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Home » Budgeting, Home Ownership, Personal Asides

Good or Bad Personal Finance Cliche? “A Penny Saved is a Penny Earned”

Last updated by on 10 Comments

It is human nature to want to simplify topics and concepts that are complex, layered, and sometimes difficult to understand.

It’s a complicated world out there and we are bombarded with information on a daily basis. When presented with advice or solutions that make our lives easier, we latch on. As a result, cliche advice that sounds good on the surface can transform into cultural memes. If heard enough times from numerous peers and the media, those memes become blindly accepted as truths.

Some of these cliches are deftly true, but others can be particularly dangerous when interpreted the wrong way. They can be universally strong, oversimplified and misleading, or just flat out wrong at times.

So, I’ve decided to start a series of posts break down and analyze some of the most popular personal finance cliches to determine if they are legit advice to follow or not. And then you can debate to your hearts content.

This will be the first…

“A Penny Saved is a Penny Earned.”

a penny saved is a penny earned

“A penny saved is a penny earned” is used to describe a scenario when a consumer has or will realize the benefit of a discount, promotion, or sale when making a purchase. It attempts to equate the act of saving money to having earned that money. And who doesn’t like earning money? So where is the debate?!

There is only one problem – as already stated, the phrase is used in the context of saving money on a purchase. With the exception of offsetting the future cost of needs, the reality is that you are saving nothing when you are spending money. In fact, you’re doing the opposite.

I fear that many blindly apply this advice as a justification for making purchases on wanted items that are on sale. And that’s dangerous.

While you chew on that, consider that the origin of this cliche is through a misquotation of a statement made in Ben Franklin’s Poor Richard’s Almanack, which Franklin began writing in 1733. The original phrase was: “A penny saved is twopence dear. A pin a day’s a groat a year.”

A twopence was a silver coin used in Britain in that era. A pin and a groat? Consider it a history class homework lesson.

So if we break down Franklin’s original statement, he seems to simply be making a currency comparison between a penny and the British twopence. Yet, the remodeled cliche has lived on and morphed into personal finance advice with a different meaning that everyone has heard and repeated.

There is no doubt that it is good to save money – but only in the context that it is money you would have needed to spend. Just remember that the next time you go to grab your groat.

Verdict? While it may seem rather innocent on the surface, this cliche can be misleading, and potentially harmful if transformed into purchasing motiviation.

Alternative Advice? “A penny saved is a penny saved. A penny earned is a penny earned. A penny spent is a penny spent.”

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


10 Comments »
  • TC says:

    What about looking at the saying as recognizing the difficulty of being consistently frugal? i.e. Saving pennies is something you work for (earn) through discipline and conscious spending?

  • Ginger says:

    I’ve actually heard it in regards to saving money (aka putting money in the bank/investing). For every penny you can save, you don’t need to earn that much more in the future.

  • Natalie says:

    I’ve never heard this used in the context of spending, only when saving money in the (piggy or branch) bank.

  • KC @ PsychoMoney says:

    I once hear someone say “if I dont purchase this item at the amazing price I will be losing money!” Great point, some of us have gotten a little carried away with the penny saved is a penny earned concept.

  • Warren says:

    If you can save that penny, it is more valuable than earning a penny. Lets make it dollars due to inflation. If you reduce your spending by a dollar, you have a dollar. If you earn a dollar, after taxes you have less than a dollar.

  • JAK says:

    A penny “saved” is a penny that is not spent. it has nothing to do with buying or selling anything. it has been misused in adds to sell things, and has twisted an old meme/adage. that penny isn’t safely earned unless you take it to the bank and leave it there. if you spend it, or spend money to “save it” it is no longer your earnings but in fact someone else’s. to “save” once meant to hang on to your money… now it means to hang on to more then usual after a spending spree, which is not saving at all. a penny in the bank is a penny in the bank, it is yours properly earned. two dollars spent to save a penny is a ridiculous marketing ploy used to turn your earnings into somebody else’s earnings.

    let’s replace the saying with “a dollar in the bank, is a dollar in the bank”.

  • Ron Ablang says:

    A penny saved is a penny earned although it hardly seems worth the effort anymore to bend down to pick one up especially when you are 40+ and your body is complaining about it.

  • David Schindler says:

    A penny is and was a British coin. The U.S. coin commonly referred to as a penny, is actually a cent. So, to be “clear”, Franklin was comparing the values of two British coins.

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