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.
Tips On Budgeting - A Dollar Saved Is 2 Dollars Earned
By Brandon Schmid
Apr 26, 2010 - 4:46:57 PM
Have you ever been told the phrase that a dollar saved is two dollars earned? Do you know exactly what it honestly means? It all works down to personal finance basics and being familiar with tips on budgeting. Part of growing to be successful financially is finding out how to become successful with just how you earn and spend cash. Why don't we take a deeper look as to how a dollar saved is two dollars earned:
If you were to make $75, 000 per annum in Ontario, Canada, here's where your next earned dollar would go.
Marginal tax rate35.39%
CPP/EI premiums 4.95%
Pension contributions 6.00%
Union dues 1.28%
So this should mean if you were to bring in $1.00, around 47 cents would go toward expenses. If you want to save one complete dollar you would need to make $1.91. That is extremely close to two dollars earned.
I realize that not anyone will have monthly pension contributions or union dues but I want to offer an situation that was very similar to my particular position. If you're an American then you'll have Social Security and Medicare in lieu of CPP and EI in Canada.
Saving a dollar rather then making two may well make sense for a lot of people out there. For lots of people reducing on entertainment or extraneous items is far easier than going out and making more. The progressive tax system in the western world makes it incredibly challenging to get ahead only by boosting your earned earnings. A strong savings plan combined with adhering to tips on budgeting is just straight forward personal finance basics.
With these tips on budgeting you can notice how saving one dollar is almost the same as earning two dollars. You'd need to earn $1.91 if you want to be able to save one full dollar, which prompts the expression "A dollar saved is two dollars earned." Think about this situation when deciding to put in more overtime to pay for your entertainment. It might cost you more than you can believe; obviously it is extremely inefficient.
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