It can sometimes be quite a dilemma working out whether we should spend or save our money. It is a good idea to think it through as you may find that there are advantages and disadvantages to both. It is worth thinking about which will suit you best.
Advantages of Saving
There are many advantages of saving money. If you put money into a savings account then it will earn interest which will mean that your money will grow. You will also have some money put away to fall back on if you need it. This means that if you have to buy something and you have not financially planned for it or there is an emergency and you have to find something, you will have some money available for you. It can give you peace of mind knowing that you have that money there if you need it and it could mean that you will not need to use a loan to pay for the item. It can also be useful if you want to save up for something expensive, perhaps a new car or a vacation.
Advantages of Spending
There are many advantages of spending money. You may be able to pay off loans, pay your utilities, and for other essentials. You might also be able to treat yourself to a few things as well. We all spend a lot of money anyway because we have to pay for everything that we need. We often need to spend all of that money that we have in order to be comfortable or we may have a bit extra and decide to spend it on some extra treats so that we can have fun and really enjoy life.
Which to Choose?
If you have paid for everything that we need and have some money left over, then you will need to choose between spending or saving. At time sit can be a tricky decision. You might want to treat yourself to something, but you may feel that you really should have a bit of money saved up just in case.
It can be really wise to have some money saved up. Some people even recommend having a good few months salary saved in case you lose your job. You will need to think about how much you feel will be the right amount. It could be that you have more than one income in the household and so you will not need to use so many savings if one of you loses their job.
If you want to buy something big, then it can be a good idea to save as much as you can so that you can afford it as quickly as possible. You could use any savings that you already have as well, but once those are spent it is wise to build up those savings again so that you always have some to fall back on.
When savings interest rates are very low, it can be tempting to spend money instead. Sometimes the rates are so low that inflation is higher which means that money effectively devalues when it is in a savings account. This can mean that it is very tempting to spend rather than save because it feels that there is no value in saving. However, if you have no savings, then you could regret spending lots of money if you need to pay for things and have no money available to do so. Even if the savings are not gaining in value, they are likely still to offer you a better option than having to borrow the money instead.
It would be impossible to save all of your money as you will always need to buy things. However, it is also sensible to have some savings so that you have peace of mind and money behind you for when you might need it. The hardest thing to do can be deciding how much you need. If you can find some savings accounts which offer higher levels of interest it might be good to put some money in those so that you can gain more from them. You may find that you have to tie your money up in these, but if you have some in an instant access account then this might be useful as well, in case you need some money in an emergency. You need to think about what you feel comfortable with.
Building up savings can take some time and effort. It will mean that you are likely to have to go without some luxuries for a while. You may have to wait to buy some things until you have built up enough. However, you can choose the rate that you save, so you might decide to save some of your spare money and spend some of it so that you can still buy a few extra things. Whether you do this or just save hard is up to you and you will need to think about where your priorities lie. Everyone has different ideas on spending and saving and it is wise to thinks about the advantage and disadvantages of both and then deciding which will be the best for you. If you are not the only financial contributor to your household it could be wise to discuss it with others in the household too.