Do you like to save or spend your money?


Let me share a story with you. I used to have these two friends back in the day constantly complaining about money. They were honestly the first people in my life to make me think about whether it was better to save money or spend it.

My one friend, let’s call him jack, would always refuse to pay for a drink at restaurants. Jack would ask for a cup of water instead of buying a soda.


Jack looked to save money everywhere he went.

I think he convinced himself that saving a ton of money would add up someday. Maybe he thought it would make him rich, or maybe he just felt better about it in his head.

Similarly, my other friend, let’s call him John, also had a ton of problems with money. Although John’s issue wasn’t with saving money, it was the opposite.

John had a business and made good money at a young age. But he didn’t know how to control his spending habits. He would go out to eat everyday, party, drink at bars, and do other crazy stuff.

Eventually, his expenses caught up with him, and he ended up filing for bankruptcy.

Is It Better To Save Money or Spend It?

The point of that story was to show you the dual sides of spending and saving money. It’s alright to save money, but obsessing over it can have negative consequences on your lifestyle.

We’ve all known that person who is just too frugal to be around, someone who is afraid of spending any money at all. Then, on the flip side, you have those who don’t know how to handle their money and end up losing it.

But at the same time, what’s the point of making money if you can’t spend it? It’s not good to hide piles of cash under a mattress and pray that uncle sam will never get to it.

The best way to look at this is to find a middle-ground.

Money is a tool, a tool you can use to buy cool stuff, to enjoy your life, and most importantly, to build more wealth. The bottom line is that nobody gets rich as a saver or as a crazy spender.

You must find balance in both your spending and saving habits, conservative with your money, while at the same time spending enough to enjoy it without going too crazy.

Why It’s Not Always Ideal To Save Money

Many people wrongly believe saving money is the safest way to build wealth and live comfortably. The truth, however, is that saving money is one of the worst ways to build wealth.

When most individuals look to save money, their first instinct is to invest in a long-term savings account. And while this can seem like a safe way to store your money, it’s actually doing more harm than good.

First, inflation is going to eat up your returns. Inflation will make your money worthless if you keep it in a savings account. The rate of inflation fluctuates around 1%-2.4% annually. Interest rates for savings accounts are around .06%.

Do that math it’s not worth it.

A savings account can’t beat inflation, and neither can cash alone. Cash is good to have temporarily, but in the long term, it’ll become worth less and less.

Another reason why it’s bad to save money is that it tricks you into thinking that you’re building wealth. Savers think that getting free water at a restaurant is going to make them rich. You can’t think this way.

If you want to save money, it’s better to approach the idea of doing so a little differently.

Try Saving Money as an Investor Instead Of a Consumer

Remember when I said nobody wants to be around someone who’s too frugal? Well, it’s only those who are frugal in the wrong way.

There is a big difference between trying to save money as an investor rather than as a consumer.

You don’t want to be a cheap consumer; you want to be a cheap investor. Investors look for assets to buy and build their wealth. Consumers are people who buy products for their personal use.

Typically, products that you buy as a consumer are not going to help build your wealth. Trying to find the best deals on a product is fine, but obsessing over prices will get you nowhere.

However, as an investor, it makes sense to be cheap. Assets can get expensive, and it makes no sense to buy an overly priced asset on the market.

If every consumer applied their price gauging skills to investing, they would all be millionaires.

That is because investors who buy quality assets at low prices experience the best returns. Imagine being that person who waits in line on Black Friday to buy the newest TV on sale.

That’s what smart consumers do. Yet, the investor will look towards a stock market crash as their version of the perfect black Friday sale. When the stock market crashes, all the hot stocks in the market go on sale.

Buying those great stocks on sale means that when the market recovers, you’ll be making money along with it.

Focus on Increasing Your Income Instead

I could give you all the advice in the world on how to save money, but it will never make a difference if your income never increases. Instead of trying to budget your way to wealth, focus on boosting your income instead.

an infographic comparing how it is to save money vs increase income.

You can do this by working harder at your job, starting a business, and self-education. Ironically, two out of those things will require you to spend money.

