When Everyone Tries To Save Money, Who Actually Loses?

[Zaka1221]

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?

Saving money is a good thing it makes person responsible because it provides money when there is emergency and a person does not need to be dependent on debt. But if a household tries to suddenly cut down all the expenses or tries to cut spending on a large scale, then businesses have to suffer they have to see lower demand, investment can be reduced, hiring can be delayed and even they have to lay off their workers. That does not mean that, just to keep economy moving, person should spend recklessly. There should be balance: when there is an emergency or uncertain period, a person can spend on essential goods and useful services while, at meantime, should avoid unnecessary expenses and also try to build reasonable savings. The problem of saving arises when extreme caution becomes widespread and it creates cycle of lower demand, lower income and also more saving.

[Silverstonez]

What you need to understand is that, there’s no harm in everyone is saving money, besides we all save money. When everyone saving money, you might feel that businesses will sell less or probably reduce staffs in order for them to keep their business running but that’s not true. Saving money or spending it restlessly is not what keeps peoples business going, what matters is how they manage their resources, price their products, create value and adopt to changes in customers demand and not how much money people spend.

[Powerjumboo]

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?

The thing is not as you think, because no one can reduce their extra expenses at once. When people reduce their extra expenses, it does not affect any businessman, because they will take what they have in their wealth, and no one can take away their wealth. Moreover, everyone's salary in this world is not the same. There are many people who earn a lot of money, now if those people spend extra money, it will not affect them much. But for a person with a limited income, spending extra money can affect him, because his salary is limited. But if that person reduces his extra expenses, it will definitely be very good for him. But remember, no one can completely stop spending extra money at once.

[Natalim]

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?

A money unspent is a money invested. A money saved is a future gain. And just because people become financially responsible then it becomes a threat to the business owners. People are still buying, its just that they stick to their needs rather wants, so it does not really bring harm to the businesses, people are just selective where to spend their money so that they will save more and spend less. Reckless spending will only ruin the future finances.

[SUPERSAIAN]

It's the economy of the country that will suffer. This has happened before in many countries because people are trying to save their money for many reasons.

The effects will not be felt rapidly, but when nothing is coming out, you know there will be a problem. Consumers must buy necessities, but they can still save some by not buying too much. If it's just for the day, then buy food that is only for the day. The problem with some people is that they are afraid that prices will rise the next day, so they stock food even though there's a possibility that it will be wasted when it goes bad. Imagine that: we are trying to save money, and yet we actually wasted some indirectly.
The consumers will still lose at the end of the day. Prices will go high because there's no consumption, and businesses will probably shut down due to zero sales.

Ultimately, the country loses out that is why, in the past, there used to be calls for people to cash in the gold they had stashed away.

When people don't spend, the government collects less tax revenue. With high taxes and the current state of inflation, people try to save rather than spend, creating a cycle. Unfortunately, however, the consumer is generally the one who loses; no matter how much they try to build up savings, not much really changes.

[Questat]

In business, one person's spending is another person's income, and if people stop spending and just focus saving on their entire life, that would really harm the whole business economy. But is this really possible? Everything we need today comes with a price, so if you stop spending and buying your basic necessities, its more like you chose to stop breathing and end your life.

What people need to is to avoid reckless spending, not stop spending.

[Tamaperdana]

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 it will have much of an impact, because even though everyone is saving and economizing, it doesn't mean they aren't buying anything. So, they will definitely be spending on basic necessities and other things they need, and that's certainly not a small amount. Basically, when we save and when we spend, I don't think there's much difference in our spending. Therefore, I think if everyone saves and economizes, it won't have a significant impact on the companies that sell. Besides, I think everyone has a different salary and also a different amount of savings, so the point is, everyone in a country won't do the same thing. So, you don't have to worry about this. Because basically, if everyone saves, it certainly won't destroy the economy. And besides, saving isn't enough, because if we save, our money will definitely be eaten up by inflation. So, I think it's better to invest some of that money.

[Oasisman]

In business, one person's spending is another person's income, and if people stop spending and just focus saving on their entire life, that would really harm the whole business economy. But is this really possible? Everything we need today comes with a price, so if you stop spending and buying your basic necessities, its more like you chose to stop breathing and end your life.

