Spend Some, Save Some


by Jeff C. Johnson

Personal Finance class

I’ve spent nine-and-a-half years teaching personal finance at the University of Nebraska-Lincoln and harping on my students to save and build wealth, before age 30 if possible. My book The Five Financial Foundations is all about saving and accumulating wealth. It’s been my mission to speak out about the need to get started investing early and to temper spending. 

Don’t miss the opportunity to save and get started in the years before age 30, I urge them again and again.

Many people never get the balance between spending and saving money in place, focusing instead on keeping current with payments but never accumulating any investments. They don’t prepay debts and they don’t fully fund their 401(k), only investing enough to get the 3 percent match (if their employer offers it). They likely won’t have enough saved to educate their children and retire comfortably. They always seem to have a little pesky debt that doesn’t get paid off.

There are, however, a few natural savers that have the opposite problem. They build wealth but never enjoy the fruits of their labor. They (and their families) live far below the standard of living that they could enjoy. They miss opportunities.

Why not strike a balance between saving and spending your money?

Here are some observations from working with people who were both successful savers and spenders:

  • They keep their fixed costs low. Early in life, they don’t purchase expensive cars and a high-priced house. High fixed costs limit saving and spending opportunities because there is no money left for either after car and house payments. I call it “living large later.”
  • When they spend, they usually pay cash, not borrowing and not adding to fixed monthly costs. They plan for, and then savor, the purchase of items that improve their lives, never frittering away money on meaningless expenditures.
  • They maintain a cash reserve set aside for emergencies and future “spending.”
  • They fully fund retirement accounts (this is where most “regular” people build their biggest pool of money). They hold long-term growth investments in these tax-favored accounts, compounding wealth over decades.
  • They don’t have any “bad debt” created by buying consumer products before they had the cash on hand.

My book The Five Financial Foundations is based on my observation of these kinds of people and was written for Americans everywhere. If you are ready to get started toward a better financial life, get a copy of this easy-to-read book for sale on this website for $11.95.

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