Spend or Save? Finding the Perfect Balance

 Adopt the 50:30:20 rule by allocating 50% of your income to essential expenses, 30% to buying things you want and 20% to savings for the future.

To save or to spend, this is a question that goes through our minds during the annual festive and wedding season. Wisdom states saving money is important to protect ourselves against future worries about money. At the same time, you need not necessarily turn down short-term indulgences because spending on thing/activities we want and need can bring us happiness. So what is the balance? You just have to spend responsibly. Consider the below mentioned pointers for making good spend versus save decisions.

Major pointers to check

Ensure that you have an adequate emergency fund. You should have an emergency fund which will cover three to six months of expenses. Saving for retirement is a continuous process when you are on the job and so check that the process is a continuous one. Make sure that you donot have debts, especially credit card outstanding etc.

How can we balance?

There are multiple ways through which one can balance between spending and saving. Let us see a few of them:

Shop smart: Instead of making impulse purchases at high end stores, shop smart and look for savings; this actually adds another layer of thrill to the shopping process, nothing feels better than getting that feeling of a shoping reward and knowing you saved money in the process.

Make use of the offers: There is nothing wrong with making a big-ticket purchase such as buying an item you have always wanted, but consider the same while brands are offering some special offers or discounts.

Sell the things you do not need: If you are just coming out of an uncontrollable spending habit then you probably have a lot of things you actually do not use and they are simply lying around occupying space. Sell those items/ things that you do not need or use, put half this money into savings an then have half to spend on things you actually need. Repeat this process whenever you have too much stuff, but remember to leave the savings in the emergency fund untouched.

Buy memories than things: Instead of buying 'things' one could always think of buying 'memories'. Invest in spending time with your family and deepening relationships with close friends. Money cannot buy happiness, but it can help you spend more time with the people who make you happy.

Use a standard budgeting rule: Rather than thinking of spending and saving as an all or nothing, mentally allocate a portion of your income to both. You could use the popular 50:30:20 rule by allocating 50% of your income to things you need as your essentials such as rent, bills, food etc., 30% to things you want such as those new shoes and dinner in a nice place and 20% to your savings for the future.

To conclude, definitely you should save your future  but immediate spending has a feel good factor and you can justify it to yourself with excesses about living in the here and now. Clearly, there is no straight answer for the question whether to save or to spend. Assess your own personal financial situation, examine your current and future spending needs and income, and then spend responsibly in an effort to maximize your long term financial security.