What people need to is to avoid reckless spending, not stop spending.

Make sense.
Not sure if people ever learn to avoid unnecessary expenditures when companies/businesses are getting creative as time passes by. From fake scarcity and urgency, like the 10.10 sale on your favourite online shopping platform to hassle free checkouts, and now here's AI that let's you see the visuals (e.g furnitures) even before you purchase them.

Saving money is one of the hardest challenge for everyone, especially in this era where you can make a purchase, book a service, and pay for everything conveniently anywhere using your smart phone.
So, there's nothing to worry about the OP's concern about who's getting affected if majority of people stop spending unnecessarily, because there will always be a small portion of the population who can actually save routinely with highest level of self discipline.

[boyptc]

It begs with the curiosity why when people do things correctly, what makes them think that it becomes harmful to the others?

Maybe because they're not doing the same as the responsible ones who have been saving their hard earned money and invest it properly?

When there's a huge number of people who save money, it's not everybody who's doing that. They also spend for things they need but becoming wise on their money. I don't see any harm in it to be honest if it's with individual perks.

[welovebit]

Saving money is one of the hardest challenge for everyone, especially in this era where you can make a purchase, book a service, and pay for everything conveniently anywhere using your smart phone.
So, there's nothing to worry about the OP's concern about who's getting affected if majority of people stop spending unnecessarily, because there will always be a small portion of the population who can actually save routinely with highest level of self discipline.

In the current era saving money is challenging because if someone has the mind and can manage things with savings, surely he is going to have a good life in the future. Enough people have good sources, but still they fall out because they do not have enough courage to save and secure for a long time.
In business things always needed strong strategy. Unnecessary spending is doing serious damage; things are getting worse. It needs to stay in limit. It will always be helpful. Uncertainty and inflation are doing things that have never been easily manageable, but still keeping balance and having responsibility is paying for decisions in emotions after people mostly regret but have no way of returning.

[Inwestour]

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 think you’re trying to give an example under ideal conditions, meaning that the entire population would behave in the same way. But in reality that can never happen, because there are so many people, and everyone has their own point of view, their own desires, and even their own level of discipline. That discipline may allow some people to save money, invest it, and grow their wealth, while the lack of it prevents others from doing the same.

That’s why we see statistics showing that, on average only around 5% of people are able to save, invest, and keep doing it consistently over a long period of time. For most people, spending money and buying whatever they want right now is the norm they’re used to and consider completely normal.

[Leahized]

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.

Since we all want to be economically prosperous and do not hesitate to take any steps accordingly. In this case, saving money is good, but how you are saving is the main issue. For example: most people in my state are losing trust in banks. As a result, everyone is starting to save paper money at home. And using electric money as much as possible. This is affecting the economic balance of the country and causing inflation.

If ordinary people do not take any steps, there will be no impact on the economy. When ordinary citizens have too much trust in banking institutions and save money there. However, you can invest in Bitcoin as an alternative. Which will give more profit than banks.

[Pablo-wood]

If everyone saves more and spend less there will be decline in demand for some commodities that are fully essential and purchases for relevant needs will be moderated. The moderation will in turn regulate the price of items and many who take advantage of excessive demand to hike price will be forced to keep things moderate so as to meet up with sales and deliveries.

When everyone is spending excessively it triggers demand pull-inflation where the overall spending and consumer demand surpasses what the economy of that specific nation can produce. Although its obviously impossible for everyone to save more and spend less . But if it were possible it will regulate the cost of living in most nations.

[Obim34]

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?

Life is a one-man race, and mindsets differ. Some will prefer enjoying the best of material things while they are alive, and a few will prefer living a moderate life, and both of these mentalities contribute to the economy. We cannot have everybody playing the same role.

I will rate higher those who have their worth calculated based on their investment and assets over amounts locked up in savings.

[Finebone]

Wether you agree with me or not, money will always be in circulation even though everyone is saving money at the same time, because buying and selling of goods and services will not stop, because people must eat, drink and sort out some basic needs. Even though you wishes to tie your money in the bank as form of saving it, banks will give it out on loan to those that want to make use of it to elevate their business, so I believe that money will always be in circulation no matter what.

