A penny saved is worth more than a penny earned.

Every elementary school student in America is familiar with Ben Franklin's famous quote - "a penny earned is a penny saved." That may have been true in the old days, but over time, that's changing, says Ryan Guina, entrepreneur and founder of the websiteCash Money Life, Evaluate.

Here's Ryan's explanation of why a penny saved is worth more than a penny earned:

1. Tax:

Most salaried workers have to pay taxes. If you pay 25%, the million you earn is actually only 720 thousand. So remember, when you save a million, you have already paid the full tax on it.

Another simple example: To buy a fried chicken dish, you can spend 50 thousand dong. But to get that 50 thousand, you actually have to earn more than 60,000 dong.

Does this make you think twice about going into expensive stores every day?

2. Time value of money

Would you rather have a million dollars today, or in a year? Most people want it today, and for good reason – money today is worth more than money in the future. Why? It's because of its earning potential. You can earn interest on money right now.

Suppose you deposit one million dong in the bank, with an interest rate of 5% per year, after one year, you will have about one million and 50 thousand dong. And if you receive one million dong at the end of the year, it is actually only more than 950 thousand dong today.

3. Inflation

As time goes by, the general price of goods and services increases, and the purchasing power of the money you have decreases. Take the example of a million dollars again. If you receive it today, you can buy exactly one million dollars worth. If you receive it a year from now, the purchasing power of the money will decrease due to inflation.

4. Done

With one dollar earned, your work is done, and you have paid your taxes. To earn another dollar to replace it, you will have to work again, and pay more taxes.

This may not sound like much in terms of a few dollars, but if you get into the habit of cutting back on spending and living more frugally, you can save a few million dollars every month. Not spending money means you won’t have to work as hard to earn it again.

5. There is no guarantee you will continue to earn in the future

Most of us will wake up tomorrow, go to work, and get a paycheck at the end of the month. But there is always the possibility that you will lose your job due to downsizing, being fired, or being unable to work. Savings will allow you to insulate yourself against the risk of future income loss.

When you look back at the above, you will clearly see that the money you have saved is worth more than the money you will earn in the future, and you will not have to work hard to get it again, or worry about whether you will be able to earn it again.

In other words, the ability to keep money in your pocket is more important than making a lot of money. And the way to do that is to learn how to save.