When Everyone Tries To Save Money, Who Actually Loses?

[Findingnemo]

Saving money is generally seen as a good thing. Spend less, keep more and you have a better chance of staying financially stable but I start to think about what happens when a lot of people start doing the same thing at the same time. If people become very careful with their spending then businesses sell less. Some businesses may respond by cutting cost or reduce staffs. That can then affect people’s incomes and make them even more cautious about spending.

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

You are asking a hypothetical question. Everyone has to spend money and if they stop spending the companies will make less profits so they will either fire their employees or pay them less, so then we are back to square one, we will just have to spend on survival or even not for that.

And it doesn't end there, government relies on tax which comes from spending and also from investing.

[Hatchy]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

The idea here is that everyone in the world cannot have the same preferences at the exact same time. It is simply not possible, especially since even time does not work the same way everywhere in the world. While you may be thinking about saving your money and not spending it, someone else may be thinking about spending theirs on something they like. Another person may even choose to spend their wealth on things that add little or no value to their life.

The reason why most people choose to save money is not necessarily because they don't want to spend it. Sometimes, they simply have a specific goal in mind for their savings and plan to spend that money on it eventually.

[Abdul Sami786]

Saving money is generally seen as a good thing. Spend less, keep more and you have a better chance of staying financially stable but I start to think about what happens when a lot of people start doing the same thing at the same time. If people become very careful with their spending then businesses sell less. Some businesses may respond by cutting cost or reduce staffs. That can then affect people’s incomes and make them even more cautious about spending.

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

I don't think many people do this because those who are financially strong and can easily face any financial loss do not think of saving money.Saving money is seen only among the poor class for whom it is the right decision to reduce their expenses to protect themselves from inflation and financial problems.Purchasing daily necessities is a normal part of every human being.Whoever wants to save should eliminate unnecessary expenses and a good decision is to use this money to earn. Saving money is not easy for everyone if they spend less it will affect the buying and selling and the income is not at all in line with the trend.

[YOSHIE]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Saving is an action that is good for individuals for their future, but if the entire human population did it simultaneously throughout the world, of course negative effects would occur, especially for the economy, In general, the global economy will experience severe shocks, in the language of economics it is called the Paradox of Thrift.

The negative effects that will occur if everyone decides to save simultaneously and drastically, the first thing that will happen is a global recession, namely global consumption will fall sharply, businesses will go bankrupt, the market will experience deflation and then there will be layoffs on a large scale, unemployment will be everywhere, interest rates will plummet, no one will borrow money from banks anymore, the only people facing banks will be those who save.

For this reason, life in this world, if you want a healthy economy, of course you need a balance between saving and spending, as we are doing now, so that the economic wheel of life continues to turn, so that everyone can enjoy it.

[Agbamoni]

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

Everyone can't save, spend, and invest at the same time. Some people in society will spend extravagantly, others will save, and others will invest, and that's how the money moves around. Without money in circulation, without losses and profits, there will be no economic balance.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Yes, absolutely. The action is preferable when few people are doing it, but if millions of people are doing it at the same time, it will not benefit anyone.

[Rockstarguy]

But the good thing about this is that, there can't beat time when everyone is going to spend less and save his money in the bank, human being are dynamic and so people behave differently there are those who likes spending money while there are also those who spends with caution.

Let's use when there is an economic crisis as a case study. When the economy is harsh, people are very mindful of how they spend, and even those who earn very well prioritize saving and investment. Even low earners don’t spend carelessly.

In a time like this, everyone is being affected because one man's spending is another man's earning, and since everyone has become a careful spender, everyone is affected somehow. The only thing that makes people have that savings mindset is when there is an economic crisis; people only spend for survival, and in times like this, even if people don’t go into long-term savings, they save money for the next day.

[viljy]

Saving money is generally seen as a good thing. Spend less, keep more and you have a better chance of staying financially stable but I start to think about what happens when a lot of people start doing the same thing at the same time. If people become very careful with their spending then businesses sell less. Some businesses may respond by cutting cost or reduce staffs. That can then affect people’s incomes and make them even more cautious about spending.

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Well, Keynes answered this question a long time ago. Universal frugality and saving exacerbate the crisis, as they reduce effective demand. It’s interesting that something similar is happening right now, in our day and age. Every corporation is implementing AI and robots (or planning to do so). And the corporations are acting completely rationally - otherwise, they’ll lose in the competition. But taken together, they’re destroying jobs and, consequently, reducing effective demand.

[red4slash]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

This may be a paradox of frugality that could have left some sectors disrupted but in this case the method of saving is always the case for the majority of people but the level of need for consumption will still occur.
So even though frugality may be a little impact for some things including those who are in small business people but on the one hand this also will not make everything end even though there will be a perceived impact.

The level of consumption is inevitable even though we are frugal, besides the level of needs of each person is different and the level of income of each person is also different makes this can be a differentiator in the problem of frugality because for now in an increasingly difficult economy there are those who save just because to make a difference in lifestyle and there are those who make frugality because they are forced to save because otherwise it will be difficult for them to live in tomorrow which certainly will also make a difference in terms of treatment.

[Jasmyne]

If everyone spends less and save more , there is going to be done negative effects that will come as a result of money not been in circulation. When it comes to finance it is actually when money circulates that value is going to be created, because there is transfer of money from one hand to the other. This is also one reason that government prints money from time to time just to keep the economy afloat via printing of money so that money can be in circulation. But the good thing about this is that, there can't beat time when everyone is going to spend less and save his money in the bank, human being are dynamic and so people behave differently there are those who likes spending money while there are also those who spends with caution.

Humans can't save more than they spend that's one thing we need to know but if they decide to spend less and save more there is going to be hungry because those who are selling will have nobody to buy and those who are supposed to buy will be left with nothing the economy will be affected because of lake of income flow or circulation.

Government printing more money doesn't help the economy of a nation they only help to make the value of the countries currency to lose value because when they are only printing notes with no productivity, if they spend money to import everything in the country then the country will find it difficult to be stable in their economy because there will be inflation and they will spend more than they get likewise every citizen.

[Sammye3]

You are asking a hypothetical question. Everyone has to spend money and if they stop spending the companies will make less profits so they will either fire their employees or pay them less, so then we are back to square one, we will just have to spend on survival or even not for that.

And it doesn't end there, government relies on tax which comes from spending and also from investing.

Exactly, there's no possible way a country or even an organization would survive without spending, one way or the other entrepreneurs need consumers to survive. There would always be a need or want that needs to be settled, so spending is unavoidable at any point in time.

At the same time, as much as spending is unavoidable, there should always be provision for saving for unexpected situations. There should be a balance between saving and spending, so there are no misplaced priorities.