Financial Dilemma amongst Fresh out Graduates: Saving or Spending?

The moment we receive our salary, we tempted to buy a lot of things that we’d in our mind for a while. It is common amongst fresh out graduates who went to college to acquire skill sets, qualifications and enhance knowledge that enable them to seek – skilled employment so that they can fulfil their desires to have an enjoyable life. By the time they came out of colleges, they get a job and start getting a decent salary. It is the moment when they find themselves in a state of fear or uncertainty aka ‘Financial Dilemma’ whether to start saving for their future or spend to fulfil their short-term desires now that they have that kind of money at hand. Truth is, it is the moment when reality hits them and they are bound to take some necessary financial decisions which may cause financial dilemmas such as managing debt, preserving capital, saving income tax or invest to generate optimal returns etc.

Cause of Financial Dilemma Amongst Fresh Out Graduates

It is due to two reasons that we find ourselves in the financial dilemma i.e. impulse shopping and peer pressure. Well, impulse shopping will always be one of the top problems amongst youngsters who came fresh out of colleges as they have a force of habit of spending money on unnecessary things that they don’t really need. The day they get money in their pocket, they start to spend it on weird things that play no role whatsoever. To stop this, they uninstall apps like Paytm, Zomato, Swiggy, Amazon, and other apps that they often use for impulse shopping. However, uninstalling apps is not the solution because the apps are not actually the problem.

Another big issue is peer pressure. I don’t know if you know about this but it is very trending among youngsters to pay for social media. They pay for DSLR clicks, likes, and comments just to get proper attention over social media. In doing so, they spend around 1K-2K per month. It is not like these people are models or anything, it is the peer pressure that made them do so.

An urge to be accepted in a friends’ community or group made us do certain things that cost us a lot. Well, to be honest, these are the two most common reasons behind the financial dilemma amongst youngsters.

Saving Vs Spending

It is said that to live life on your own terms you need to spend less and save more to ensure that you have investments to generate a corpus that allows you to achieve your financial goals and maximize your long-term financial security.  The more people participate in capital markets and make investments, the more the economy will grow strong over time. The saving is indeed good for the economy of a country but sometimes the truth is more complicated than that.

According to many economists, spending plays a significant role in the growth of an economy as it is the only thing that keeps it afloat. The logic behind this reasoning is generally derived from the ‘circular flow of economy’ model. It tells that the cash flow in the economy is circular in nature and one person’s spending is another person’s earning, and vice-versa.

Apart from this, it is the spending that increases employment. So, if people start spending less, the jobs will cut down. As a result, the purchasing power of people will get weaken and they will find it difficult to afford things. If that happens, the negative sentiment will flow in the market and the economy will start going down. But, there is a major flaw in this approach. As the increased spending will help in increasing the gross domestic product (GDP) however in the long-term, it will lead to more indebtedness. In addition to it, the people will have the spending state of mind which will stop them from saving money for long-term.

Thus, it is important to make a  balance between spending and saving. What’s important is to encourage savings and invest money in financial instruments, in the hands of people who intend to use it for productive use. Saving money under a mattress is going to help neither you nor the nation.

Early Investing: A Way to Get Rid of Financial Dilemma

It is all our desire to achieve financial freedom to ensure that our future is secure and we have enough funds to carry out our short-term and long-term needs. Life is uncertain and one way to safeguard yourself against any unfortunate demise is to do investment for the future. It is the only way to secure the financial future of ourselves and our loved ones. And investing in early age is the best way to accomplish that.

Investing early can put you out of this eternal struggle of saving or spending and allow you to make investments for capital appreciation. Unfortunately, many youngsters don’t give a lot of thought as they are way too distracted towards things that they don’t actually need. Instead, one should start investing as early as possible to benefit from the magic of compounding in investing in high-risk high reward investment options that face pace the wealth creation to attain the desired capital needed for retirement or other financial goals.

At an early stage, you have less of responsibilities and financial obligations that will make it easier reaching the desired corpus earlier. The early investing will improve your spending habits, helping you cut down unnecessary expenses and allow you to be a step ahead. In short, you can better manage your finances that your long-term savings won’t be interrupted by the short-term spending or emergencies and your investments continue to grow over time.

Hope, this will help you with the financial dilemma of saving or spending. Nevertheless, if you have any doubt or would like to contribute something to this article then don’t hesitate to mention in the comment section below. We will be happy to have you here.

Happy Investing!!!


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