If you are stuck at a dead-end job making $15 an hour, stop trying to save money and start finding ways to increase your income.

You can put some money aside to pay for things like books, college, or even startup costs for a business. There is no reason why you should settle on making $15 an hour for the rest of your life.

If you do settle on that, then saving money will never be easy since you aren’t making enough. Besides, there’s a limit to how much money you can budget while making that much hourly. However, theoretically, there is no limit to how much money you can make.

What I mean by this is that even though you are making $15 an hour, by mastering a skill or craft and monetizing it, you could make 10x more in a relatively short time.

You can increase your income a lot faster than trying to save money making $15 an hour.

Emergency Funds Are a Good Excuse to Save Money

If you’re going to bother with saving money at all, the best thing you can do is to focus on building an emergency fund. Emergency funds are a necessity today. It’s a good idea to have at least six months of cash reserved for a rainy day.

That rainy day can come at any moment; look at what happened this year with the coronavirus. So many people lost their jobs in an instant, and most didn’t have any savings at all.

The biggest mistake you can make is to save money for a car or product and neglect your emergency fund. That’s a horrible idea, which is why so many employees lose their jobs without a safety net.

You want to build that safety net first, then you can save up for whatever you want after. But being without an emergency fund is like jumping out of a plane with no parachute.

It’s ironic because if you ask the people that claim to be big on saving money if they have an emergency fund, many will tell you they don’t. That goes back to my last point about changing your mindset on saving money.

Most savers consider emergency funds a waste since emergencies are rare. Instead, they would focus on finding the next best deal at Best Buy rather than try to save money for an emergency.

Consider yourself before anything else. Rich people don’t look for sales on electronics or other retail items because it’s not worth their time. But the rich understand the importance of having an emergency fund.

That’s the difference between thinking like a wealthy person and thinking like a typical consumer.

The Best Way to Save Money Is To Cut Out Big Expenses

There are a few expenses that you need to avoid like the plague if you want to get good at saving money.

For the most part, these expenses are relatively easy to avoid, plus they are also very obvious.

However, they’re also easy to get caught up in, so if you aren’t careful, they can damage your finances. Avoiding certain expenses can make the difference between making you wealthy and keeping you from becoming wealthy.

Housing Costs

Housing can lead to some of the largest expenses for most people today. Home prices are higher than ever and rent in most areas of the country is ridiculously high.

It is a tricky situation since you can’t go without a roof over your head. You also must look for a decent neighborhood that’s close enough to public transportation and other entertainment.

Homes are more expensive to live in than apartments because you are responsible for more expenses. Property taxes and utility costs are a huge burden. It might seem like buying a home is the right thing to do, but sometimes it’s better to wait it out.

If possible, I suggest you avoid buying a home early on in life. There’s just no point in rushing to buy a house. Renting is the cheapest housing option by far. The best thing to do is to rent for as long as you can, then eventually buy a home later.

In the meantime, there are a few ways to save money on housing.

Finding roommates is a great way to save some cash while renting. I know that this can get difficult with COVID-19 still around. I suggest you set some rules with your roommates and make sure everyone is tested before you move in.

Once you get that out of the way, having roommates has a ton of benefits. All of your costs will be split, including rent, internet, gas, and electricity. The downside is that obviously, you will be sharing your living space with someone else.

Certain people will not be compatible with you, which is fine. It’s even better if you can gather friends you already know to be your roommates.

Credit Cards

I am a big fan of Dave Ramsey. He’s like the financial guru I need to slap some sense into me when we need it. Dave is known for making some controversial comments about credit cards. He goes far enough to call them “the cigarette of the financial world.”

While I don’t agree with everything he says about credit cards, I think he does make a good point. Credit cards trick you into thinking that debt is a good thing.

Debt is never a good thing; credit card debt is one of the most common forms of debt that Americans struggle with.

Dave doesn’t believe that people should use credit cards at all, even if they claim to use them responsibly. I disagree with Dave on this one. I think that there are people who can control their spending and use credit cards properly.

However, I also believe that most people don’t do this. Some individuals just buy into the hype that the credit card companies promote. Therefore, so many Americans are in credit card debt today.

