From: 4dtvman@verizon.net (4dtvman)
Newsgroups: misc.invest.financial-plan
Subject: Ben Franklin Was Wrong !!
Date: 26 Aug 2003 17:35:01 GMT
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…when he said "a penny saved is a penny earned". Actually, a penny
saved is worth more than a penny earned.  The following (although
over-simplified) example will illustrate this principle:

Let's suppose that Jack and Cindy have identical jobs and incomes.
Let's also suppose they shop at the same grocery store and pay about
the same for groceries each week. Now, Jack gets a $20 per week pay
increase and Cindy does not. However, about that same time, Cindy
finds a new grocery store where she is able to save $20 per week on
her grocery bill. Cindy is now better off financially than Jack, even
though she did not get a raise and Jack did. How can this be? It's
because Jack has to pay taxes on his $20 raise and Cindy does not have
to pay any taxes on her discount. Assuming Jack is in the 25% federal
tax bracket (and disregarding all other taxes/fees that he may owe),
he will be able to put only $15 into his piggy bank each week whereas
Cindy will be able to put $20 into hers.

Bottom line: It's more blessed to receive a discount and than to
receive an equal amount in increased income.