The tension between saving and spending is an age-old financial conundrum. For many, the challenge lies in determining when it’s appropriate to splurge, particularly when that hard-earned nest egg has been built over time.
This dilemma was discussed during a recent episode of The Ramsey Show. Dave Ramsey addressed a listener’s concerns about buying a new car despite having a healthy cash cushion.
Ramsey says saving money shouldn’t mean skimping on necessities. There comes a time when one must understand the value of a reliable vehicle over the comfort of a savings cushion. Here’s what Ramsey had to say about the right way to approach saving and spending.
Dave Ramsey Advises Someone Who Is Afraid To Spend Money
During an episode of The Ramsey Show, Dave Ramsey read a letter from Ricky, who sought advice about spending money on a new car. Ricky said he had enough money to buy a nice car, but he was afraid to spend the cash.
Instead of purchasing a new vehicle, Ricky chose to drive “beaters” so he wouldn’t have to dip into his emergency savings fund. “I’m tired of being on a first-name basis with the AAA tow truck driver,” he wrote in his letter to Ramsey.
A Reliable Car Is Important
Ramsey said it’s OK to buy a new vehicle if you already have savings and you’ve paid off high-interest debt. According to him, a reliable car is more important than hoarding cash.
Ramsey said his wife also has trouble parting with money. “It’s so hard to finally get something in savings,” said Ramsey. “It’s hard to release it, especially if you’re wired as a saver. I’m wired as a spender; my wife is wired as a saver. Usually [people] fall into one of two categories.”
“[My wife] gets great comfort from having that pile of money more than she would get great comfort from having a reliable car,” Ramsey continued. “Me, I’d rather have a reliable car. After you’ve established your emergency fund, [reluctance to spend] is an emotional thing at this point. You have the money, but you have trouble releasing it. You get security from that extra money beyond your emergency fund.”
Dave Ramsey Believes You Should Enjoy Your Money
Ramsey said some people like having extra cash because it makes them feel safe. However, it’s important to be able to enjoy the money you work so hard for. “It would be a shame to save and work and not enjoy some of your money. And one of the things you should enjoy is a reliable vehicle,” advised Ramsey.
You don’t have to fear money. It’s best to approach money as a tool that can help you reach your goals. Ramsey said money can be “fun” if it’s handled correctly.
“Money is fun if you have some,” Ramsey added. “You ought to enjoy it. You ought to enjoy some nice things. If [all you do is spend money] and you don’t save and you don’t give, then you’re just shallow. But to assume that just because someone has the ability to enjoy money means that they’re greedy or shallow is just bogus.”
Focus on Giving Money
Ramsey suggests focusing on philanthropy if you’re financially stable but hesitant to spend your cash. This will permit you to enjoy your money. He recommends donating to a good cause or helping someone in need. “When you learn to give as the natural rhythm of your life it changes everything,” he said.
Balance Is Key
Ramsey says it’s OK to occasionally treat yourself once you reach baby step three. However, he emphasizes maintaining balance when it comes to spending and saving.
According to Ramsey, it’s easy to tell if someone is truly selfish. He says it will be clear by the way they spend their money.
“The way you can tell is by looking at what percentage of their financial situation is going towards stuff for them,” said Ramsey. “If all the money you make is going [towards yourself], you’re out of balance.”
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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