Friday Finance: Give, Save, Spend

John Wesley famously declared, “earn all you can, save all you can and give all you can.” John and his brother Charles were well known (and well dressed) 18th century anglican clergymen who famously became the founders of Methodism (go figure….).

In his Sermon On the Use of Money, where these statements are to be found, Wesley demonstrates a particularly ascetic streak because he does not offer any advice on how to spend. There is certainly advice on how money should not be spent: not on ‘delicate food, in gay or costly apparel, in superfluities of any kind…’ but none on how to spend it. My guess is that John Wesley probably wouldn’t approve of this blog….

Earn, save, & give is good financial advice but probably insufficient unless you are planning to give away everything you earn, which may well have been Wesley’s intent.money-is-only-a-tool-not-the-end-goalGiven that most of us will in fact spend, this blog is here to give advice for when you do spend on clothes.

However, it is important to acknowledge that a blog such as this one inevitably advocates a certain amount of self indulgence. If a 5YP is not to become entirely self-centred as well as self indulgent it needs to be set in context.  That is why I suggest that 5YP spending should be preceded by giving and saving.

I start with giving, precisely where Wesley ends, because it is least self interested and self serving.  But then we move to saving because it creates long term stability. Only then are we free to consider discretionary spending, the category into which a 5YP falls.

Giving TuesdayGive

Brits have a proud and distinguished history of giving to charitable causes. It is good for the soul to give away money regularly to causes we support, whether to a local community or church or an international NGO.

Giving is an important part of taking our place in human society and recognising our relative wealth compared to many part of the world. Indeed to give is to recognise that all that we have is itself a gift. Before we indulge in a 5YP let’s make sure we are giving.  10% of our income is a good target to aim to give away each year.

Save

In the grand scheme of things, a 5YP is not among the most important things in life. For those things that are truly important, a roof over our heads, education for our children, retirement, some form of financial security, that is why saving was invented.

So before we indulge in a 5YP let’s make sure we are saving.  Coincidentally, 10% of our income is also a good minimum savings target to aim for.  However, if there is a big project you are working towards you may well want to aim higher.Savings Pots

Spend

Only once these two things are in place, when we are giving to others and saving for the future do we then have the freedom of investing in a 5YP with some of the disposable income that we have left. Contra Wesley, I don’t think that spending is bad.  But it does  need to be put in its place.

If you’re not already thinking along these terms why not work towards it this year?  You’ll be glad you did.Pink.png

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