It's Not What You Make
...It's What You Keep
We've all heard the saying, "A penny saved is a penny earned."
My favorite is a derivative, “it’s not that you make, it’s what you keep” — an amazing reminder of the importance of efficiency AND effectiveness in your wealth system.
But in today's world of relentless advertising, instant gratification, and seemingly endless subscription services, that simple adage feels more relevant – and more challenging – than ever before. Many people focus intently on increasing their income, chasing promotions, and side hustles. While boosting your earnings is important, it's only half the equation. True wealth building isn't about how much money flows in; it's about how much you strategically keep and grow.
This article isn't about depriving yourself of all joys in life. It's about gaining control over your finances, making conscious choices, and building a future where your money works for you, instead of the other way around. It's about shifting your mindset from passive spending to active, intentional financial management.
There are levels to gaining control of your financial world.
Level 1: Budgeting – Beyond Wishful Thinking
Many people think of budgeting as setting arbitrary limits: "I'll only spend $X on dining out this month." That's a start, but it's like trying to steer a ship without a map or a compass. True, effective budgeting is a far more active and insightful process.
"Budgeting isn't budgeting unless you dump out your statements and reconcile by category."
This is the core principle. You need to know exactly where your money is going. This isn't about judgment; it's about awareness. Here's how to do it:
Gather Your Data: Collect all your financial statements for the past month (or better yet, three months). This includes bank accounts, credit cards, loan statements, and any other accounts where money flows in or out.
Categorize Everything: This is where the magic happens. Go through each transaction and assign it to a category. Be granular. Don't just have a "Food" category; have second column with subcategories to break it down into "Groceries," "Dining Out," "Coffee," "Work Lunches," etc. Use budgeting software (like YNAB, Mint, Personal Capital, or even a simple spreadsheet) to make this easier.
Reconcile and Analyze: Once everything is categorized, add up the totals for each category. Now you have a clear picture of your actual spending habits. Compare this to your intended budget (if you have one). Where are the discrepancies? Are you surprised by any of the results?
Identify Leaks and Opportunities: This is where you start making changes. Are you spending more on subscriptions than you realized? Are those daily coffees and treats adding up to a significant amount? Are there areas where you can realistically cut back without sacrificing your quality of life?
Adjust the budget, and stick to it.
This process isn't a one-time event. It's an ongoing cycle of tracking, analyzing, and adjusting. The more you do it, the more intuitive it becomes, and the more control you gain over your financial life.
Level 2: Automate Your Wealth Building
Once you have a handle on your spending, it's time to put your savings and investments on autopilot. This is where the principle of "pay yourself first" comes into play.
"Make automated contributions to BOTH saving and investing accounts every pay check."
This is non-negotiable. Don't wait until the end of the month to see what's "left over." Treat your savings and investments like any other essential bill. Here's why automation is so powerful:
Removes Decision Fatigue: You don't have to think about it. The money is automatically transferred, eliminating the temptation to spend it elsewhere.
Consistency is Key: Consistent contributions, even small ones, add up significantly over time thanks to the power of compounding.
Prioritizes Your Future: It ensures that you're consistently building wealth, regardless of short-term fluctuations in your income or expenses.
You should have at least to buckets that receive automatic contributions:
Savings: This is for short-term goals (like an emergency fund, a down payment on a car, or a vacation) and unexpected expenses. Aim for at least 3-6 months of living expenses in a readily accessible, high-yield savings account.
Investing: This is for long-term growth (like retirement). Consider index funds, ETFs, or other diversified investments that align with your risk tolerance and time horizon.
Eventually, you can advance to having multiple investment accounts that receive automatic funding from your checking account (or wherever your income flows) … one for dividends, another for options, another for capital appreciation opportunities, etc…
Set up automatic transfers from your checking account to both your savings and investment accounts on payday. Even if you start small, increase the amount gradually over time as your income grows or you identify areas to cut back.
Level 3: The Negotiation Mindset
Many people accept prices as fixed, but this is often a costly mistake.
"Everything is negotiable – so negotiate everything."
This doesn't mean being aggressive or unreasonable. It means being assertive and informed. Here are some areas where negotiation can make a big difference:
Bills: Phone, internet, cable, insurance premiums – these are often negotiable. Call your providers and politely ask for a better rate. Mention competitor offers if you have them.
Credit Card Interest Rates: If you have a good credit history, you can often negotiate a lower APR.
Credit Line Increase: You can apply for a CL increase which immediately reduces your credit utilization, which provides two immediate benefits.
Large Purchases: Cars, appliances, furniture – always ask for a discount. Be prepared to walk away if they won't budge.
