In the world of economics you can be two things, a consumer or a saver. In my mind there is no gray area. There is an old adage that illustrates what I’m trying to say perfectly. “You have GUNS and then you have butter!” Guns refer to things you can purchase that appreciate in value over time, while butter refers to possessions that lose value over time.
Who Is A Consumer?
A consumer is a person who spends the majority of their economic energy acquiring “things” or “experiences” that do not add ECONOMIC value to their lives. In layman’s terms a consumer is someone who spends their hard earned dollars on “Butter.”
Who Is A Saver?
A saver is someone who plans ahead for the future and spends the majority of their economic energy saving money and adding ECONOMIC value to their lives. In short a saver is someone who spends their hard earned dollars acquiring “Guns.”
Below is a list of popular examples that a majority of households spend their money on.[table “” not found /]
Please keep two things in mind when looking at this list. Not all “Guns” (assets) will appreciate over time, you have to educate yourself on that particular asset class and make sure you are purchasing at or below fair value. Additionally, there is always a place and time for rewarding yourself for hard work or a job well done. I am not saying to never go on vacation, buy new clothes, or get a smartphone. What I am saying is you should number one never go into debt when obtaining these luxuries and number two should never strive to purchase these items on a regular basis.
Here’s to our wealth!