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.

[Bd officer]

If you look at it this way, you will not get the opportunity to save. Here you are not told to save all your money, you can buy the necessary things and then save. But it is true that if everyone starts saving and does not spend, it can affect the companies because their consumers will decrease. But we have to keep in mind that unnecessary spending cannot be done, many people shop every month despite having good clothes, instead of these, you should save which will benefit you in the future. But if you only save, it will not be wise. You should try to invest in any sector so that you can get some profit from your saved money, which on the one hand will protect your money from inflation and also get profit.

[Darker45]

What comes to mind are towns or villages where stores are only selling what's necessary and people buying only what they need, perhaps with a few wants every once in a while. People may be earning less but still sufficient and, with a few unnecessary things to spend on, could still save. And I believe it works.

But with a consumerist lens, such scenario may depict a struggling economy. It seems to me most businesses these days are generally driven by compulsive buying. If people begin saving and spend only on what they need, most of these businesses would perish. And I don't think that's necessarily wrong.

[philipma1957]

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 that 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?

If all 8 billion people tried to spend the bare minimum the world would end.

First off no one would make kids and that would end it for us all.

[Somegory]

You can only save some money when you are earning more than enough, I have seen people struggles to save any amount after they get paid because they already have enough debt on their necks before getting paid and when they settle bills they have to settle debts too.

Nothing is lost when you save money but the problem is inflation, if your plan is to keep all your money in the bank don't forget that the purchasing power reduces over time, what $100 can get you today will not be the same in a year time.

Dollar is even stronger compared to my local currency, it deprecates too fast that I can't even keep large amount of money in my bank account, stable coin is even safer than my local currency.

[Tmoonz]

Since, it's not everyone that earn the same amount of income and can save the same amount of money, it wouldn't change anything if everyone save at the same time. Don't you see that majority of people have banks that they keep their money for savings. Most government workers little part of their salary goes into a pension scheme and that didn't affect anything.

You should know that you can only save when you have more than enough to take care of your monthly expenses and  basic needs and it's not everyone that their income can have a discretionary income which makes it impossible for everyone in a country to save money at the same time and keep it over a long period of time. It's better to buy bitcoin than save your money in the bank.

You have said it all, and to add more to it is that there's no accurate measures through which it can be calculated to know the differences between those saving more and those that are saving less, the whole thing will only keep revolving around without any range of value, from time to time people earn and spend money differently and on different things and there is no way people can get to save at the same time let alone talking about the amount, those that have less expenses can talk about savings as if it is an easy thing whereas it is not the same for everyone, some people income is not even enough to take care of their basic needs and at some point they have to borrow just to meet up.

[Bigjoe33]

So long as people earn differently, consume differently and live life differently, then everyone cannot save the same and at exact pattern.

While some may not have to save today, even though they had wanted to save, some are saving, but not to there satisfaction. While some are saving up too much more than they had wished. All these create variations in our savings and this, money cannot seize circulating. There will always be some money around for consumption. People must eat and use money. Illness and some other emergency situations that calls for financial expenditures, and so, money must move around.

It would have been a severe problem if everyone earns the same amount, consumes the same amount and quantity of food, spend the same and also save the same. But since there is always a variation, then there is always a way out.

[Prince patrick]

What you are saying could be true, but it isn't realistic. This has never happened before due to so many reasons, everyone can't save too tightly because everyone isn't designed to have the same mentality, goals, ambition, salary or wealth. We are living in a world where there are millions of billionaires and millionaires and they have to spend huge amount of money frequently no matter how they minimize it, but still it won't be the same with a common man, and that's why everyone cannot just start saving tightly, except there is a disaster coming or a National outbreak. Maybe sickness or something. But I understand that these were just your imaginations and I can guarantee you that it will never come to reality. They are fictional things and they will always remain as that.