Can Not Spending Money Really be the Secret to Wealth?

You hear it all the time: Just Spend Less Money or "A Penny Saved is a Penny Earned."

But is becoming rich really that simple?  Is not spending money really the reason that many people are poor?  Is Not spending money really the reason that so many are rich?

The answer is that it is both true and untrue.  Although consumer keep spending more and more money, the reasons are multi fold.

Why Spending Less Money is the Road to Riches:

If you spend less, you should theoretically be able to save more.  Saving more, begets interest which is itself a savings.  When you choose not to spend money on a trinket lets say, and save that money, you can in theory choose to buy that trinket 2.0 at a later date.  Perhaps when the trinkett is available in High Def, or when it costs less.  But when you spend that money that trinket you are locked into that make and model.

Economists know this and this is partly why they are so interested in keeping inflation going up (ever so slightly.) The reverse of inflation is deflation and most economists fear this.  Deflation is when things are less expensive each year.  Mind you Deflation is essentially what you have with electronic goods.

And yes, if you save all of your extra cash beyond the basics you certainly can become fabulously wealthy.

Why Spending Less Money is Not Really the Road to Riches:

You must have food, You should have a roof over your head, You should have medical care.  All of this requires money and a fair amount of it.  As cheap as you can be, it still costs a few dollars a day, per person, to eat.  In other words there is a limit to how little money you can spend.  And someone that is making a retail wage, say $9 per hour might only be bringing in $18K per year - how are they supposed to pay a $2,000 monthly rent?  Where is the potential savings for them.

The reality is that many people cant save enough money because they are just not over that initial hump.  That hump of necessary money needed to sleep, eat, and care for themselves.

 The Truth on Spending:

Many Many Americans are working super super hard, but are unable to save much when things cost too much.  These working poor are not lazy people, they are busting their butt more than many of the uber wealthy, luck is just in their way.   The solution might be more compassion, and I speak to myself on this as much as anyone.

And yes, for the middle class that can afford their rent, their food, and some basic healthcare = saving your money this holiday season by not spending money on that trinket can make you rich.