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I think about this a lot, as another frugal but high-earning household that earns way more than we spend, even after maxing out 401(k) contributions. Most peopl

I think about this a lot, as another frugal but high-earning household that earns way more than we spend, even after maxing out 401(k) contributions. Most people in our position save more than they need partly as a means of hedging personal risk (higher-than-typical retirement and medical expenses, children who grow up unable to financially self-suffice), and partly (IMHO) just because they gain some satisfaction from seeing numbers climb and because hoarding wealth is not seen as having any downside. However, at least the first of these reasons could be much more efficiently managed by having social (rather than individual) safety nets, for the same reason that insurance works. Some people also save with the thought of giving away a ton of money at death, but this again holds money out of useful purposes until decades away. With these thoughts in mind, and with the example of religious folks with much less disposable income than us who tithe, we annually give away whatever money we don't have use for after sensible but not excessively conservative allocations for immediate and future needs. To be clear, I'm not certain this is the right thing to do; ask me how I feel about it in a few decades!

em500 7y ago
> Some people also save with the thought of giving away a ton of money at death, but this again holds money out of useful purposes until decades away. What makes you believe that? The overwhelming majority of savings are held in bonds, stocks and real estate, not in paper notes in a vault. You might quible over the usefulness of savings and investments vs other allocations, but assuming is useless is pretty extreme.
- eptcyka 7y ago
  In all honesty, putting money in real estate or stocks is just speculation which is fairly meaningless - the only benefit that brings is that it drives market forces to evaluate a certain good at a given price, and even still I don't believe it's all too useful today. Further still, putting money into real estate with a hope of ROI is, in my opinion as a home-owner-to-be, actively detrimental to society. Having seen the market prices in my current city rise more than 2x in less than 10 years without the wages seeing anything remotely close to the same adjustment. Just because somebody can make a profit doesn't mean that any intrinsic value has been made.
- pfortuny 7y ago
  Thanks for writing this. Saving is not storing money. It is delaying your right to “use” it, thus allowing others to “use” it now (which is why you expect a return interest). That is why banks are not evil. On the contrary: they are the basis of a healthy economy.
  - StillBored 7y ago
    Nothing is black/white. Banks which operate like your grade school basic economics classes are providing a healthy/necessary service for the economy. OTOH, it might be debated that banks which take your money leverage it out and get huge returns while giving you a fraction of a percent, banks that charge 2-4% transaction fees for basic transfers for merchants, or fee harvesting people for more than their net worth are more economic parasites than useful service providers. Much of modern banking in countries like the US are basically shifting wealth from the economic value creators to a few vampires growing their own personal fortunes which dwarf that of the other 99.999% of the population. The idea that they might return some of that to their customers though interest bearing checking accounts, removing low balance fees or any of their other abusive practices never comes up.
    - pfortuny 7y ago
      Well, I was referring to the institution, not to specific instances of it. I should have said "banking", probably. You have a point (that corruption is almost ubiquitous nowadays in the large banking corporations) but my argument was intended as an abstract. And precisely because banking is so essential to economy, its corruption is one of the worst events in an economy.
- lozenge 7y ago
  Many economically productive things are immoral (cigarettes, child labour) and many are amoral or zero sum (somebody choosing one food brand over another is of no value to society). Anyway, the usefulness to humanity of an investment must be orders of magnitude less than a donation. https://80000hours.org/articles/should-you-wait/ https://80000hours.org/articles/should-you-wait/
- xenocyon 7y ago
  I'm measuring with respect to the default. When I say "useful" I mean "more useful than the default". Investing in stocks and bonds is the default (very few rich people save cash notes in a coffee can, so that's not worth talking about). Market investments don't help with the climate crisis (in fact their effect on climate are generally negative), human rights, etc, whereas our investments in 350.org and the ACLU do. Additionally, these orgs also have the ability to utilize the market as a means of growing money, although if they focus on this excessively that can be a distraction from their core mission. But we're getting into higher-order discussions here...
- acjohnson55 7y ago
  And even money in "sitting" in deposit accounts is, in reality, loaned out to be put to productive purposes.
newfangle 7y ago
As the other commenter said, unless you are hiding your money under your matgress your money is being used by society in some manner.
- cheerlessbog 7y ago
  Hiding your money under the mattress increases the value of money being spent because it reduces the amount of money in circulation in the near term.
  - im3w1l 7y ago
    In a system where money is debt, money under the mattress means someone else is in debt. That is someone that has to be more risk averse. Normally this is balanced by someone who can take more risk because they have more money. If hoarding money under your mattress becomes a movement then it may be that it tilts society to unhealthily risk averse and no one is in a position to try ambitious investments. I haven't fully thought this through so please poke holes in the argument if you can :)
    - cheerlessbog 7y ago
      Money is not debt its paper or equivalent whose only purpose is exchanging for things. The government can and does print as much as it likes without creating any obligation on anyone else. They could print a billion dollars to put under your couch without any affect on the economy at all until you spend it.
_bxg1 7y ago
My parents tithe 10% before tax each year. When I became an atheist I decided it wasn't going to make me less generous, so I "tithe" 10% of my pre-tax income to an assortment of charities and put the rest of my excess in savings. Of course the right amount varies greatly by an individual's circumstances, but 10% seems like a good rule of thumb unless you're super-rich.

