Save or Spend? What Is the True Key To Financial and Mental Wellness?

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What, exactly, should Americans be doing with their money right now? The general consensus is to save as much money as possible. Saving is the primary strategy for fighting the current high inflationary period and ensuring a comfortable financial future with a robust retirement fund. 

But it’s OK to feel tired of budgeting all the time, even though that kind of story tends to make fewer headlines than its “grocery store hacks!” and “coupon stacking tips!” contemporaries. The concept of frugal fatigue — in which one feels frustration and exhaustion from always tracking their spending and saving habits — is real. Many people simply want to feel happy, and putting their money toward a wonderful experience can make all the difference.

In a research report from Oracle Fusion Cloud Customer Experience (CX) and Gretchen Rubin, five-time New York Times bestselling author and podcaster, 78% of people surveyed said they would pay a premium for true happiness. 

Where does the balance lie between spending and saving? GOBankingRates spoke with Ambus Hunter, an accredited financial counselor (AFC) who has helped more than 500 people make smarter spending and saving decisions through financial coaching, speaking and blogging. Here are a few scenarios in which Hunter said it is better to save your money versus spending it on what brings you joy.

Save: In a Crisis

If you are going through or coming out of a financial crisis, like the sudden loss of your job, Hunter said this is the time to pause any discretionary happy spending. Get laser focused on making a financial plan and budget and sticking to it to weather the storm. 

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“When rebuilding, you want to reach fundamental financial security as soon as possible. If it’s not a need, save the money,” Hunter said.

Save: When the Emergency Fund Is Low

In a recent GOBankingRates survey of 1,005 Americans, the majority of people — 51% — don’t have any form of an emergency fund. And of those that have one, the 15% have $1,000 or less saved.

If you’ve been dipping into savings, or your emergency fund, to pay for sudden bills and expenses surrounding life events, make sure that you’re also putting any extra funds into replenishing your emergency fund, so it reaches a comfortable level. These funds, Hunter said, help protect us from financial fires. 

Save: In Times of Trauma

“Everyone responds to trauma differently, but you want to make sure you don’t make any significant purchases while in a state of trauma or high stress,” Hunter said. “While in this state, it can be easy to fall down a trap of mindless consumerism and end up in debt.”

Spend: When You Planned for Fun

What gives you joy and makes you happy? For some people, this could be anything from grabbing an afternoon coffee at their favorite coffee shop to getting concert tickets for their favorite band. Hunter, who budgets each month and makes a plan for his money for the upcoming month, also sets aside funds for fun. (Currently, those funds are going toward his ever-growing record collection.)

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“When I’m mindful, I can create moments to spend on what brings me joy without it financially holding me back, or feeling guilty about it,” Hunter said.

Spend: On Days You Value

What days hold the most value in your life and the lives of those you love? Some may choose to go all out to celebrate Halloween by dressing up in costumes with home decorations. Others plan surprise birthday parties for their children. Diehard baseball fans may head to the stadium on opening day while couples make plans for a special getaway to enjoy their anniversary together. 

“I’m an August baby and I really love celebrating my birthday!” Hunter said. “Some of my favorite birthday shenanigans involve money, but not all. Then you have other days of importance, like how my family took my parents to a baseball game for a joint Mothers and Fathers Day celebration. If there are events, holidays and other days of importance you value, plan ahead and save so you can spend intentionally.”

Spend: For Wellness

“I think spending money on preserving a healthy life is worth the investment,” Hunter said. “With spending on anything of value, plan ahead and verify it’s within your means.”

Taking care of your physical and mental health needs requires spending money and it is well worth the investment. A trip to the dentist can fill in a cavity while meeting with a therapist can be beneficial to working on yourself. In between, visits to the salon, barber and spa leave you looking and feeling your very best. 

Spend: When You Hit Your Goal

Did you meet a significant financial goal like paying off student loan debt? You’ve gotta celebrate that achievement with a spending treat!

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“Meeting financial goals, whether saving, a net worth milestone or debt payoff related, should be celebrated!” Hunter said.

Remember to make this a smart celebration. Hunter recommends staying within your financial means as overdoing it can wind up self-sabotaging part of your financial growth.

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