Money has been considered as the prime resource in
this
materialistic world. Some people believe that it should be saved for the future usage in tough times while others assume it is better to increase the consumption for the strong economic growth of the country. I presume the balance of these
both
views is beneficial to save
both
the country as a whole or an individual.
There is a ground for the belief that the spending is vital for the growth of the nations. The stability of the economy is measured by means of Gross Domestic Product, which is called GDP in short. Consumption is required to increase
this
factor as increased usage by people increases the
demand
, which in turn give a rise in production which means higher GDP.
For instance
, if the
demand
for the product or the service increases, it is manufacturing increases, which give employment to many which again increases the spending giving rise in
demand
.
This
is a full circle and a break in one stage could harm
this
process and eventually the community.
On the contrary
, if
this
spending is fuelled by the credit more than the income,
then
consumers would be brought under the mountain of the debt. A prime example is the American citizens who are under higher debits owing to their extravagant nature of spending more than earning.
Thus
, expenditure according to the income is crucial.
On the other hand
, the value of the thrift is important for
both
the industry and the individual to fight with the catastrophic situations.
Firstly
, the corporate saving would save the company in times of the crises when it does not get the loan from the bank.
Secondly
, if the mass population would deposit money in the bank,
then
it can be used for a loan to the corporate for capital gains.
Thirdly
, domestic conservation can save the family at the time of calamities like natural disasters and recession. On the contrast, if more and more folks start savings at the cost of the consumption, the cycle of the
demand
-supply will be breached which can harm the development of the society.
For example
, fewer requirements mean less production
this
causes higher cost which again lessens the
demand
and
finally
the industry.
Thus
, it is imperative for citizens to save enough to cope up with unwanted situations, but not at the limit which affects the GDP.
To sum up, saving and spending fulfil the individuals and economy needs.
However
, too much in
both
ways will dangerously lead to unnecessary things, so, everyone should know when to spend and save for the sake of the whole. It is just a matter of balancing things in a proper way.
