Save or Spend?

turmoil, Turmoil, TURMOIL!! The world’s economy is in turmoil.

What should we do? Many people are losing jobs, homes, and retirement savings.

Should we save our money? That way, we can “buy” ourselves some time if we lose our jobs. That way, we may have enough to cover for an emergency if it’s tough to acquire credit. That way, we feel safe. Losing a job or a home is a scary thought.

Should we spend our money? Everything is on sale! 92% of Americans still have their jobs. I’m not certain of this, but I’m willing to bet that the stock market will rebound. The value of our homes and retirement savings may as well. If we stop spending money, then the cycle of businesses losing money, laying off people, and possibly shutting down will continue.

But, we might not need to spend. Maybe the economy is “right-sizing.” Maybe we don’t need to upgrade all of our electronics. Maybe we can use our cars for more than five years. Maybe we don’t need to go to a gym to get exercise. Maybe we can eat at home, use our imaginations, spend time with our families, grow our own food, and iron our own shirts. Maybe we don’t need to be so extravagant.

The again, if we work for our money, shouldn’t we be able to use it to pamper ourselves? Is our time too valuable to waste on menial tasks that we can pay someone to do for us?

There’s a lot to think about when making this seemingly easy decision. Maybe there is no right answer.

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3 thoughts on “Save or Spend?

  1. Good Posting, I have always thought that Americans need to save more and spend less. from 2000 to 2006 our economy saw tremendous growth however that growth was only fueled by debt, credit card debit, HELOC loans, etc. people compared their debt to their assets such as their home and stocks which were doing great and ‘always’ went up. I also agree that the economy needs to right size itself, we need to become a nation of savers not spenders. However last week I was listening to a George Mason economist and he explained the ‘paradox of thrift.’ The paradox of thrift basically states that “savings” is useless and having a economy that has intense focus on savings is fatal. See when one family spends less money it causes the entire system to shrink and thus someone may lose their job because of it, thus that person has less income and has to cut back even more repeating the cycle. The paradox of thrift is something you should look into, it shows the implications of Americans saving more.

  2. Answering your questions as the bottom, people can actually do both. With budgeting and saving working with an occasional “fun” purchase, it can work great. However, too many people “splurging” got our economy into this mess, and that includes just about everyone from greedy brokers to those who don’t want to save up for things, but they want them NOW! It reminds me of Charles Dickens. Back then, his dad was in debtor’s prison for owing too much money to too many people. Can you imagine how full a prison like that would be today? There’s a reason people shouldn’t adopt the logical fallacy of wishful thinking. Yes, the money might be there NOW, but what about tomorrow? Enjoy today, but don’t forget about tomorrow. Perhaps more people need to adopt this mentality.

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