Claire's Random Thoughts

“A penny saved is a penny earned” –Benjamin Franklin

Roughly 2.5 centuries ago, a very wise man, Benjamin Franklin, introduced a new proverb that we still hear today. I’m sure he simply meant that spending less money was a great way to build wealth, and that’s still true if not even more true today.

First, let’s break down the US tax system:
25% federal income tax
9.3% state income tax
6.2% social security
1.45% medicare
…58.08% to keep
This is neglecting additional taxes that we all pay, such as sales tax and property tax. The above calculation is above is also missing payroll tax.

Sorry Ben, your overall concept behind this quote is wise, but your quote may need to be updated due to the way our government in the 21st century is run. I would trust that you wouldn’t approve of the tax system changing so drastically that your proverb isn’t even accurate anymore.

This “proverb” may need to be updated to “A penny saved is two pennies earned.” And my dad also added “A penny taxed by the US government is two pennies spent” when I discussed this earlier today with my family.

So, I am thinking of pennies in a brand new way from now on. I’ll either have to mentally cut the taxable income I am making in half as I am earning it or double the price of everything I’m spending money on in order to get an accurate estimate of the real price I am paying for goods/services.

We would think that it would be more logical for Americans today to save a penny once in a while, which is roughly equivalent to earning two pennies. Unfortunately, most Americans tend to make one penny and spend two, just like the US government does. The proverb may need a slight update (although I wish it could go back to being earn one = save one), but the overall concept behind it should not be forgotten.