Why Cutting Costs Won’t Make You Rich: The Real Path to Wealth
- AfriNews 247
- May 30
- 3 min read
Updated: Jun 2
Most financial advice starts with the basics: skip the morning latte, dine out less, and hunt for discounts. While these habits may help you save money, they won’t make you wealthy.
According to Taylor Kovar, CFP and CEO at 11 Financial, the real secret to building lasting wealth lies in how you think about money — not just how you spend it.
“Focusing only on cutting costs can actually keep people small,” says Kovar. “If your mindset is always about saving every dime, it becomes hard to dream big or take strategic risks.”
Being frugal is a good habit. It shows discipline. But frugality is only half of the equation.
“A true wealth-building mindset pays attention to expenses, but focuses on growing income and developing passive revenue streams,” says Dr. Robert R. Johnson, CFA and finance professor at Creighton University.
He quotes Warren Buffett: “If you don’t find a way to make money while you sleep, you will work until you die.”
Investing Is the Real Key to Wealth
The path to real wealth runs through smart, long-term investing. You need to take calculated risks and think beyond just cutting back.
Dr. Johnson points out that long-term investments in large-cap stocks (like the S&P 500) have returned an average of 10.3% per year since 1926. Compare that to bonds, which return 5.7–6.2% on average — and you see the power of growth investing.
Kovar agrees: “I’ve seen more wealth created from side businesses, salary negotiations, and upskilling than from just saving pennies.”
Time and Compounding Are Your Best Friends
Investing early is critical. The earlier you start, the longer your money compounds.
“Time is the greatest advantage in investing,” says Johnson. “Let compound interest work its magic over decades.”
That’s how you build exponential growth — not just by slashing expenses but by letting your money grow on its own.
You Can’t Cut Your Way to Wealth
Sure, saving money is part of the process. But it's not the whole plan.
“You can only cut so much,” says Kovar. “But there’s almost unlimited upside to growing your income — whether through entrepreneurship, investing, or leveling up your career.”
Budgeting Still Matters — But Prioritize Savings
Cutting back isn’t the goal — prioritizing savings is.
“Don’t just track expenses — build savings into your budget as a fixed line item,” urges Johnson. “We accomplish what we prioritize.”
This means paying yourself first and treating savings like any other necessary expense.
Avoid Extreme Sacrifices — They Rarely Work
Trying to eliminate every bit of fun from your budget is not just unrealistic — it can be harmful.
“Extreme sacrifice isn’t sustainable,” Johnson says. “Find balance between your current and future needs.”
If a daily coffee or occasional brunch brings you joy, keep it — just be mindful of what you value most. The goal isn’t to strip all enjoyment from life, but to spend purposefully.
Budgeting Still Matters — But Prioritize Savings
Cutting back isn’t the goal — prioritizing savings is.
“Don’t just track expenses — build savings into your budget as a fixed line item,” urges Johnson. “We accomplish what we prioritize.”
This means paying yourself first and treating savings like any other necessary expense.
Avoid Extreme Sacrifices — They Rarely Work
Trying to eliminate every bit of fun from your budget is not just unrealistic — it can be harmful.
“Extreme sacrifice isn’t sustainable,” Johnson says. “Find balance between your current and future needs.”
If a daily coffee or occasional brunch brings you joy, keep it — just be mindful of what you value most. The goal isn’t to strip all enjoyment from life, but to spend purposefully.
Focus on Growth, Not Just Cutbacks
Building wealth is less about deprivation and more about strategic action. Spend with purpose, invest early, take calculated risks, and prioritize growing your income.
“It’s not about how little you can spend,” says Kovar. “It’s about how wisely you can use what you have to multiply it. Strategic money growth beats extreme sacrifice every time.”
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