read More

Russ Whitney - Building Wealth Through Real Estate

When Building Wealth by Russ Whitney was released a few years ago it sent shockwaves... Read More

How to Save Money and Take the Vacation You Always Wanted

Many people don't realize how much money they spend on convenience and boy does it... Read More

Do You Want To Save Money Easily?

Living on credit is fashionable. Indulging oneself is fashionable. Saving money isn't.This is a pity,... Read More

Turbocharged Financial Planning

Financial planning is an ongoing process individuals and businesses should implement by organizing all aspects... Read More

Lesson 2 - The Commodity Of Kings!

What is "The Commodity of Kings""Power is simply "the ability to act." Since ancient times,... Read More

Do You Want Money?

Let me ask you a very simple question. Do you want money? Of course you... Read More

Financial Planning For Singles

Financial planning often gets a bad rap. Part of the problem is self-inflicted, since some... Read More

It Adds Up

Loose change that is, if you want a easy way to start saving a little... Read More