Spending Vs. Saving

Essay by PaperNerd ContributorUniversity, Master's September 2001

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To spend or to save? It is that question which has plagued employees over the years as they attempt to find the most logical way to manage their money. If they spend it, they can enjoy all life's frivolous pleasures, however leaving little for future investments. On the other hand, if they save money, they can relax with a feeling security, although not living the lifestyle maybe they wish they could. To maintain a balanced personal budget, one must find a medium between these two extremes. This ideal mixture of spending vs. saving doesn't seem to find its way into many Americans bank accounts, as it just so happens that the USsavings rate has hit an all-time low. Lets explore into the pros and cons of this type of lifestyle and determine how this kind of spending affects the economy.

Savings can be on many levels, from a boy putting money in his money in a piggy bank to workers opening retirement accounts.

A person can stash money away under their bed, or invest it into the stock market. To keep things simple we will refer to savings as the amount of a person's paycheck, which is not consumed in the near future, but rather put away as not to be spent until a later date. The different methods of saving, referred to earlier, have different effects on the persons return, and on the economy. If a person puts money in a shoebox under his bed, it is a no risk situation, (unless of course it is stolen) where the money is there until he or she decides to spend it. This type of saving is doesn't do much in terms of stimulating the economy, however one can be assured that it will never lose its value. Another popular...



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