Yes, this goes against what everyone is telling you these days–“Stop spending money”, or “Save your money”. But spending money can be good for the economy. There are the obvious reasons why this is true, such as it create jobs, helps small businesses stay in business, and other things like that. However, no one really talks about the real reason why spending money is good for the economy.
Money Goes ‘Round and ‘Round
Have you heard the expression, “Money makes the world go round”? You may have thought this meant that we need money to live on or survive. While this interpretation is true, it is not the entire story. The myth of money is that there is only a “fixed” amount of money in the world. Physically, this is true. However, this is not exactly the way things work. Money must circulate on a daily basis for the economy to be healthy. This is similar to the way blood must circulate constantly for the body and mind to be healthy. In fact, the body needs several thousand quarts of blood every day, but on any given day, there is only 5 quarts of blood in a body. How do we get what we need? It is circulated.
Money circulates in the same way. It changes hands from one person to another, creating a healthy economy. What one person’s extravagant spending is another person’s amazing successful income. Eventually, that money comes back again as income for you. If the circulation slows or stops, everything falls apart and we have a sick or dead economy.
While spending money may be good for the economy, it may not always be good for your economy. What this means is that, while it is okay to spend money every so often for more than just your needs, it’s not always prudent to do so. You must prepare for your needs and some wants, but you do not want to spend so much that you are in debt and stressing out about your finances. If you strike a nice balance, then you do not have to feel bad about spending money on yourself every so often.