Salary and Benefits: Don't be afraid to negotiate your salary when accepting a new job or during performance reviews. Research industry standards and be prepared to make your case.
Medical Bills Medical bills can be negotiated, even after insurance has been applied.
People just want solid communication and comfort that they will be paid. Everything is open to negotiation beyond that.
The key is to be polite, persistent, and informed. Do your research, know your worth, and don't be afraid to ask. The worst they can say is "no."
They will likely say no. But no is just the start of the next phase the conversation. Now you do some additional discovery. Figure out what the root of their objection is.. perhaps if you schedule your purchases in advance or you agreed to make larger volume buys you can negotiate a discount, etc… perhaps they are sensitive to collecting the entire amount but they are open to stretching the repayment term out by another year or two.
You don't get what you don't ask for.
Level 4: Time is Your Most Valuable Asset
Money isn't the only resource you need to manage; your time is equally, if not more, valuable.
Optimize for Time, Not Just Money:
Consider the value of your time in every financial decision. Sometimes spending a little more money to save significant time is a worthwhile investment. This could mean:
Paying for Convenience: Grocery delivery, meal kits, house cleaning – if these services free up time for you to focus on higher-value activities (like work, family, or personal development), they may be worth the cost.
Investing in Efficiency: Buying tools or software that streamline your work or personal tasks can save you time and increase your productivity.
It is old school, but there is nothing wrong with Eisenhower's decision matrix. What can you delegate? What can you delete from your to-do list entirely so you could focus more fiercely on the priorities and projects that really matter?
Think about your hourly rate (even an estimated one). If you earn $50/hour, is it worth spending two hours to save $40?
Probably not.
Level 5: The Hidden Costs of Recurring Expenses
We all know to cancel unused streaming services, but the world of recurring payments is far more insidious.
Regularly Audit Your Subscriptions and Recurring Payments:
Software and Apps: Are you paying for premium features you don't use? Are there cheaper alternatives?
Online Tools: Project management software, design tools, cloud storage – review your usage and see if you can downgrade or switch to a free option.
Forgotten Memberships: Gyms, professional associations, online communities – are you still actively using these memberships?
Automatic Renewals: Many subscriptions automatically renew, often at a higher rate. Set reminders to review these before they renew.
Schedule a recurring calendar reminder (e.g., quarterly or bi-annually) to meticulously review all your automatic payments. You might be surprised at how much money is silently leaking out of your accounts.
Level 6: Frugality vs. Cheapness – Knowing the Difference
Being mindful of your spending doesn't mean sacrificing quality of life.
Don't Confuse "Frugal" with "Cheap" (Invest in Quality Where it Matters):
Frugal: Being resourceful, value-conscious, and making smart spending choices.
Cheap: Prioritizing the absolute lowest price, often at the expense of quality, durability, or long-term value.
For certain essential items, investing in quality can save you money and frustration in the long run:
Shoes: Good quality shoes can last for years and provide better support and comfort.
Mattress: A good mattress is crucial for sleep quality and overall health.
Tools: If you use tools regularly for work or hobbies, investing in quality tools can improve efficiency and durability.
Appliances: Energy-efficient appliances can save you money on your utility bills over time.
Know when to prioritize quality over the absolute lowest price. A cheap item that breaks quickly and needs to be replaced frequently is often more expensive in the long run.
Level 7: "Set It and Forget It" Beyond Savings
Automation isn't just for savings and investments.
Leverage "Set It and Forget It" for More Than Just Savings:
Automatic Bill Payments: Avoid late fees and protect your credit score by automating your bill payments.
Round-Up Apps: Use apps that automatically round up your purchases and invest the difference.
Dividend Reinvestments: Compound your capital automatically.
Automated investment rebalancing. If you utilize a diversified investment portfolio, you can rebalance your portfolio by market cap weight or even across asset classes on autopilot.
The more you automate positive financial behaviors, the less you have to rely on willpower and the more likely you are to achieve your financial goals.
Building wealth isn't about a single "get rich quick" scheme.
It's about developing sustainable habits, making conscious choices, and consistently prioritizing your financial well-being. It's about understanding that it's not what you make, it's what you keep that truly matters. It’s about shaping your environment to make wealth building easier for you.
Start small, be patient, and celebrate your progress along the way.
By mastering the art of strategic spending and savings, you'll be well on your way to building a secure and fulfilling financial future.
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I started Wealth Systems in 2023 to share the systems, technology, and mindsets that I encountered on Wall Street. I am a Wall St banker became ₿itcoin nerd, ML engineer & family office investor.
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