I have two competing money styles going on in my life these days. One is a frugal streak a mile wide, although it seems to have diminished to half a mile these days. This frugal streak comes from my upbringing. My parents were not particularly frugal, but money was always an issue. I remember many concerns about money when I was growing up, so as a young adult, my response to this was to be as tight with money as I could possibly be. This was facilitated by the fact that I didn’t have much of it to begin with.
When we had a child and I developed a chronic illness, money became tight once again. Now that I’m working a bit more, things are looking up, hence the slightly less frugal lifestyle. That, and we value things like organic food, so we do tend to spend a bit more for our ideals. However, the frugal habit is still there. I put money into retirement and education savings plans like anything.
However, there’s another desire these days. It’s a desire to have my money work for me. I want to invest my money, whether that is in real estate or in slightly riskier investment vehicles. I know that money can make money, and I’m willing to put some time and effort into making that happen, just like I spend time being frugal. However, with that desire comes some risk. If I invest in real estate, the market could crash, leaving me with a mortgage larger than the value of my home. I could put money into high risk mutual funds or the stock market and have it bottom out just when I need that money.
If you want to play it safe, frugality is a good way to go. Saving money is very low risk, but the gains can be a little lower too. Spending or investing money to make money is higher risk, and the gains are potentially higher. Of course, the two aren’t mutually exclusive, and both can be savvy ways to create wealth.
Do you do both, or do you swing one way or the other?
Image courtesy of lusi at Stock Exchange.