I was browsing through the Best of 2007 articles, and came across this one.

Yes all of these tips and tricks to saving money are great, and spending less than you earn is the key to building wealth. The problem I see with this mentality is that some people see their expenses as something they can reduce, and their income as something they cannot increase. But let's face it, there is a base level of living expenses, and if you always earn slightly above that, saving $50 a month isn't going to lead to you being a millionaire at retirement and traveling the world.

You can only be so frugal. Eventually, to be living the retirement you've dreamed of, you will have to find a way to earn more money. This tidbit of advice is always snuck into PF articles as an afterthought, passed off as something to do "if all else fails". I think it should be one of the most important goals we all have. If you ever find yourself wondering if you can substitute Ramen noodles for spaghetti (for financial reasons), maybe you should focus on getting a better job or a 2nd job first. I know a lot of people who jumped into the working world right after high school because they found jobs for more money than they had ever seen before (~$20/ hour). I stayed for college. After four years, they are still making $20/hour and I am earning 1.5x that with the potential for raises the rest of my adult life.

It's a difficult line to walk, but be honest with yourself. Are you not rich because of your daily latte, or are you not rich because you do not earn enough at your job?

Lots of ways to get rich, you need a program and stick with it, in real estate the key is OPM,other peoples money, when I was 35 I came to be friends with a very wealthy man, one day we were discussion getting rich and he asked me my plan, my approach was to save , which gets defeated by inflation, he said something that kind of hurt my feelings, he said your not going to make it by trying to save your way to wealth, his idea was to make it through real estate and OPM, I asked him what OPM was and he said using other peoples money, and leverage ,in other words you invest 5 thousand and control 100 thousand and when it appreciates to say 110 thousand after say a year so so then you have in effect doubled your money, much better than a CD lots of different ways to wealth ,another rich man told me everyone wants to get rich but they want to get rich fast and he stated the key was get you a plan and stay with it, and get rich slow, not everyone is going to make 150,000 a year, but you can save and invest in whatever you are best at and over time you should become wealthy, to grow a money tree you have to plant and water and nurture your money tree for years and one day it begins to produce fruit that you can pick from time to time and enjoy

Sschow, I think you make an excellent point. This is one of my pet topics. The fundamental law of building wealth is to spend less than you earn. How to do that depends on your current situation.

If you're earning minimum wage or otherwise straddling the poverty line, there aren't many ways for you to decrease your expenses. Your only option then is to increase your earnings. If, however, you make a decent living and still can't get ahead, then your best option is to decrease your spending.

What worked for me was to combine these two approaches. I decreased my expenses while increasing my income, and I stayed focused. This helped me eliminate my debt, and now I hope it will allow me to build wealth.

But it all comes down to spending less than you earn.

p.s. I'd like another option in the poll: I'm not rich yet, but I'm getting there.

I'm just not old enough to be rich yet. I don't earn enough money, yet. I haven't had time to let compounding really work ofr me, yet. I fritter away some money / make my life fun. I don't actually ever expect to be millionaire rich, but I do expect to be able to live off my investments rich. In almost exactly 40 years time.

What do you mean by rich? Top 5% of people in developed nations? Top 2% of the world? A dollar amount? What's the definition of rich?

I am rich for my age, so yes, I am rich. Is that what this poll is actually trying to ask? Are you rich for your age?

"It's a difficult line to walk, but be honest with yourself. Are you not rich because of your daily latte, or are you not rich because you do not earn enough at your job?"

I don't have a daily latte and I earn enough at my job... but I'm not a millionaire and I can't retire right now. I've only been working for 1.5 years. Soo... is this question directed towards those of retirement age? You will also have to define "rich". A net worth of 33x your yearly expenses or higher? I find this poll to be pretty nebulous and highly interpretable. I'd suggest scrapping it and start a new poll with a clearer question. "Are you rich for your age?" might be better, where "rich" is "On track to comfortably retire by the time you are 60".

The splurging on little things is it for me. I know what I need to do but have just never done it. Now I have a written plan and I'm beginning to work it.

Being rich can be however you define it, but by coming to GetRichSlowly you are passively admitting that you are looking for ways to get "richer". Therefore, those of you who feel rich for your age can answer as such...I was mainly pointing out that after you cut out the other reasons for not being wealthy (splurging, bad investments, etc.) usually you are left with your income as the problem in need of fixing.

It's ironic that, for most people, the most crucial period of their lives in terms of building a foundation for wealth also happens to be the time when they are least likely to make the right decisions: their teens and twenties.

Think about it: unless you're born rich or happen to be lucky with your investments, you have to start investing while you're young to build significant wealth. But that's the time when most people 1) have the lowest income of their lives and 2) live mostly for the moment with little regard for the future.

Furthermore, many people are at their most irresponsible and least motivated when they are teenagers, which affects their education as well as their prospects for further education. Unless they're a genius or have entrepreneurial skills, actions like dropping out of high school, not going to university, etc., can sharply reduce their ability to build wealth later on.

I think the situation is worse today because teenagers are so heavily marketed to, building a strong culture of consumerism and fiscal irresponsibility. My 18-year-old stepdaughter is a good example: she's a high-school dropout who maxed out her credit card two days after she got it, and when she's working (she has never lasted more than a couple of weeks at any job) she spends her entire paycheck as soon as she gets it. Most of her friends live the same way; when we talk to her about putting money aside for her retirement or for savings, she just rolls her eyes. For her, that's something to think about "later." For now, she just wants to party.

I think you bring up a great topic, and one that was recently written about by Steve, from the blog Brip Blap. He wrote that spending less than you earn is the wrong way to think. His message was that you should think about increasing your income for the same reasons you mentioned.

I feel the same way and try to increase my income through raises at my day job and various other means including income via my blog. But I also write about reducing expenses. Why? Because most people have a lot of money leaks that if they can plug, will save them a lot of money. In my opinion, a penny saved is worth more than a penny earned, mostly because of tax reasons and opportunity cost.

As for the poll... I am not rich yet, but if the option JD mentioned was up there, "I'm not rich yet, but I'm getting there," I would select that. My wife and I are comfortable, and I think we are doing the right things by saving and investing, and finding alternate income sources to increase our household income. We are by no means wealthy, but I think we are well on our way to getting there.

Build wealth in your teens? Every cent I earned went toward savings for university. I suppose I was building wealth by a avoiding debt and increasing my earning power, but only rich kids get to invest in their teens. I had to pay for university on my own.

Nah, what I said was building a foundation for wealth in your teens and twenties -- by starting to putting aside money for retirement, finishing school and getting good grades, etc. -- not actually building wealth itself but setting the wheels in motion.

Well, I suppose that's a foundation. It certainly helped me, although I'll never catch up with the kids whose parents paid for school.

It may be worth less than you think. What's the stat from Millionaire Next Door? 80% of millionaires are new millionaires and half of them are immigrants. That implies there are a lot of people who fall out of millionaire status. Kids who get free rides end up taking their start for granted and falling back to the pack. It's human nature. Meanwhile, the new immigrant is like the lean wolf just in from the wild amongst a pack of domesticated dogs. For now, they're ready to ascend to alpha dog status but in a few generations, their progeny will be tame just like everybody else.

Of course, this is just my random musings on human nature.