What do we need to do in the economic crisis that we’re facing at the moment? A lot of people are advocating that we shouldn’t splurge and we should save our money for the future.
Is that notion correct?
Going back to economics 101, it’s actually the other way around. As we all know, negative Gross Domestic Product (GDP) growth equals a recession. To support GDP, one actually needs to spend his/her money. Only then you can fuel the economy. If we save, we’re only crippling the GDP.
During an out of control economic boom do we only start cutting down on our expenditure so as not to allow the inflation goes out of hand.
However, of course, things are not as simple as that. The emotional distress that a financial crisis gives you alone is enough to deter you from going out there and shop like there’s no tomorrow.
Also, one thing to remember, splurging helps the economy but will be bad for an individual’s nest egg. Agreed?
Please, my readers out there. Do participate in the discussion. What do you reckon? Should we spend or should we save?
P.S. If you ask me whether am I spending or saving, I’d say I’m saving my money. I’m pretty much scared shitless thinking about what’s going to happen to me after I graduate.
Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.