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Hoarding vs Affording


In this segment I often talk about the dangers of overspending.

Today I want to talk about the dangers of under-spending.


It’s one thing to make sure you can afford a thing. It’s another thing to be so gripped by fear, that you hardly spend any money. For the person so gripped by fear, the issue is not affording. It’s hoarding.

The difference between affording and hoarding is usually fear. And fear usually thrives in the absence of facts.

A budget is just a plan to spend money. Everybody realizes that in a budget it is important that you not spend too much. But did you also realize that it’s important that you not spend too little?

If the owner of a factory only focuses on what that factory can produce today, he’ll never spend any money on maintenance, because maintenance is a cost and it takes away from today’s productivity. This is the definition of short-sightedness.

Soon, his factory and machinery will begin to deteriorate to the point of inoperability. In an effort to maximize productivity, the factory owner will actually lose productivity.

It’s reminiscent of the story Jesus told about a guy who was so rich that he decided to tear down his old barns and build new, bigger ones to store his growing pile of stuff. His plan was to take it easy, or as he said, “eat, drink and be merry.” The only problem was he heard a Voice that night Who said (in effect), “Game over. Time’s up. Turn in your chips.”

I can only imagine the depth of regret I would have looking back and realizing that my barns full of stuff, which I had spent on no worthwhile person or worthy purpose, would now be someone else’s property.

Think about this: all of your money will be spent by somebody some day.

We exit this life with exactly what we entered it with. The only way to store wealth is to store it in people or purposes that will outlast us.

If you tend to be a hoarder, ask yourself – are you afraid of something? Maybe you are…you just don’t know what. Saving money is good. But when you obsessively save money for some unknown, fear-based reason, that’s not healthy.

The purpose of a budget, drafted in the context of an overall financial plan, is to identify and balance what needs to be spent now (lifestyle) vs. what needs to be spent later (savings). Most people who don’t have a plan err on the side of spending too much now. This is the consumer society in which we live. It is the spirit of the age.

But there are still a few souls who naturally err on the side of “later” spending, a.k.a., saving. Yes, they save too much. We call these troubled souls hoarders.

Interestingly enough, both over-spenders and hoarders need the same thing.

A plan.

Byron is a Certified Financial Planner and Managing Director of the Planning Group at Argent Advisors, Inc.
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