As a financial planner, I always tell my clients to ignore a common piece of advice about how to get wealthy

Telling people to “spend less” as a way to solve all of their financial problems is common advice. And commonly, it’s extremely unhelpful.

• Cutting your spending is not the ultimate key to building wealth — it can only get you so far.
• Yes, it’s important to live below your means, but increasing your income and investing wisely are the keys to building wealth.
• Skipping your weekly latte or pinching pennies when you’re earning a low income and saving little won’t help you build wealth for the long term.

Frugality only gets you so far; there are only so many expenses you can cut. Telling someone who is already struggling to get by on a low income to spend even less isn’t productive.

I do tell my financial planning clients that controlling their cash flow is a critical component of finding financial success. Wealth is what you can build with what you don’t spend, and keeping your expenses low means it’s easier to maintain your lifestyle over time (which translates to more financial flexibility).

You absolutely do need to live well below your means, but spending less is not the ultimate solution. Building wealth is more complicated than that.

Spending less is a first step, but it’s not the only one to take to build wealth

In client meetings at our financial planning firm, we often discuss how there’s a difference between looking rich and actually being wealthy.

Looking rich means you may have many material possessions and goods. Maybe you have a newly renovated home or a newly leased car in the driveway that gets swapped out every two years or so. You might take a lot of great vacations or maintain expensive hobbies.

But being wealthy is more about your balance sheet and the assets it includes.

Wealth is your savings, your investments, your freedom from liabilities like debt, and your financial means. Perhaps most important, wealth is the ability to do what you want when you want to do it — meaning, you are wealthy when you have flexibility and financial power at your disposal.

Looking rich is easier to achieve. It does not require you to manage your cash flow wisely. Building wealth, on the other hand, is hard, and will require you to make careful trade-offs and hard decisions about where you allocate every dollar you make.

Obviously, there is an element of “spend less” as part of that. The person who spends less has more to save and invest — and the more you save and invest, the easier it is to build up assets that provide you with the freedom and flexibility that are the true hallmarks of wealth.

What matters more than cutting your spending

There’s no substitute for managing your cash flow and living below your means. But along the way, most people need to do two other critical things to build wealth: increase income and invest wisely.

My theory about why you mostly hear people talk about “spend less” as the end-all, be-all solution to any financial trouble is because it’s so easy to tell people to do that. It is much easier to say “stop buying lattes” or “clip coupons” than to give someone a strategy for earning more money or constructing a successful investment portfolio.

But the reality is pinching pennies doesn’t do anything to raise your earning potential or inform you about investing in such a way that you can earn enough of a return to meet your goals while avoiding excessive risk.

This seems straightforward on the surface, but determining a wise investment strategy gets immensely complicated. It requires you to understand what “enough” is, have the discipline to avoid swinging for the fences and losing everything, and know how to avoid risks that could derail or even destroy your ability to maintain and grow your assets over time.

Good investing is about a lot more than just determining an asset allocation between stock and bonds; there’s a reason professional wealth managers exist.

The return on your time and effort that you put into increasing your income can be exponential, just like investment returns over time — especially when compared to spending your energy trying to cut back on expenses.

There are many strategies you can use to do this, including:

• Negotiating pay (and perhaps even position) at your current job
• Seeking a new career path that offers more opportunities
• Searching for positions that include powerful compensation packages beyond a baseline salary (like bonus structures or equity compensation)
• Branching out into self-employment, where you have more control over your income
• Starting a business (and perhaps eventually selling it)

The “hows” of increasing your income are vast and varied. The trick is knowing which option is the best fit for you, your skills, and your situation.

Eric Roberge, CFP, is the founder of Beyond Your Hammock.