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Savings vs. Profit

I just finished listening to JD Roth’s Audible Original How to Achieve Financial Independence and Retire Early. There wasn’t a ton of new material for me, but I still found it a great resource, and one that I would recommend if you’d like to learn more about the subject.

There was one part, though, that, while simple, was something I had never given any thought to before. He said that most folks don’t get that excited about talking about saving money. He thinks it would be better if we treated this topic like businesses do. They don’t call it savings. They call it profit. Income minus expenses in a business is profit. Profit allows you to grow and expand. It’s actually tied to growth.

Why don’t we feel the same about our personal finances? Income minus expenses equals savings, but it’s normally haphazard: If there’s any money left at the end of the month, I guess it’s savings! But what would a shift in our thinking produce? If we saw it as profit, would we be more excited about it? Would we see it as a sign of growth? As something to be celebrated? Something to think about.

Published inMoney