Let Others Do The Spending

It is a well-known fact (or well-believed theory) that the increase in spending by consumers actually boosts the economy in which the consumers live (assuming a closed system). Consumer spending results in job creation and wage increases, and subsequently encourages more spending. Job creation results in the production of goods, services, and other mechanisms that drive consumer spending. Good marketing is one such mechanism and it invariably entices consumers to spend regardless of their needs.

But as an individual, do you have to subscribe to that? My answer is no. My philosophy is to let others do the spending, unless:
1. The spending is a necessity.
2. The spending provides an adequate return on investment.
3. Not spending results in a loss greater than the cost of item.

The definition of necessity is subjective. But I am sure we can agree to a great extent that something is necessary if you need it to survive. And good heavens, you don't need all that little shiny rocks around your neck, or that yellow chassis that goes from 0 to 100 in 10 seconds, or that two-storey bungalow that was never meant to house more than 4 people.

What is adequate return on investment? Well, if your local savings rate is anything below 2.0% per annum, that just isn't adequate by my standards. Inflation sets you back. Search for other forms financial instruments that can return much more. Look at bonds, and even stocks if you want greater returns.

Oh, don't save for the sake of saving, and end up having to pay more later.

If you think you will have trouble trying to figure out how to save, well, you can go to various internet sites for help. Money Saving Expert. Or check out some of the self help books available: How to Save Money Every Day, How To Save Money On Just About Everything, 1,001 Ways to Save, Grow, and Invest Your Money to name a few.

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In a country where population count goes by the millions, there is sufficient people to provide the spending power to support the economy (assuming spending = good economy). As one single individual, there is no need for you to add on to that statistic. Even if you had the power, your spending would probably be too small too insignificant. And as a favor to yourself, do not add yourself on to the list of people who has negative savings, ie, people who are in debt.

So unless you are filthy rich, you should be spending a lot to support to economy, (or donating a lot of your wealth to charity!), focus on having good, liquid savings.

Begin today with a savings plan that you can follow!