The save or spend choice is at the heart
of your relationship with money.
Is your life a hunt to make a fortune?
Or is it about how to make a difference?

Why does it matter?

The save or spend question is relevant and topical. It focuses on the fundamental choices you make about how you lead your life. You may be exhausting your time, energy and quality of life in a job you hate because it pays a significant salary. This adds to your financial worth, but not your self-worth. Alternatively, ‘making a difference rather than making a fortune’ may be more important for you.

The save or spend question is topical because society is reacting against the drive for more. We have moved into a world where words such as ‘meaning’, ‘sustainability’, ‘conservation’, ‘sharing’, ‘community’ are now common in conversation. Not only are these words spoken; they are turned into action every day.

Many of us are reacting against the eat / sleep / work / spend culture. Greed, self-promotion and conspicuous displays of wealth affront us. The messages about the damage we are doing to ourselves and our environment are at last getting through to us. Consequently, we now want to be known ‘not for what we accumulate, but for what we allocate’. In the save or spend dilemma, spending to make a difference is gaining headway over saving to accumulate wealth.

Save or Spend compared

Many factors drive our need to accumulates. Fear that there is not enough and never will be is top of the list. This is why we save for retirement. We also accumulate because we value our self-worth in terms of our net worth. This drive for more and more so we feel better and better cannot be healthy.

Unfortunately, capital held in accumulation is achieving little. It is like that old jacket that has been in the back of the cupboard for years, doing nothing. Far better that it should have been sold or donated so that it can be used.

The allocation mindset is entirely different. It is one of knowing that we have enough and are enough. This does not mean to say we are without ambition or drive. Rather, it allows us to live with integrity and to use our resources to express our values, aspirations and ambitions.

In this mindset, we value what we already have, conserve it, steward it and use it as the vehicle for our best intentions.

It comes down to our relationship with money. This relationship shapes our decisions on how we earn, save and spend money. It determines whether we go down the route of prudence or of unintentional self-harm.

Finding the save or spend sweet spot

It is not a heads or tails, either or choice. It is a question of deciding where on the save or spend spectrum you want to be and achieving that balance through a process.

Our theme last month was appreciating what you already have, and this is an important first step on the road to finding the balance on the spend or save spectrum.

Clarifying your values is the next step. Once you have done this it will make those spending (and earning) decisions easier.

Working out your long term cashflow is a part of this process and is particularly important for getting this balance.

To do this you need to work out your aspirations and related spending plans. These spending plans form your spending boundaries. Within these boundaries you have the freedom to live your life as you want.

And financial literacy is important. You cannot make these important decisions without some degree of financial literacy.

In conclusion

To be fair, the spend or save debate has been going on since the invention of money. However, talking in terms of spend or save keeps the debate at the shallow end of the pool. If instead you start to consider the degree to which you should allocate or accumulate you see the debate in a different and more insightful light.

Credits

All quoted text taken from The Spirit of Money by Lynn Twist, which is also recommended reading

Ali Morshedlou Photo by Ali Morshedlou on Unsplash

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This is an abridged version of the Living Money members monthly topic.
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