Lesson 3: Mind the Gap | Paula Pant

If you’ve ever ridden the London Underground, you’ve heard a recording of a sweet voice warning you to “mind the gap” as the train doors open. The space between the train and the station platform is small, but not paying attention to it can be dangerous. The gap between what you earn and what you spend can be scary, too. But Paula Pant, host of the Afford Anything podcast, points out that you actually want a vast gulf between them — as long as it stretches in the right direction. In this video lesson, she discusses ways to widen that gap by earning more, spending less, or both.

To achieve financial independence, pay attention to the gap between what you earn and what you spend. There are only two ways to increase the gap: earn more or spend less (or both).

It’s not just about frugality (i.e., cost cutting). It’s about increasing that difference in whatever way is most effective for you. This will depend on your opportunities, skillsets, and where you are in your life.

Earn more

Early in your career, trying to earn more will probably reap more rewards than trying to spend less. Depending on your industry, this may involve climbing the career ladder and increasing your salary.

If you’re in a field with low earning potential, consider self-employment or entrepreneurship. You could also develop a side hustle to bring in more income.

Spend less

Housing, transportation, and food (and healthcare, depending on your situation) typically represent a household’s largest expenses. If you can lower the cost of the Big 3 (or 4), it will have an outsized impact on what you can save.

When people try to save more money, most focus on tiny costs that don’t move the needle much (e.g., cutting back on lattes).

Instead, try to lower your housing costs by:

Airbnbing a room in your home

Taking in a roommate

Downsizing

Try to lower your transportation costs by:

Getting an inexpensive used car

Using public transportation instead of Ubers or taxis

Aim for “big wins.” Major one-time sacrifices might be difficult, but they can result in big gains.

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About Paula Pant:

Paula Pant is the host of the Afford Anything podcast, an award-winning show with more than 24 million downloads. It was named by the New York Times as one of “7 Podcasts Your Wallet Will Love.”

She is also the founder of Afford Anything, a personal finance brand with more than 75,000 newsletter subscribers.

She is a Knight-Bagehot Business and Economics Journalism Fellow at Columbia University.

Pant is frequently featured in financial media including Money Magazine, the Washington Post, Oprah.com, CNBC, Fortune, Marie Claire, Marketplace Money, Men’s Health, Real Simple, Outside Magazine, Cosmopolitan, the New York Times, and more. She’s spoken at the “Talks at Google” series and guest lectured at Georgetown University. She lives in New York City.