Saving and Spending: A Balancing Act
saving and spending (Photo credit: 401(K) 2013)
We often dream of getting rich. It’s a common dream, and really, there’s no harm in dreaming. So let’s imagine a scenario wherein this dream does come true. You’ve recently come into money, perhaps by way of inheritance via a deceased relative or access to a mini trust fund given by your grandparents. Although it’s tempting to spend all that money you’ve just inherited, you should also think about how fast this newfound wealth can disappear. If you’re not careful, all of it can be gone in a blink of an eye.
You may rationalize that this is just a hypothetical situation, that it’s not real. But what if, you do find yourself in this very circumstance years from now when you least expected? I think it’s best to be prepared with a plan so you can save a part of it and learn to curb your spending urges. How much should you set aside for savings and what are the things that you should spend for? Here are some ideas you can consider.
Set Aside 10%
You don’t have to wait for an inheritance–which may or may not come–to begin saving. Most of my friends claim that they are setting aside at least 10% from the salary each month. If they could save more, then so much the better. Older people, however, feel inclined to save more because they are saving up for retirement, so that amount should be substantial enough to support them for the rest of their lives.
Spend for a Worthy Cause
Money can’t buy you happiness. No amount of saving and building up your wealth can make you happy. But when you spend a part of your money for a worthy cause like helping others through charity, the happiness you will gain from this experience will be magnified because that feeling will also be shared by those whom you’ve helped.
Another cause worth spending for is travel. Some people may say that travel is expensive and something you can do without. On the contrary, I believe that travel is integral to your growth as a person and that the experiences you gain from your journeys are priceless. Sometimes, it’s only when we embark on an adventure where we explore the unknown, can we discover a hidden part of ourselves we never knew we had. Before you leave on any trip, however, I would suggest getting travel insurance as a precaution against any unforeseen contingency that may crop up. Should you ever have any medical emergency, at least you will be covered by insurance and you won’t need to blow off a chunk of your travel money or savings to pay for the hospital bills or other unexpected expenses you may incur.
Create a Purpose for Your Savings
When you think of savings, it’s actually a collective of mini savings that serve different purposes. For example, you set aside part of your savings for the future, probably for when you decide to settle down and have a family. A part should go for retirement and a part should go for your emergency funds, which you should only dip into when the need arises. As traveling is a worthy cause, I believe you should also assign some money to quench your wanderlust. Aside from savings, you should also set aside money for investments so you can supplement your income especially when you already have a family.
Learn to Balance
Some people are good at saving, only to splash out the whole amount on an extravagant thing like the latest smartphone or gadget. Spending is okay as long as there is still some money tucked away for the rainy days. Remember, saving and spending are a balancing act. You shouldn’t spend more than you earn but you also shouldn’t live like a miser and watch every purchase you bought down to the last cent. Live a simple life and be contented with what you have. Spend more on what you need and less on wants. This doesn’t mean you can’t pamper yourself. Don’t scrimp to the point of making yourself miserable. Once in awhile, it’s okay to reward yourself for the hard work you did. But don’t go overboard and go on a crazy shopping spree. Avoid credit cards at all costs. Set a budget for yourself and stick to it.
About the Author
Based in San Diego California, Tiffany Matthews is a professional writer with over 5 years of writing experience. She also blogs about travel, fashion, and anything under the sun at wordbaristas.com, a group blog that she shares with her good friends. In her free time, she likes to travel, read books, and watch movies. You can find her on Twitter as @TiffyCat87.
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Category: Budget, Family Finances, Financial Education, Financial Planning, Saving Money
