A Penny Saved is Two Pennies Earned

In his book The Only Investment Guide You’ll Ever Need (an excellent read, by the way), Andrew Tobias spends a chapter talking about the fact that, after you factor in state, federal, social security, and sales taxes, every dollar you earn is only worth about $0.50 (depending on your tax bracket).

Thus, he argues that Ben Franklin had it wrong… If it a certain amount of income translates into half that much in terms of buying power, then a penny saved is much more than a penny earned. In fact, it’s worth upwards of $0.02 in extra earnings. So if you’re looking to improve your bottom line, think twice about those frivolous expenditures. It’s far more efficient to fix your finances by spending less as opposed to earning more.

Published on June 10th, 2005 - 4 Comments
Filed under: Saving & Investing
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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4 Responses to “A Penny Saved is Two Pennies Earned”

  1. 1
    Jose Anes Says:

    Your article is very true.

    But Benjamin Franklin was almost right. There where no federal income taxes or social security taxes on his time. As a matter of fact, federal income taxes would have been highly unlawfull.

    Amendment 16 of 1913 (to the US Constitution) had to be made so that income taxes could become legal.

  2. 2
    Todd Derscheid Says:

    Andrew Tobias deserves a lot of credit for having revised that book totally at least twice… unlike some financial-advice mavens who put the same anecdotes in three or four books.

    Fun stuff, especially the earlier edition.

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