Spending is the New Saving

Investing money will give people an opportunity to grow their net worth more than saving will. Knowing where to invest raises serious concerns. Yes, they can invest in a nice car so it will last longer than two cheaper ones, therefore saving money, but they could also invest in options which will lead to exponential growth. Choosing to spend money on education such as a university will likely increase pay once completed. The money spent on education will be earned back and increase their net worth. Thoughtfully investing money into a stock can also lead to exponential growth, which is key. This type of growth is what keeps people’s net worth increasing at a rate above inflation, which is one thing that saving is unable to accomplish. 

Storing money away in a locked account might appear as a good solution to save money, but it does more harm than good. Rate of inflation will slowly take portions of the returns in the account therefore making the money worth less and less. Freelance writer and blogger, Alex, writes articles on finance and wrote, “The rate of inflation fluctuates around 1%-2.4% annually. Interest rates for savings accounts are around .06%. Do that math, it’s not worth it.” Some would argue that banks reward interest, but this rate is never able to overtake inflation.

Note that this does not mean people are able to freely spend money while still accomplishing more than saving. Emotional spending is always a threat and can be expressed as celebrating or coping. A simple solution to this is to think before they buy. Needing to spend and to save, keep this ratio in mind: use 70% on anything from bills to entertainment, use 20% for future plans and investing, and that last 10% can be put towards charity or emergencies funds. By investing money, people control their own future.