Spend Less or Earn More - Which is Better? - Passive Income MD

Spend Less or Earn More – Which is Better?

February 20, 2018 • 7 Min Read

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The idea of financial freedom is something everyone dreams of. Many of us are at different stages of that journey, but on some level, it’s something we all work toward.

In a previous post, I mentioned that I’m financially free from medicine, and I’m happy to say that still holds true, even a couple months later.

Not only that, but my passive income streams continue to grow without necessarily putting in more time and that’s the hallmark of truly passive income. I can’t say the same for my day job as an anesthesiologist. In fact, I’ve started reducing my time at work, not only to spend more time with my family but also some to continue to grow my passive income streams.

Along this journey, a question I’ve often heard posed is this: when trying to achieve financial freedom, or even just save some extra money, is it better to earn more or spend less? Well, of course, there are two schools of thought.

Spend Less

This school of thought seems to appeal to some physicians however physicians are mostly notorious for keeping up with the Joneses. Perhaps there’s an expectation of what we feel we deserve after years of sacrifice. Whatever the reason, the result is that many physicians end up living paycheck to paycheck.

Some physicians, however, are bucking that trend and living simply – even taking on yearly budgets of $62,000. Now, I’ll be honest. I live in a high cost of living area and the idea of spending $62,000 a year doesn't seem realistic. We spend closer to $200,000. But those for whom this method works find that it works well. Most of the time.

As with anything, there are pros and cons to simply spending less.


  • One can make changes immediately and see effects. They say every dollar you save is equivalent to $2 earned. Why? Because for most income earners, you have to make $2 to net just $1 after taxes. Change that $1200 car payment for one that's $400 and you'll see that impact starting from month 1.
  • Simplicity and minimalism. Minimalists, like Marie Kondo, have created a movement that is sweeping the nation. According to them, spending and having less allows you appreciate more in your life. This is undoubtedly true for them, and may be for you.
  • Frugal habits create discipline. The White Coat Investor has talked at length about lifestyle inflation and his remedy, “Live like a resident.” Thinking frugally helps you maintain discipline, which can spread to just about every area of your life, and may cause you to be more content with what you have.


  • There’s only so much you can cut. You can’t eliminate your basic expenses, so you have to draw the line somewhere. If that’s not enough, you’ll reach a dead end as to how much you can realistically save.
  • Frugality can lead to deprivation. You may find that life is only about denying yourself the good life, and all you focus on is what you can’t have. Where’s the enjoyment in that?


Earning More

On the other side of the coin, we have the option of earning more. Why focus on skimping on that $4 coffee? Instead, figure out a way to make double that expense in the same amount of time.

This is an abundance rather than scarcity approach to one’s lifestyle. Budgeting is important, yes, but is life about denying yourself constantly? And does that lead to happiness and contentment?


  • Unlimited upside. As Ramit Sethi puts it, “there’s a limit to how much you can save, but there’s no limit to how much you can earn.” Your lifestyle is limited only by your drive.
  • Focuses on a life of abundance and potential rather than a mindset of scarcity and denial. Even done for all the right reasons, skipping out on things that bring you joy in order to save more money can be draining.
  • One of the secrets to happiness is feeling like you’re constantly growing. If you focus on creating additional streams of income, there will always be new challenges, and in spite of whether you strike it rich, the intellectual challenge will keep you vibrant.


  • You must step outside of your comfort zone and be bold about it. This means getting out of your normal routine in order to push yourself to learn new things. This will put yourself in a position where you could fail. However, as I mentioned before, I worry more about the cost of inaction than the cost of failure.
  • You could end up working more and having less time. The whole point of all this was for freedom–both financial and, perhaps more importantly, time. What good is more money without time?
  • Earning more to cover your lifestyle doesn’t necessarily require the same discipline that saving does. Lifestyle inflation is all too real, and you may just end up with a bigger house and nicer car, but still living paycheck to paycheck. When my wife and I were in medical school, we used to stay at motels and hostels when traveling, but now that we’ve gotten used to the life of nice hotels in nice areas, it seems a little tough to do that. This is because we’ve become accustomed to our lifestyle. Unchecked, this can turn the path to financial freedom into a treadmill that will never get us where we want to be.


Ultimately, the goal of both camps seems to be the same. At the end of the day, you want more money to spend on the things you love and to be able work as much – or as little – as you want.

There are many websites that are dedicated solely to ways one can scrimp and save, coupon, and substitute. I see these and I realize I certainly could be saving more. But my goal is to be at a place where I don’t have to worry about that.

It doesn’t mean I’m foolish with my spending, but I don’t like the idea of debating whether I should get a coffee in the morning or not. I like coming from a place of abundance.

To be completely honest, I like to splurge on some things and skimp on others. ESI Money calls this “selective frugality,” and it’s definitely what works for me.

I enjoy my morning Starbucks. I like taking my kids to Disneyland. But I don’t want to work more at my day job to get more of these things. Instead, I’ve focused on creating passive income streams to support this lifestyle. It’s taken work to get to this point, but this was my goal all along. Now, I can have these things irrespective of whether I’m working my day job or not.

So for those who are thinking that you can just save your way to financial freedom, think again. You’re still trading your time for money. For those who strive to earn more, be careful how you go at it. Make sure you're not continuing to just trade more time for money. You honestly may not end up in a better place than where you're at.

Like most things in life, there has to be a balance. However, if I have to devote my energy to something though, it’s to earning more smartly and increasing what I essentially get paid per hour of work. That takes the focus off of making more (more time traded for more money) or saving more (not living how I’d like).

I see money as a means to an end, and that end is the ability to use my time how I want. Passive income provides the lifestyle I want without sacrificing time.


Disclaimer: The topic presented in this article is provided as general information and for educational purposes. It is not a substitute for professional advice. Accordingly, before taking action, consult with your team of professionals.

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