But I just want to make it very clear to you, it's impossible for everyone to save at the same time because we all have different characters and objectives.

[philipma1957]

Well I looked at the answers and a few people get it. We would be pretty much crushed world wide if we all saved the max we could.

Also we the people of the world are not going to do this in unison.

So next question.

[MainIbem]

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're very correct mate, it's impossible for everyone to be saving money, while some are very wealthy and gave enough to take care of expenses, savings and investment, there are people who barely have enough to feed with talk more of saving, there are also those who's responsibility out weighs their income thereby making it tough to save. So for everyone to be saving everyone has to be earning more that their responsibilities which is not possible.

[Soldroplet]

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 think you’re trying to give an example under ideal conditions, meaning that the entire population would behave in the same way. But in reality that can never happen, because there are so many people, and everyone has their own point of view, their own desires, and even their own level of discipline. That discipline may allow some people to save money, invest it, and grow their wealth, while the lack of it prevents others from doing the same.

That’s why we see statistics showing that, on average only around 5% of people are able to save, invest, and keep doing it consistently over a long period of time. For most people, spending money and buying whatever they want right now is the norm they’re used to and consider completely normal.

I also think that saving money is not just about having a high income. Your habits and discipline are also a big deal here. You can understand the difference even if you look at two people who earn the same amount of money. One sets aside some money at the beginning of the month, and the other spends almost all of it before the end of the month. Small expenses don't seem like much at the time, but when you calculate everything at the end of the month, you can see that a lot of money has gone there. So you don't need a lot of money to start saving, even if it's a big one. The habit of saving little by little regularly helps a lot later.

In the case of many people I know, I have seen that income increases, but savings do not increase much. Suppose, X, a person's monthly income went from about $244 to $325. Before, he was saving about $41. But after receiving an additional $81, his expenses like eating out, paying for a new phone, buying this and that, also increased. In the end, it turned out that even though his income increased, his savings were still about $41. So it's not like people can build wealth just by getting more money. It is actually more important to control your spending habits and regularly save some money for the future.

[M47AK16]

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?

Was the world created just yesterday? Or was the concept of saving discovered just recently? What makes you think that if saving money could create problems the world wouldn't already have faced those problems since the concept of saving has been with us from the beginning? It is not that difficult to understand that a person can save money if they have extra, but they can't save everything, there are necessities and needs that must be met, and people spend more money than they save, which is the reason why the concept of saving is never going to create problems for an economy or make businesses go out of business.

No matter how much a person tries to save as much money as possible from what they are earning, they will still ne compelled to spend most of it. You need food, cloths, you need to pay your bills, pay for your children's school fees and expenses, take care of your family and loved ones, or even if you don't have those responsibilities, you will still need to take care of your own financial needs, and just like that, every business will have at least some customers at a time, which doesn't let them go bankrupt.

[Muba20]

Wether you agree with me or not, money will always be in circulation even though everyone is saving money at the same time, because buying and selling of goods and services will not stop, because people must eat, drink and sort out some basic needs. Even though you wishes to tie your money in the bank as form of saving it, banks will give it out on loan to those that want to make use of it to elevate their business, so I believe that money will always be in circulation no matter what.

But I just want to make it very clear to you, it's impossible for everyone to save at the same time because we all have different characters and objectives.

This is true and there is nothing to prove it wrong. If all the people in a place start saving, they will not be able to do so because if they start saving at the same time, the expenditure will decrease a lot. That expenditure meant income for someone. If the income decreases, then the savings will also decrease. Therefore, even if you save, it is not possible to do it in the long term. It is also true that a person has some expenses without which he cannot live, he has to do it out of necessity. Moreover, everyone's income and financial situation are not equal. If someone saves, someone else may end up spending his money and even have to borrow. On the other hand, those who save it in a bank are lending it back. Those who borrow are spending the money from that loan. It is not possible to stop spending in any way.

Saving is definitely necessary to ensure the security of every person. Those who want security of their property will try to save in any way. This is certainly not a bad idea but if it happens that everyone starts saving at the same time then it will definitely have a negative impact although there are many arguments because it is not possible for everyone to save at the same time. Unforeseen circumstances may arise in which case it is certainly not possible for everyone to start saving at the same time.