conversation: User (kevingp12): "So I am a spender. I want to understand more about bugeting and saving. I have some trouble understanding the concept of saving though. What is it's purpose, what does one save for, to spend?\n\nI'm 22, working somewhere decent, and graduating from college soon, I have lots of hobbies and like to buy things that allow me to do my hobbies.\n\nSo to get started on this saving topic. If I had no loans, no credic card payment, no bills, had enough emergency money in the bank for 6 months, and lets say I wasnt really interested in retiring early or saving for my 401k- what do I do with my surplus money? Can I spend however much I want as long as I always had enough money for really important things? \n"
  Self: "&gt;I have some trouble understanding the concept of saving though. What is it's purpose, what does one save for, to spend?\n\nPeople might disagree but I'll try to explain this from a general economics perspective:\n\nYou say you're a spender, so I'm going to make the assumption that you don't just mean you buy penny candies.  You're familiar with the purchase of expensive electronics or cars, but not property, and since you're asking, not financial instruments.  That's okay.  The point is you do understand the concept of buying things that you cannot purchase with say, one paycheck.\n\nSo to define it in one simplified statement, *saving is deferring consumption today (now) to obtain something later (tomorrow)*  This means that you do not need to save if you constantly were satisfied with what you had at the moment.  Clearly this isn't the case, but why save?  Well, that is up to you - you've thought about the topic and have decided on a future scenario where you have obtained x.  That *x* is something that you cannot obtain unless you set aside some money every time you get more, until you have the amount to get x.\n\n&gt;what do I do with my surplus money?\n\nWell, what do you do now?  Do you just spend it on other things?  I'm guessing you do - so in order to save, you have to value the *x* future goal I mentioned above *more* than you value spending in the present as well as spending the proposed savings on other things.  Could you come up with any examples?  Saving will not happen until you have a goal, even if that goal is "save up 5,000 dollars and then worry about the next step"\n\nI'm not one to argue this or that and whether you should save or what to save toward.  People will say that if you constantly spent every cent you had, it is a risky way to live because you're expecting that the universe will always be predictable enough that your cashflow keeps your consumption constant.  Having savings is the security I mentioned to protect you from that - an emergency fund, for example, allows you to keep consumption at the same level even when your cashflow is negative relative to before the emergency.  It can also allow you to scale down your consumption to "necessities" while you figure out what to do next, so that you don't die or get sick.\n\nI'd start [here](https://www.reddit.com/r/personalfinance/wiki/index) (the wiki) when you have a some time, and if you want to read more on emergency funds (and why you might want to save up to have one) check out [these](https://www.reddit.com/r/personalfinance/wiki/emergencyfunds) [threads](https://www.reddit.com/r/personalfinance/comments/w0yor/what_exactly_is_an_emergency_fund_what_exactly_is/)"
  