Tips on Budgeting – A dollar saved is 2 dollars earned
Tips on Budgeting– A dollar saved is 2 dollars earned
Have you ever heard the saying that a dollar saved is two dollars earned? Do you know what it actually means? It all comes down to personal finance basics and understanding tips on budgeting. Part of becoming successful financially is learning how to become efficient with how you earn and spend money. Lets take a closer look as to how a dollar saved is two dollars earned: If you were to earn $75, 000 a year in Ontario, Canada, here’s where your next earned dollar would go.
Marginal tax rate 35.39%
CPP/EI premiums 4.95%
Pension contributions 6.00%
Union dues 1.28%
Total 47.62%
So that would mean if you were to earn $1.00, more than 47 cents would go towards expenses. In order to save one full dollar you would need to earn $1.91. That is pretty close to two dollars earned. I understand that not everybody will have pension contributions or union dues but I wanted to give an example that was similar to my personal situation. If you are an American then you will have Social Security and Medicare in lieu of CPP and EI in Canada.
Saving a dollar rather then earning two may make sense for most people out there For many people cutting back on luxuries or unnecessary items is far easier than going out and earning more. The progressive tax system in the western world makes it very difficult to get ahead just by increasing your earned income. A solid savings plan coupled with following tips on budgeting is just simple personal finance basics.
With these tips on budgeting you can see how saving one dollar is almost the equivalent of earning two dollars. You would need to earn $1.91 in order to be able to save one full dollar, which prompts the saying “A dollar saved is two dollars earned.” Consider this scenario when deciding to put in more overtime to pay for your luxuries. It could cost you more than you think; needless to say it is very inefficient.
DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS!
Tagged with: Budgeting Tips • personal budget planning • Personal Budgeting • Web Page Finance
Filed under: Budgeting Tips
Like this post? Subscribe to my RSS feed and get loads more!
very interesting, never thought of it like that – to take it further i might stop going to work and save on train fair, only joking, i don’t think that would have the same effect!
.-= bmx pizza´s last blog ..What’s all this I keep hearing about Leslie Ash? Apparently… =-.
I knew that saving was advantageous to earning, but I had never seen the numbers put quite that way. It makes perfect sense and is one more example of how looking at some stats with a little ingenuity can help explain a great concept. Good illustration!
.-= Joe Plemon´s last blog ..Do You Comment? Three Reasons Why You Should / Weekly Roundup =-.
Thanks for the tips. I’ve been looking for a good blog that talks a lot about budgeting, and it appears I’ve found it!
.-= Eric G´s last undefined ..If you register your site for free at =-.
Regardless the amount is, it is still savings…some people people just ignore it.
very nice reading here.. i know that not everybody will have pension contributions
EXCELLENT post. When you factor in taxes and everything else that comes out of your gross pay. A dollar saved is really two dollars earned.
.-= Trading for dummies fan´s last blog ..Trading for dummies =-.
Thanks for the comment!
Saving a dollar rather then earning two may make sense for most people out there For many people cutting back on luxuries or unnecessary items is far easier than going out and earning more. The progressive tax system in the western world makes it very difficult to get ahead just by increasing your earned income. A solid savings plan coupled with following tips on budgeting is just simple personal finance basics.
Most people don’t understand the value of money combined with investing. This is the principle of why the rich continue to get richer. Once you have money it is easy to accumulate a lot more!