Not all spending is bad - July 2019

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When it comes to the difficult choice between spending on something you really want, or saving the money instead, you may expect that an investment manager would say it’s always best to forego short-term indulgences in favour of investing for the long-term, right?

You might be surprised to hear us say, not always!

As part of National Savings Month this July, Coronation is encouraging South Africans to save more by putting money aside every month instead of overspending it on unnecessary things. But we also know that it’s important to have balance. 

“We all want to live our lives to the full and spending on valuable experiences can be positive. After all, the primary reason for investing is to have more spending power later, so striking a balance between considered spending today and tomorrow contributes to a well lived life, ” says Head of Coronation Personal Investments Pieter Koekemoer.

But before you get your credit card out and book that overseas trip for you and your family, take note of some important caveats. Incurring debt to support a lifestyle beyond your means, or not thinking at all about building your balance sheet is not wise. Your objective should be to balance the needs and wants of today with the ability to cope in emergencies and prepare for the big future expenses like your children’s education and your own retirement.

So when is spending better than saving?

When your basic financial needs are met and you have extra money, purposeful spending on memorable life experiences may make more sense than impulse buying of unnecessary material things. You can’t put a price on the memories you build up over time.

“Investing in memories and time with those close to you is important for wellbeing and happiness. When you eventually retire, you’ll not only have built up a healthy retirement investment, but also a wealth of memories with family and friends in whom you have invested time. It will make your life that much richer,” says Koekemoer.

National Savings Month is a good time to be mindful of how we can be more careful about what we spend our money on and to put away any extra that we can for the long term. “If you find yourself tempted into spending some of your hard-earned money on ‘stuff’ – things that you don’t really need, just take a moment to consider what you could do with that cash if you were to invest it. Allow your money to grow until such time that you can comfortably afford experiences that you truly desire. That is the real meaning of saving,” adds Koekemoer.