Personal Finance

What Should I Focus on When Saving Up to Invest: Spending Less or Earning More?

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
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Today we’re talking about whether you should spend less, earn more—or both. The answer to that question would be both.

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Spending Less

Considering how much debt this country has, from credit cards and student loans to car loans and mortgages, I really think it would be wise to start by spending less.

My philosophy is that $100 in your pocket is, well, $100 in your pocket! What I mean by this is that you get to choose what you want to do with that money. It’s entirely in your control. 

So, you have to start off by spending less. Save money, be frugal, don’t get into debt, and don’t do any stupid things with your funds. You can just stick it in a reputable savings account with no fees and you’re still better off than spending it frivolously.

Earning More

One of my favorite quotes from a man worth $150M is: “Wake up before everyone, go to sleep after everyone, work harder, work smarter!” I am a big believer that many real estate investors are very, very lazy. They’re all looking for a quick pill to get rich overnight. It doesn’t work like that. You have to work hard.

While getting started, you’ll likely work your nine-to-five job to cover your basic necessities to live day-to-day. If you have to get another job and work all night, do it. Be prepared to do whatever you have to do to get the starting capital needed to go into real estate.

Related: 4 Side Income Streams to Sustain You as You Pursue Real Estate Full-Time

Once you get the money, you can start building your portfolio, flipping, wholesaling, or pursuing whatever strategy you want to utilize. I am a big believer that money makes money! Remember that some things you do before nine or after five are where you’re going to be making more money. Still, some tasks like doing research or working on a business venture won’t give you a direct ROI. Don’t get discouraged by that; always look at the big picture. Focus on yourself, chase your dreams, and watch them become a reality.

Keeping Costs Low

We spoke about spending less and how to potentially how to earn more. This last piece of advice is from my own experience. You have to keep costs at a minimum. I can’t tell you how important it is! Over the last four years of my business cycle, there were times when I was down to the last $1,000 in my operating account. That is the reality of being a business owner. The way we survived was by being very frugal.

So, you have to:

  1. Minimize expenses.
  2. Keep costs at an absolute minimum.
  3. Grind it out yourself by working around the clock.
  4. Wait to employ anyone else.

Once revenue allows you to spend to make more, then spend it wisely. In my opinion, every dollar you spend should give you three back.

To review, I think you should do both. You should focus on spending less. You should also focus on earning more. And then when you do start your real estate business. you must keep costs at an absolute minimum. And when you do spend money, make sure you get three dollars back.


What do you think is most vital when saving up to invest—spending less or earning more?

Leave your comments below!

Engelo Rumora, a.k.a."the Real Estate Dingo," quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate al...
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    Ryan Schroeder Rental Property Investor from Saint Paul, MN
    Replied about 3 years ago
    A few comments: 1. The easiest option is to spend less. There are wants and there are needs; but there are very few actual needs. Elimination of many of the wants is also easy. Have to have the latest cell phone, go to the latest movie, have that kindle, get all the cable channels/movie channels? Nobody needs any of that stuff. 2. Second easiest is to be a good employee at your day job. Show up early, leave late (I’m talking 15 minutes on each side here) take things off your bosses desk (as in volunteer to take a project and then complete it on time) will result in rewards of income and position…and its all done during the same time of day that you would be working at your job anyway. 3. Third would be to eliminate debt and then pay cash…and watch your cash grow…pretty easy…and you can make a game of it…becomes quite fun. 4. The obvious is a second job as most people waste time after their “9 to 5” but that second job likely is paying $10/hour or something and you might be better off either getting another degree, studying on REI, or working on your main job to increase your value there. 5. Invest in growth and/or high dividend stocks. Yes this has more risk than the other options but the reward is also great, particularly if you are young enough to go through a cycle or two. On the same note, maximize the match on your employer 401/457/403 and consider a high deductible health plan…with a health savings account and then max that out…use it as another 401. 6. Finally, take your time in finding the right investment. Allow yourself to walk away from a deal if it isn’t the right deal. Go into the negotiation with your not to exceed number and then don’t exceed it. Another one will come on by. For us, we are buy and hold rehabbers so we like buying stuff where nobody else sees the value as it is a dog (but in a good neighborhood)…a little paint, maybe a new kitchen and you’ve added asset value
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Ryan, Bloody brilliant comment mate. Thanks again and much success
    Alison Meehan Investor from Montpelier, Virginia
    Replied about 3 years ago
    Thanks for this post and the video! I agree on being frugal and I try very hard to follow that rule. I own one rental house at the moment and am hoping to buy a multifamily building soon. One thing I’m not sure on is HOW to be frugal all the time. For instance, the house I rent out is quite old and we’ve had to spend a lot on plumbing since the pipes have needed to be replaced. My husband always tries to fix it first, but if he can’t fix it, I call a plumber. We also have a hot tub, which must be maintained sometimes by a local company. I do all of the yard work, cleaning up, and painting, however. Still, at the end of the year, after all expenses, we only earn about $2,000 per year from this property, more if you count the equity. It’s worth it to keep it in my opinion since it’s very easy to rent out, great location, great house, etc. But still . . . I already charge more than market price in rent since it has some perks, such as the hot tub, but feel a little bad since the last two renters worked 3 jobs to pay for it. What is your advice on how to do more on the saving money side of things?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Alison, Personally, I would sell the house and use the proceeds to buy, fix and flip. I don’t think $2,000 in cashflow is enough to provide you with financial freedom. Money makes money so you should use every penny you can to go into the market and try and make more with what you have. Buy and hold only with surplus capital. Thanks and much success
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks for your comment Greg, Much success
    Account Closed Business Owner from Madison, Wisconsin
    Replied about 3 years ago
    If you’re in your 20’s like I am I’d say earning more should be your #1 focus, although that doesn’t mean you shouldn’t save as well.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Lakeem, Much success
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 2 months ago
    Scott Trench's point that saving $1 means you keep $1 but earning another $1 means you keep somewhere between 65 and 90 cents in all likelihood because of taxes. As far as personal finance goes, saving goes further. (That being said, there is more capacity for upward growth in earnings than savings, but saving should be your first focus when trying to acquire capital.)