When You Should Save and When You Should Spend

Once people start to make more money than they need to support their daily lives, they often face a new question: How do you know whether to spend extra income or to sock it away?

Luckily, the choice between saving and spending is a non-issue. Instead, I suggest you take a stand for the And: Save money and spend it. Money is a renewable resource. It comes and it goes, it ebbs and it flows. It’s meant to move. When we’re too liberal with our spending or overly militant about saving, we set ourselves up for a lose-lose situation, either putting all of it away and never getting to enjoy it, or spending everything and feeling guilty and panicked.

Mastering the mindset of wealth is about neither hoarding nor hemorrhaging your money, but instead consciously choosing to think about it in a way that will make you rich (where “rich” means able to afford all of the things and experiences required to live your most authentic life, including having a robust savings account).

A wealth mindset views money as a medium of exchange only, a unit of measurement used in the act of giving and receiving. We stay open to giving and receiving money when we’re comfortable with the idea of wealth, when we give ourselves permission to get rich, to spend, to save and to trust that money is an abundant resource. We shut ourselves off from the flow of money when we fall into the trap of seeing it as something precious and finite that needs to be stockpiled or as something that’s not to be trusted.

Begin by looking at your relationship with money and any fears and concerns you have with either saving it or spending it. Do you worry you’ll be criticized or go broke or lose your money-making mojo if you splurge on an awesome European vacation? Do you worry you’ll miss out on important things or be judged as stingy if you don’t spend everything you have the moment you get it?

It’s possible to simultaneously save and spend responsibly in a way that allows you to enjoy your life now. Everyone has a happy medium between spending and saving, and in order to figure out what yours is, you simply have to look at the numbers and make an educated decision. Exactly how much do you need to save — and by when — in order for those savings to make a positive difference in your life? What are the things and experiences that are important for you to spend on, and exactly how much will they cost? Something as simple as buying a new pair of shoes every few months could have great meaning to you, or maybe you have a bigger goal of taking multiple trips in a year. What you spend and save is a personal decision that only you can make — what you “should” do, according to your parents or your friends, is none of your business.

Once you get the specifics down, consciously save and spend your money accordingly. And if it turns out that you need to earn more in order to pull off your ideal spending-saving ratio, commit to a non-negotiable mission to make that happen for yourself. You had the discipline and tenacity to earn the money you have right now; you know how to do it, you just need to think bigger. You have one shot at life. What’s more important than choosing to make it as good as it can get?

Jen Sincero is a bestselling author, success coach and motivational speaker. Her books include the New York Times bestsellers You Are a Badass At Making Money: Master the Mindset of Wealth and You are a Badass: How to Stop Doubting Your Greatness and Start Living an Awesome Life.