Financial Education: Saving Money vs. Spending Money
There’s never a bad time to start saving money. Yet, saving money isn’t as easy as just putting a stop to all your spending. It’s important to strike a healthy balance between saving and spending. Continue reading this blog to find the right balance between spending and saving money that fits your lifestyle and needs.
Most people are aware that saving money is an important goal. There are plenty of reasons for saving your money, including for pursing bigger goals like buying a car or home as well as simply having an emergency fund for unexpected and costly occurrences.
Yet, saving money isn’t as simple as the reasons for why we should. Depending on your financial situation, saving money can seem impossible. You’re not alone — 70% of Americans have less than $1,000 saved up. That’s less than the cost of a major healthcare procedure or car repair. If you’re hoping to get your savings in shape, breaking down the nuanced differences between spending and saving is the first step.
Why Save Money At All?
If you’re not entirely convinced about why you should stash your money away instead of spending it, consider these important and often overlooked reasons for saving. When you save your money diligently, you’ll get:
- More peace of mind knowing that you can afford unexpected emergencies.
- Increased discipline that helps you pursue long term goals instead of short term pleasure.
- More freedom to make major life changes, like quitting your job, moving to a new city, or getting married and having children.
- More money!
There are plenty of reasons that make saving your money worthwhile and not all of them are immediately financial, but instead offer personal success through building your discipline and financial savvy.
Spending and Saving Mean Different Things to Different People
The important quality to understand when to save and when to spend is relativity — what’s expensive and wasteful for one person might not be for another person. For some people, spending the extra money to have their groceries delivered allows them to take that time and make more money than they spend on the delivery. Yet, for another person, that delivery will cost them more than they would normally earn in the time it would take for them to do their grocery shopping. In this example, spending is saving for person A, while spending is not saving for person B.
When it comes to deciding the right course of financial action for you, it’s crucial to calculate the cost and benefits based on your own unique situation. Create a framework for judging your financial actions where you easily deduce whether spending or saving will amount to a financially sound decision based on your needs and lifestyle.
When to Spend
Spending money seems like the easiest action, so why bother thinking about when to spend? Being conscious of the way you spend your money and when is a vital step towards financial literacy.
Saving and spending simply isn’t as easy as always saving or never spending. There are plenty of reasons that justify spending money; a car repair, a doctor’s visit, even a gym membership. In some cases, spending can be seen not just as a loss of money, but as an investment. When you spend money to protect and improve your health, this is money well spent that ultimately pays off in the long run.
For example: neglecting to perform a repair on your car now can save you money in the short term, but if that mechanical issue worsens in the meantime, you’ll end up spending even more on a major repair later on. In this case, spending money would save you more money in the long run.
Getting Serious about Spending vs. Saving
We all want more money in our lives, but the way each person goes about improving their financial situation will differ based on their lifestyle and needs. At the Community Currency Exchange Association, we know that every individual approaches money differently and needs the flexibility to handle their finances in the way that best serves them. Whether you need money services like check cashing or payment services like money transfers, we aim to make your financial life easier. Find a Currency Exchange location near you to get ahead on achieving your financial goals.
With over 350 locations, many open nights, weekends, and holidays (and several stores with 24/7 availability), you can rest easy knowing your financial needs can be taken care of when you need them most. We’re in the heart of every community. Don’t believe us? See for yourself.