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Should you spend less or earn more to increase your leftover money?

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Most of us wish we had a little more money left over each month, especially given that we can spend or save it however we please. After you’ve paid all your necessary expenses, that number can range from a couple hundred bucks a month to thousands, depending on your situation.

So, how can you increase this amount to improve your financial situation? Generally, there are  2 ways to control this—spending and earning. By focusing on both sides of the equation—decreasing spending and increasing earning—you can help maximize the difference between them.

Spending less

Having a budget is vital for finding areas where you can cut your current spending. Once you’ve totalled up your monthly income and subtracted necessary expenses like rent or mortgage, loans or credit cards, healthcare, utilities, and food or household supplies, you can take a hard look at what you’re spending the remainder on.

If you want to have a meaningful impact on your finances and have more left over each month, consider the savings strategies you could implement into your day-to-day life. It could help to make an inventory of all your recent spending habits outside of necessary expenses, see what you can cut or reduce, and then move on to finding other ways to save costs. 

Here are a few money hacks to consider.

  • Download a coupon app and look for savings before checking out.

  • Use cash-back sites when shopping online.

  • Buy “used” gift cards for less than their face value and apply them to your purchases.

  • Listen to personal finance podcasts to increase your money knowledge.

  • Switch to a


    Varo Bank Account


    with no fees.

  • Build your credit

    , which could help you get lower insurance premiums and lower rates on loans.

  • Prioritize spending that focuses on needs versus wants.

  • Learn how to


    avoid overspending


  • Limit the amount of social media you consume, as it may tempt you to make purchases you don’t need.

  • Explore the benefits of moving to a lower-cost location or taking in a roommate.

  • Get rid of one big expense if you can, like a new car or an annual trip abroad.

Saving more

Implementing cost-cutting changes into your life can be more feasible than increasing your income, especially in terms of immediate benefits. For example, if you figure out how to decrease your spending by $100 each month, you’ll have an extra $100 to spend or save as you wish. However, if you earn an extra $100, you’ll have less than $100 after taxes are taken out.

Need some help reaching your savings goals faster? A high yield Varo Savings Account offers no fees and easy auto-saving tools to help grow your money.

Focusing solely on saving isn’t without its challenges, however, as there’s usually a limit to how much you can save. Even if you go to extreme lengths to cut back, you’ll always have to spend money on basic necessities like food and housing. 

Cutting back significantly can also be physically and psychologically draining. You may be able to reduce spending for a few months only to find you’d rather save less and enjoy a more comfortable lifestyle now. Some people wind up seesawing back and forth between extreme savings and overspending—a sort of yo-yo diet with money—that causes them more stress than a more manageable approach to their finances would. 

The trick with spending less and saving more is to find the right balance for you and your financial situation. It’s your money, after all. So, do what makes sense, but don’t sacrifice your mental wellbeing just to cut corners.

Earning more

We know that earning more isn’t as simple as flipping a switch. Most people who gradually increase their income follow career paths that are usually on more of a long, winding road than a shortcut. But, as with reducing expenses, there are a number of ways to go about boosting your earnings, even if some take a more long-term approach. Here are a few of them. 

  • Find a higher-paying job, or do some research to ensure you are being paid at the level you should be.

  • Negotiate a raise at your current job.

  • Continue your education and then use your new skills to help you negotiate or change jobs.

  • Make money


    selling the stuff


    you no longer need (but recognize this is a short-term solution).

  • Start a


    side hustle

    , especially if it’s something you can turn into a real business long term.

  • Look into passive income streams like investing, rental properties, or peer-to-peer lending.

It’s important to keep in mind that increasing your leftover money is impossible if you match higher earnings with more expenses. For example, if you get a raise, then buy a new car that costs $400 more per month, that higher monthly payment could wipe out your extra income. This is what is known as lifestyle creep. If your approach is to earn more, make sure you’re armed with responsible spending habits so that you can fully reap the benefits of more pay when it comes to long term financial stability.

Finding the right balance between spending responsibly and increasing your earnings can be a challenge for anyone. Remember, there’s no one-size-fits-all approach, and a combination of several methods may even be easier. For example, you may want to start with a side hustle, which could then provide enough money to pay for classes or certification courses that can eventually boost your career and salary. 

Or, you may want to get the ball rolling with some simple money-saving lifestyle changes right now while you take the time to map out what your long term career goals are. You’re in control, so figure out what works best for you. 

Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.


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