Earning Power: Why High Salaries Don’t Always Equal Savings Ability

If you’re someone who makes a decent amount of money, you should probably have more money saved then someone whose salary is about half of yours, right?

That simple statement often is wholly false, mostly because higher earners tend to be a little more spend happy with their money and often don’t keep track of it that well, either.

Budgeting is quite universal when you talk about saving money. No matter what your income is, despite the fact that you might believe it to be somewhat endless or that you’ll always have enough to cover expenses doesn’t absolve you of having a system in place to track expenses and be able to have money leftover to save.

Often assuming that to be the case leads you to think you’re ahead of the game that is saving money when in actuality that isn’t the case at all. Simply put, you can’t skimp on the budgeting process, no matter what your income is.

A higher income also can translate into not only spending money on things you don’t need but also a lack of thinking toward the future, with the assumption that your large-scale income is never going to end. For starters, you have to think about retirement no matter how much longevity you believe your job has.

Also, your salary isn’t always a guarantee. Those who make a very good living might always want to keep in the back of their mind that the salary you covet could easily go away at a moment’s notice with an unexpected layoff, illness or cutbacks that you don’t see coming.

That larger salary should mean you live modestly, below your means and begin to save even more than a person who makes half as much as you do. Studies show that larger incomes are related to debt and living beyond your means almost as much as a person who has an annual income of $20,000.

Buying flashy, over the top cars, a larger than you need and can barely afford the house or vacationing multiple times per year should be left to the celebrities and A-listers, not someone who makes around the six-figure mark or just below it. As much as your new salary might sound like a new car to you, make sure you think about keeping your expenses at a minimum and shuffle for cash into a savings account or retirement fund.

You’ve worked hard to earn what you do, so don’t look back on a 20-year career with very little in the way of saved money to show for it since you probably spent too much time living in the now, rather than mulling over the future.