Tuesday, July 16, 2024

How do you decide when to save and when to spend?

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Adetunji Matthew
Adetunji Matthewhttp://www.aidthestudent.com
I’m Adetunji Matthew, an Economist, Social Media Manager, software Developer/Marketer Sales Consultant, and Ecompreneur. I’m popularly known as “Matt” As an artist and designer, I aim to create something brilliant daily. Eager to learn more, I use my free time to get better at w hat interests me, whether it's researching, teaching, or even something entirely new.
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Across the globe, many people find it difficult to decide when to save or spend. It’s like standing between the devil and the red-blue sea. 

Without a doubt, saving is paramount. We need to be diligent to save and not spend out of budget to prepare for future occurrences. People save for different reasons: for emergencies, retirement, etc.

As much as it is very important to save, there are times that if you choose to save rather than spend, it will be an unwise decision. 

Hence, knowing the balance between spending and saving will prevent you from making terrible financial decisions. Luckily, this is what this article is about.

When should you spend and not save?

As mentioned earlier, there are cases when choosing to spend is a better decision than saving. Here are some instances:

1. To maintain good health 

Health is not a trivial matter, so it shouldn’t be taken for granted. Whether it involves expensive health insurance or spending money on buying health-related products, you shouldn’t feel guilty about it. 

Health issues have to do with your mental and physical well-being. It can affect your participation and effectiveness in your job or personal business. 

Therefore, if you save when you are supposed to spend on your health, your income will be affected negatively.

In some cases, it could also be for the health of your loved ones. Spending on their health will keep them alive to stay with you. I’m sure you love them too much to allow them to die, for you to save money. 

Also Read: How to create a business name from scratch

2. Quality shoes and clothes for work

On shoes and clothes, I know most female readers will be in full support.

Every extra thousand spent on quality office shoes implies a longer duration and therefore savings.

The same goes for clothes. If you spend money to buy some quality office clothes, they will serve you for a good number of years and you won’t have to worry about what to wear to work.

But if you buy inferior clothes and shoes so that you can save some money, you’ll keep buying new clothes and shoes. And in the long run, you would have spent more money.

Furthermore, in the world of work, how you dress also affects the perception that others have of you. Therefore, you need to spend money on your clothing. That’s an investment like any other.

3. To buy things that make you happy

So far you are not spending extravagantly, it is good to also decide to spend on things that make life worthwhile. Spending money is not a bad thing, it is only bad when you are not disciplined enough to know when to make spending decisions. 

It’s good to spend on products, services, and experiences that give you joy and raise your ecstasy of love. This will generally improve your mental health. If you are happy, it will rub on all aspects of your life too.

However, note that spending money on what makes you happy doesn’t mean spending to buy what is against society, religion, and state law and ethics. 

Also, note that you shouldn’t do this to the detriment of your financial goals. 

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4. Insurance purpose

If it’s about getting insurance, you can spend your money without thinking twice. This is very important if you have people that rely on you for financial support. A life insurance policy will provide your family with a huge amount of money when you pass away.

Likewise, automobile insurance provides financial protection against physical damage in the event of an accident. Insurance is good for peace of mind and security of life. Therefore, spending on insurance is not wasteful and should be done when the need calls for it.

5. Professional Training

Every money spent on books, courses, and training in general is Naira invested, not wasted.

When you find useful courses that, in any case, are part of your career growth path, then it’s not wasteful to spend money on them rather than save. 

As a matter of fact, it’s hard or impossible to succeed in any career relying on free knowledge. Also, because time does not come back and it is not certain that in life there will be an opportunity to do some things again, it’s better to spend on professional training now than wait till the future comes.

6. Whatever allows you to save time

The last category is a bit all-encompassing because it includes many things on which it is worth spending.

You have to spend on anything that saves you time if every minute is important to you. Because time is money, yes.

If you’d have done something more worthwhile with the hours it will take you to clean up your house, do the dishes and the laundry, and prepare food, then, it’s not a waste of money to spend on professional house help.

Also Read: 10 Must-have skills for Entrepreneurs

When should you save?

There are some factors to consider to know the best time to save for the future purpose:

1. When you are not preparing for unexpected expenses

Saving is done either for emergency purposes or to purchase something worthwhile. However, the best time to save is when you do not expect any expenses, this will build your mind on the wealth creation process and not just spending. It’s very important to bear this in mind to have a good savings plan.

Philip Olson, a reputable financial planner once said “We recommend keeping three to six months’ worth of cash in savings.” It will serve as a kind of insurance when life throws a curveball at you. This proves the significance of saving.

2. No increment in earning capacity

Try to save even when there is no increment in salary, if you can’t save when there is no increment, how will you save it when there is an increment. Especially as a salary earner, you should focus on making a saving decision when there is even no increment in wages.

However, you save according to your capacity. If you have trouble making a saving decision, it is also proper to meet a financial planner.

3. Saving goals

When you have a timeline and already figured out saving goals, you can proceed to make savings. It’s ideal to have a larger goal after which you proceed to save. This is paramount if you wish to have investment options too. If you have a five years goal to achieve it’s better to start saving to meet up the responsibilities.


After reading this article, you shouldn’t find it difficult to know when to save and spend. However, if you have any questions, you can ask in the comment section below.


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