In today’s world, there is plenty of talk about spending vs. savings and how it all affects our economy.  It’s a legitimate question.

If you go to the mall and spend $50, how does that affect the economy?  And of course, there is the opposite question: what if you don’t spend that $50 at all and choose just to save it?  How does that affect the economy?   

Here’s the deal…whether you choose to spend or save that $50 won’t have any major affect on the economy.  However, if millions of people across the country all make the same decision as you, then collectively, something significant is going to happen. 

Which is sort of where we find ourselves today.  We are in a recession partly due to the lack of collective spending by Americans.  Thus, you hear about it in the news and from the government that we should be spending more now.

The problem is how can you spend what you don’t have?  Today, more and more people find themselves with smaller incomes (job loss, pay cuts, etc), so they are less likely to be spending like before on things like vacations, new cars, furniture, eating out, etc.

Here’s a great video that further explains the current situation and how the credit crisis is affecting the economy.

YOUR 2 CENTS: How can you help contribute to the economy without putting a strain on your own personal finances? 

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1. What Does The Current Economic Crisis Mean For Me?
2. How Do I Learn To Spend My Money On Needs VS Wants?
3. How Can I Help Take Some Of The Stresses Of Money Off My Parents?
4. With The Bad Economy, I Feel Like I Should Help Out My Parents Financially…What Should I Do?
5. What Should Students Do With Their Money From The Time They Receive It? (Part 4)