Is It Better To Spend Or Save?
Everyone has an opinion when it comes to money.
Throughout your life, if you are anything like me, you will find yourself being given all kinds of financial advice from many different sources, regardless of whether you have asked for it or not. I have also noticed that no two pieces of advice are the same, what one person calls a sound investment, another would tell you it would be financial suicide to throw any money at it, with so many different opinions on money and how best to deal with it, often it can lead to a lot of confusion.
The government are very good at telling us what to do with our money, this doesn't always mean that they are right it's just a part of their job, however even in parliament there are conflicting views on how to rescue the economy and these people are so called experts, if they can't agree what hope have we got and who should we believe? Those who advise us to spend or those that inform us to save?
Lessons from the economy.
In 2009 we slid rather nonchalantly, into recession (not for the first time in history I might add), and most of us didn't take it all that seriously at first, until we experienced the double dip recession that soon followed that is, and the job culling really began to make a noticeable impact on most peoples lives. We had morphed from a nation of spenders and borrows to a country that saves diligently and avoids shopping, (well most of us have had to anyway) our economy continues shriveling, shrinking and struggling to recover day by day.
Long gone are the times when you could juggle a few credit cards, get a new car on higher purchase and slowly pay back the odd bank loan. Now we have to hoard our money, pay off everything quickly and hope we can keep our jobs that have suddenly become very precious. For those of us still with our jobs in tact we feel very lucky to still be employed at all.
The private sector hasn't created the 100,000 jobs that the government predicted that they would. To the right thinking individual the notion was unrealistic from the onset. Businesses both big and small have had to tighten there belts too, they have become scared of spending and anxious at parting with their cash as well, they feel like they can't afford to pay yet more wages because people are no longer purchasing the products that they manufacture or using the service that they provide, in fact in many cases sales and profits have made a noticeable nosedive and the reverse of the anticipated government job creation boom occurred.
We are facing higher rates of unemployment as opposed to growing numbers of people making there way back into the work force, as was wrongly predicted, yet more people have since been made redundant, have had to join the ever increasing dole queue and members of parliament wonder why? Basically it comes down to the inconsistent, continually changing and erratic attitude that we have as a nation towards money. This is not entirely our fault, we can only work by the nature of the system and the structure of economics as it stands, we tend to act in accordance with the information that we are fed.
The rise and fall of saving and spending.
I was out of work for over a year due to having major surgery and my savings at the time fished me out of a good few holes. However savings only continue to grow if you continue to add to them and because I wasn't adding to my pile of cash it soon dwindled into nothing. This triggered an instinct, a longing to want to build it up again, I missed the satisfaction of knowing I had something to fall back on financially in case of a rainy day so to speak, I had also been struck by the same fear as the rest of the nation.
I was doing the right thing for the future when I was saving, like most people I don't have any pension previsions, I saw what happened to some peoples many years of building up savings only for them to be lost forever in the blink of an eye and I quickly decided that that wasn't for me. So I embarked on a strict saving mission, I would restrict everything I bought, I fought bouts of temptation and stuck to only the bare essentials for living, by my calculations (which for the record were wildly ambitious) I would have saved it all up again within the year.
Suffice to say my enthusiasm soon disintegrated, about a month into the plan I had had enough and I wondered how I had managed to save the money I had accumulated before in the first place, I couldn't recall it being that difficult. The simple answer was time and work, it took time and it took work, I could not expect to achieve the kind radical results I had hoped in the short space of time I had alloted to do it in and I think the government are making the same mistake now.
Unless you some how manage to fall on a fortune by some major stroke of luck, or you gain a hefty inheritance from family members that have already done the hard work then you and I and everybody else are all going to have to do it ourselves. Before we can even consider spending or saving we have to consider earning and the potential for earning.
Everything in moderation.
I have been dabbling in economics for some time now, I have by no means yet mastered it and there are some extremely complex concepts that I have yet to get my head around, yet for the most part I do seem to have grasped the basics and I do understand the important underlying principles.
We are facing the problems we are facing because we are in debt, in short we overspent. However the economy can only recover if people still spend money, not ridiculous amounts of money where you end up getting into trouble, but spending within your means, I think that would solve many an issue surrounding money, we have to get back to a work and save first then spend mentality.
Saving money is also good for the economy, (when the banks and certain individuals put it to good use that is), individuals and organizations having hundreds of thousands, millions or even billions in the bank is not necessarily a bad thing, even if all they do is sit on it, it generates interest and creates more wealth, when the banks and building societies put these funds to good use, by leading responsibly, it is actually good for the economy. But we can't continue with the mindset that money has to be made quickly, no matter what the cost, this is of no help to anyone.
The truth is it all comes down to balance, neither too much saving or too much spending is good for personal, national or global financial matters. In a nutshell moderation is the best way for most things in life, including money management.