A PENNY SAVED IS GREATER THAN A PENNY EARNED
- Treavor Dodsworth CFP®, CPA, CKA®
- Feb 21
- 1 min read
Many have heard the misquoted saying "A penny saved is a penny earned." Below are two reasons why a penny saved is greater than a penny earned.

The first has to do with taxes. If you earn a penny, it is likely subject to income tax. In other words that penny after taxes may only be worth about 75% of a penny. This may seem like a minor nuance but being tax aware when making decisions makes the decision less taxing. For example, one way to improve your financial margin is to earn more money, however, it isn't dollar for dollar. In order to improve your financial margin by $1,000/mth, you may need to earn $1,250/mth or more due to the impact of taxes.
The second reason a penny saved is worth more than a penny earned has to do with the double positive impact of lower lifestyle expense. Many goals are tied to what you are spending on lifestyle. For example, how much do you need in life insurance, disability insurance, retirement savings, etc. While these don't have to be tied to your lifestyle, they oftentimes are. If you choose to save a penny instead of spend a penny on lifestyle, you just had a double positive - your lifestyle is lower (which means the amount you need to save is lower) and your savings are higher (due to the penny saved). The compounding impact of this double positive is mind boggling. A simple lifestyle adjustment of $100/mth can shave whole years off your retirement goal (very situation specific).
A penny saved is greater than a penny earned.