If you want to have a credit card, I think it’s alright only if you use it responsibly. You must be very careful since financial denial is a real thing. Stop using the card if you start acquiring large sums of debt.

New Cars

Buying a new car is a bad idea when trying to save money.

Buying a new car is probably one of the worst financial mistakes you can make. The car’s value will plummet once you drive it off the lot. That is a bad thing because cars are expensive and are not known to last very long.

Plus, unless you have the cash to pay for the car, most people end up just getting into debt. For all of the pointless debt in America, car payments are probably the most common.

It adds an unnecessary expense while at the same time being nothing but a headache.

New cars also cost a lot in repair and service. It’s a myth that a new vehicle is more durable than a used one. A new car can break down just as easily as a 10-year-old car.

The worst part is that you spent more money buying the new vehicle rather than the old one.

To get around this problem, just go out and purchase a used car. The right car can last a long time, do your research, and buy a durable model.

Some good cars to consider are Hondas and Toyotas. They may not be the most luxurious cars out there, but if you’re looking for something cheap and durable, they’ll do the job.

Student Loans

Year after year, college graduates are getting slammed with an insane amount of government loans. It’s too much at this point. Colleges have become so expensive that some students don’t even want to go.

There are ways around this, however. For instance, you can just go to a community college for the first two years. That’ll allow you to save some money since community colleges are less expensive than 4-years schools.

Once it’s time for you to transfer to a 4-year college, go to a state school, they’re cheaper and are probably closer to where you live. Bringing me to my next point, which is you don’t have to live on campus.

Commuting to school is just fine; you will save a ton of money, and trust me, you will appreciate that once you graduate.

Drugs and Alcohol

Have you ever realized that those who use drugs and alcohol excessively are either very rich or very poor? Why do you think this is? Well, the rich have so much money that they don’t have to worry about doing them.

While the poor fall victim to drugs and alcohol through their environment. There are even many studies that link severe drug and alcohol abuse to poverty. That’s because drugs and alcohol have a tenancy to demotivate you.

They are also a complete waste of money. Alcohol is expensive; just going to a bar can cost you a decent sum of money. And with the legalization of marijuana, the drug has proven to be quite pricey as well.

Though it’s not all about the expenses, addiction can have negative consequences on your health as well. Everything in moderation is fine but you can’t deny that drugs and alcohol have ruined many lives.

Being smart with money requires a clear mind. Drugs and alcohol have the potential to distort your thoughts and make you do irrational things. I think it may be best to avoid them altogether.

A graph showing which expenses to cut if you want to save money.

Why Spending Money Can Be a Problem

Like with saving money, spending money has its pros and cons. The problem is that the majority tend to lean towards the bad instead of the good. You see, there is a clear difference between spending money on useful things rather than wasteful things.

A good example would be buying new cars, which I said earlier. Spending money on a new car is a waste, especially if you can’t afford it.

Car companies want you to think that it’s normal to pay for a car monthly, even if you don’t have the money. It’s a marketing trick they use to get lower-income customers. A $500 monthly car payment is like having a second rent.

Put that next to your actual rent, health insurance, gas bill, the electric bill, water bill, entertainment bill, legal bill, medical bills. Do you see what I mean? As the list goes on, eventually, your spending habits add up, making it harder to get wealthy.

Emotional Spending

Emotional spending is the erratic behavior of spending money based on how someone feels. If you feel good about yourself, spending money is the way to celebrate. Alternatively, if you feel bad, then spending helps cover up those feelings.

Some of the biggest emotional spenders on the planet are celebrities This is how those who have money end up losing it. How many athletes and musicians have there been who’ve gone bankrupt over their bad spending habits?

Michael Jackson, 50 Cent, Nicholas Cage, they all have one thing in common, it’s that they spend too much money.

Whether it be legal issues, fancy clothes, nice cars, vacations, their money is going to waste.

It’s this type of behavior that results in bankruptcy and an unfortunate end to whatever wealth an individual has built. But it’s not just the super-rich who lose control of their spending. Emotional spending affects people of every economic class. It’s more dangerous to be an emotional spender if you aren’t wealthy.

