There is always this neverending battle between saving vs spending. The obvious choice to keep yourself from financial problems is to prioritize the former and limit the latter. Most of the financial regrets that you do not want in your life involves wrong spending choices.
Of course, we cannot say that we should eliminate spending altogether. This is something that is difficult to implement in this consumerist world of ours. It is a must to spend because that is how we can avail of the basic necessities that we need to survive. We need to spend for rent, food, clothing, transportation, our children’s education and and everything else. Without money and spending, we will have a very miserable way of life.
But while that is true, it is important that you realize how saving vs spending still plays out. There is a need to spend but we also have to be wise enough to choose when to prefer saving over it.
When we save, we are not really keeping the money to rot. Saving is our way of deciding that our money could be spent on something more important than the needs of today. It is our way of making sure that we have money to spend – especially during unforeseen moments when it becomes difficult for us to find resources.
You see, saving is when we decide to postpone spending. That is still where it will end. The money will still be spent but it will be done when it is most needed. That is how smart financial manager think about their money.
Gallup.com reveals that Americans will prefer saving over spending
Thankfully, Americans are showing signs that they are better financial managers. In a poll done by Gallup it is revealed that the winner between saving vs spending is the former. Apparently, when given a chance, consumers will put aside their money instead of making purchases.
The poll results showed on Gallup.com indicated that back in 2008, before the recession, Americans were evenly divided when it comes to saving and spending. But after the crisis, 62% of consumers want to save while 33% are more inclined to spend. These came from the results of a poll that happened back in December 2013.
Here are other important results of this poll.
People enjoyed saving more than spending.
One of the questions included whether the consumer is more inclined to save or spend. Apparently, towards the end of 2013, 62% wanted to save, 33% will spend and 5% did not have any opinion on it. This was based on what they enjoyed doing the most.
More people planned to spend less during Thanksgiving (holidays).
Although the spending is reportedly increasing over the Thanksgiving week, Americans still feel that they are not spending as they used to. 40% said that they planned on spending less and have the rest put into their savings. Only 28% said they will send more while the remaining intends to spend the same amount of money.
Since 2012, the trend had been to save.
The Gallup poll revealed that spending less could be a trend because a consistent 40%-43% are spending less from 2012 to 2013. Those who intend to spend have consistently played around 26%-28% during the same time.
It is hard to say if this trend will be good for the economy or not. After all, consumer spending is a big factor in the recovery of our still ailing economy. But given that the hourly job rate is also rising, we can hope that people are just being cautious about their spending without compromising their needs. We hope that this will not lower the sales of companies. But we do hope that at the very least, people will think harder between saving vs spending before making any transaction.
We all know that the market is quite fickle and that this may or may not be a trend after all. But regardless of what the polls may say, what matters most is where you choose to direct your financial path.
Saving will lead you to financial stability; Spending can lead to financial ruin
One thing is for sure, saving vs spending will lead you into two different roads.
Saving leads to financial stability.
There are many reasons why you should start to save now. The very first reason is to achieve financial stability. You want to make sure that you are prepared for the uncertainty of the future. We all know how quickly our hard earned assets will go. Even if you are not acquiring debt, you can be led into it if you do not have adequate savings.
Although we want you to budget for entertainment expenses, you have to understand that enjoying life does not necessarily have to be spent on. Once you realize this, saving will become more acceptable and less of a deprivation.
This is not to say that you should keep on saving and not enjoy the fruits of your labor. You need to spend on your entertainment activities but what we are trying to say here is you need to do it in moderation. Budget it so make sure that you will not spend in excess of what you can afford.
You know that you can stop saving when you have more than enough in your emergency fund, your retirement fund is secure and your financial goals are met. Anything in excess of these can be enjoyed.
Spending can lead to financial ruin.
Take note that we are saying that it “can” lead to financial ruin. As we mentioned, spending is a necessary transaction in our consumerist society. Since it is unavoidable, you should learn how to do it in moderation. There are necessities and there are luxuries. You need to know the difference by heart. Like you need clothes but not designer labels. You need to eat but it does not always have to be in a fancy restaurant. You need shelter but it does not have to be in a very big house where you hardly see anyone.
Think about where your money is currently going and decide whether you want it to go there or not. Also, ask yourself if you can live without that purchase or not. It is important that smart spending be associated not just with affordability. It is more applicable when you can afford something, yet you decide not to spend on it because you know that it is not something that is needed in your life.
StatisticBrain.com shows the average spending of Americans on various categories in their lives. The categories are the following:
Housing and Utilities: $665
Other Services (education, travel, cellphone, legal, finance, child care, etc): $427
Lodging and food (entertainment): $234
Recreation (entertainment): $137
Household goods: $375
Gasoline and Energy: $151
Recreation (hobbies): $119
Household furnishing: $87
As you can see, the biggest percentage is spent at home. Healthcare deserves to be given adequate amount too so this should not be a problem. But it has to be noted that lodging and food eaten outside has a big value at $234. This can be cut back some more. The same is true for the recreational activities – which when combined is already $256.
Take careful note of how much you really have to spend on and just focus on that. If you have a lot of debts, you know that you need to take care of that before you splurge on a vacation or something similar. Just know your priorities and you should be alright.