One day I was thinking about what we had been tought about spending in my home country, Iran. I remember I saw many times on TV or in school where people saying that western culture was a culture of spending, and they meant it was a bad thing. After I moved to Canada I realized that the spending part was true, people spent way more than what I’d seen in my country. I thought to myself there should be more important things to spend money on. Why would you want to buy a large yacht and park it in a port, have someone to regularly clean it and never use it?! So I started thinking about what different factors are there, such as wasting, saving and spending that effect the economy and if too much spending is bad or good for the economy. What you read below is the organized result of my thoughts. Just note that I am not an expert in economy and what you read is only from my common sense. I hope it makes sense.

Economy

In our world, there are common needs. Things that can meet those needs have value. People who provide value gain wealth for themselves. In a larger scale, a city, a territory or a country that provides more value to others, naturally gains more wealth. But what are these common needs? I can think of some categories like below:

• Basic human needs such as food, water and air
• Tools that provide efficiency in everyday life and therefore they free up more valuable time
• Recreation and fun that provides motivation, joy and hope
• New needs that come up with the advancement of technology and the way of life

And then there are sources to provide for these needs:

• Food products, technologies and industries to produce and  preserve food,which  are highly valuable and never lose their value.
• Natural reserves such as oil, metal, coal, rocks and jewellery mines and forests are valuable but limited. Forestry is renewable but oil will be finished in time.
• Work force including physical and mental talents. Talents might be the most valuable as such values are relatively cheap to create but attract lots of wealth as they can make use of anything to provide for all needs.
• History and attractions that absorb tourism and their wealth into a country.

Human talents are very valuable. It is proven as there are some countries with small natural resources and yet they are richer than many other countries because of the valuable talents and services they provide to others.  All the above sources and more build the economy.  Some businesses even create new needs to provide new values for financial purposes. The economy works when someone demands and pays and someone else provides.

All the huge structure of economy breaks down into every person’s single needs and that any person wants to have a less troubled and more fun and fulfilling life time.

Wasting

Wasting is an enemy of economy. I define wasting as: taking something with some value and remove its value, either by destroying (like a tool), ruining (like food) or never using it (like a property).

I have heard many time people say: “I’ve paid for it and its mine, I can do whatever I want with it”. You usually hear it talking to wasteful people! They think that when they pay for something it isolates that item from the society and doesn’t have any further effect. To have a closer  look, let me give you an example:

You go to a restaurant, you over order and therefore you have some left over food, let’s say about 10% (I’ve seen people that don’t eat more than half of their food). You have two options: leave it on the table which results in the food ending up in the garbage, or take it with you and eat it in a later time. Let’s see what happens in every scenario:

- You take the food with you and eat the rest later. So you are 10% less hungry and therefore in a later purchase may buy 10% less food. You spend 10% less money on food and nothing goes to waste.

- You throw the leftover into the garbage. You will be more hungry and spend 10% more on food. But you may say, “well, that’s my loss”, not true. To make it simple, let’s assume in a country food products are exactly equal to the consumption of the people in that country plus 10% that goes to waste. No body goes hungry, but what if that 10% was not wasted? That would be over the needs of the country. What would you do with that? Well, I would sell it to the countries that needed that food. Now not only nobody is hungry, we have extra money in our pockets too! We will have more fund to research, invest, improve and gain even more.

It’s that simple, you are not only throwing your money away, you are weakening the economy in your society too. Any kind of waste, even wasting your time is a damage to the economy. It is not personal anymore.

Spending

This one is pretty simple: giving out money, assets, belongings or time to receive what you want or need.

Saving

Last but not least, saving means holding what you could spend and storing it for different purposes. It is the opposite of spending. You may think that it means one of them should be bad. It’s not true, they can be both good or bad.

Which one is better?

No body can spend over their limits. There are people that spend to those limits. Even though they might have good income, they spend it all because of the believe in living for now and having a quality life now. You are renting a perfect home, financing your perfect car and eating in the best restaurants! All of a sudden for no reason you lose your job. What happens now? You have no other source to pay for your expenses. You lose your car and home and fancy eating! Now you understand why it is good to save. When you save enough for a couple of months to survive your life style, your life won’t shake hard by the loss of your source of income as you have time to find a new one. When you save for your retirement, after you stop working you can still maintain your life style.

Saving is very good, isn’t it? It is good for anyone’s personal life. But what if some people don’t have enough or any income to pay for their expenses, some of them even with some talent or good resource? You may say no resourceful person goes hungry, then you should go around the world and look closer. Of course there is a better chance for a resourceful person to have a better income, but in an ill economy even those people go hungry. And one of the big sources of the economy illness is “Not Spending”.

How do you think people gain money? Of course somebody else is willing to pay them for their services. So unless somebody pays, nobody receives any money. Remember that in any country the wealth is only equal to the country resources. If people fall into the game of money making and storing, winners take it all. The problem is that money brings more money, so rich and smart people will only get richer. As the wealth is limited, other people get poorer, especially those who, although resourceful, don’t have access to funds to make a living and invest and develop their talents.

How are some people supposed to earn money when a society’s mentality is “do everything yourself”, “don’t give out any extra money”, “live harder but save more” and so on? The entire point of having money is to live good, and a main part of living good is having a good quality society where everyone is happy.

Conclusion 

Now I’m against what they tought me before. I hate wasting, I like saving for future needs and I like spending. If someone gives a service that you can use for a fair price, take it knowing that you are buying many things: their service, your time, wellness of them and your society. Money must circulate back to people and wherever it sticks, it ruins and hurts, like a blocked vein.

Going back to the person who buys a yacht, I actually think they are doing good. They spend their money buying a yacht, paying for the parking and other services. At least they are circulating their money back to the society. I think not using it is a waste, which is not good, but at least as long as the boat is in good shape there is value. When they have so much money, let’s be happy when they spend it a lot!

I couldn’t care less about jewellery, but I think it is OK to spend big money on jewellery because it always keeps its value, boosts some people’s confidence, all the labour to make it is paid off and loads of money gets back to people. Of course I prefer buying jewellery to be the last resort for letting the money flow!

At the end, be happy when you pay extra tip to your server, buy a gadget that makes you happy or go on expensive trips to have fun. Spending is giving to everyone including yourself. Donating is the most selfless act of improving the society because you don’t get much in return, just a good feeling in your heart. You might want to consider that too. But don’t forget to keep a proper saving just in case.

AND NEVER WASTE!

This entry was posted on Wednesday, July 11th, 2007 at 7:52 pm and is filed under My Opinions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.