Don’t allow yourself to lose control of your emotions. Be dominant over them and realize that money is better spent through thought and not emotion.

Spending Money You Don’t Have

Like what I said earlier about credit cards, they allow you to think that it’s okay to spend money you don’t have.

Credit cards can hurt your finances if they are misused. Unfortunately, it’s pretty easy to misuse them since they are just pieces of plastic. Using them is more convenient than paying with cash.

Before you know it, you’ll have a list of credit car payments piling up every month. America is a consumer economy, but the consumer is known to use credit rather than cash.

If you consistently spend money with a credit card, eventually it’s going to catch up with you. Your best options are to either avoid them or try disciplining yourself when using them.

You don’t want to get into the habit of using a credit card out of addiction. Not to mention, it’s easy to get trapped into thinking that you can buy anything and just pay it back later. That is the main reason why Dave Ramsey calls it the financial world’s cigarette.

How Spending Money Can Be Good

Like when you want to save money, spending money also has a bright side to it. Spending money has many benefits in self-development and building wealth. Money is supposed to be spent, not dormant under your mattress. Spending money can be a good thing both for you and the economy.

The economy loves it when people are spending money. When people spend money, businesses end up profiting more, which in return helps the economy grow.

If You Invest Money in Assets

An image depicting a man having a great idea to save money and to spend it on education.

Most consumers are buying products that depreciate. Items like cars, electronics, clothing, and jewelry all lose their value over time.

Furthermore, Americans who spend money are more concerned with buying products instead of assets like real estate and stocks.

Spending some money on entertainment and other things is fine to a degree, but you need to be spending money on assets as well. Imagine putting what you pay in car payments each month towards an S&P 500 index fund.

Most people can build their wealth exponentially just by doing something that simple. Nevertheless, the bulk of spenders don’t do this. Some of them are afraid to invest, while others are just ignorant.

It’s normal to be afraid of putting money towards something you don’t understand. Yet, the best way to overcome this brings me to my next point.

Through an Investment in Yourself

Investing in yourself is a great way to spend money. Don’t worry about investing in stocks or real estate; you are your greatest asset. It’s appropriate to spend all the money in the world if it means bettering yourself in some way.

Knowledge is power, and by spending money on books, courses, and school, you will acquire that power. A book is valued by what you absorb from the text. Reading a good book can change your life, making it worth the investment.

Don’t be afraid to spend money on anything that’s going to help you learn and benefit from it. Your greatest asset in life is your mind. Buying an online course can help you start a business that would be too difficult to do otherwise. Likewise, it’s a good idea to spend money on higher education if it doesn’t include getting into debt.

If possible, try to pay for college in cash. Spending money is likewise very important when trying to start a business.

The biggest problem with the saving money mindset is that it doesn’t advocate spending money for a business. If you refuse to spend money on your business out of a desire to save money, then it becomes harder to be successful.

Any kind of spending is beneficial if it means investing in yourself. Remember that you are your greatest asset, so it’s only logical to spend money on educating yourself.


To sum up, we can see that both saving and spending money can have good and bad aspects depending on how you approach them. With saving money, focusing on the little things seems pointless. Don’t save money as a consumer but start thinking like an investor.

The big expenses are the biggest problem with saving money. Housing, credit cars, and loans can all lead to sucking your wallet dry.

Rather, focusing on those expenses instead of trying to save money eating out is what’s really going to make a difference in your life.

With spending money, emotional spending, and irresponsible usage of credit cards can lead to unwanted debt and more problems. However, we know that spending money is necessary when trying to invest in assets and yourself. In either case, you need to make sure your spending is under control.

Given these points, both spending money and saving money are necessary. However, the catch is that you need to be responsible with your spending, while at the same time, focusing on saving money the right way.

It’s best to spend money smartly on things that matter, like education and investing in assets. Organize your money so that you save for an emergency fund, and to cut out big expenses like credit card debt and student loans.

Albeit, if you can do that, then saving and spending money can together help you achieve the best results for your finances.