em500 7y ago

> Some people also save with the thought of giving away a ton of money at death, but this again holds money out of useful purposes until decades away. What makes you believe that? The overwhelming majority of savings are held in bonds, stocks and real estate, not in paper notes in a vault. You might quible over the usefulness of savings and investments vs other allocations, but assuming is useless is pretty extreme.

eptcyka 7y ago
In all honesty, putting money in real estate or stocks is just speculation which is fairly meaningless - the only benefit that brings is that it drives market forces to evaluate a certain good at a given price, and even still I don't believe it's all too useful today. Further still, putting money into real estate with a hope of ROI is, in my opinion as a home-owner-to-be, actively detrimental to society. Having seen the market prices in my current city rise more than 2x in less than 10 years without the wages seeing anything remotely close to the same adjustment. Just because somebody can make a profit doesn't mean that any intrinsic value has been made.
pfortuny 7y ago
Thanks for writing this. Saving is not storing money. It is delaying your right to “use” it, thus allowing others to “use” it now (which is why you expect a return interest). That is why banks are not evil. On the contrary: they are the basis of a healthy economy.
- StillBored 7y ago
  Nothing is black/white. Banks which operate like your grade school basic economics classes are providing a healthy/necessary service for the economy. OTOH, it might be debated that banks which take your money leverage it out and get huge returns while giving you a fraction of a percent, banks that charge 2-4% transaction fees for basic transfers for merchants, or fee harvesting people for more than their net worth are more economic parasites than useful service providers. Much of modern banking in countries like the US are basically shifting wealth from the economic value creators to a few vampires growing their own personal fortunes which dwarf that of the other 99.999% of the population. The idea that they might return some of that to their customers though interest bearing checking accounts, removing low balance fees or any of their other abusive practices never comes up.
  - pfortuny 7y ago
    Well, I was referring to the institution, not to specific instances of it. I should have said "banking", probably. You have a point (that corruption is almost ubiquitous nowadays in the large banking corporations) but my argument was intended as an abstract. And precisely because banking is so essential to economy, its corruption is one of the worst events in an economy.
lozenge 7y ago
Many economically productive things are immoral (cigarettes, child labour) and many are amoral or zero sum (somebody choosing one food brand over another is of no value to society). Anyway, the usefulness to humanity of an investment must be orders of magnitude less than a donation. https://80000hours.org/articles/should-you-wait/ https://80000hours.org/articles/should-you-wait/
xenocyon 7y ago
I'm measuring with respect to the default. When I say "useful" I mean "more useful than the default". Investing in stocks and bonds is the default (very few rich people save cash notes in a coffee can, so that's not worth talking about). Market investments don't help with the climate crisis (in fact their effect on climate are generally negative), human rights, etc, whereas our investments in 350.org and the ACLU do. Additionally, these orgs also have the ability to utilize the market as a means of growing money, although if they focus on this excessively that can be a distraction from their core mission. But we're getting into higher-order discussions here...
acjohnson55 7y ago
And even money in "sitting" in deposit accounts is, in reality, loaned out to be put to productive purposes.

newfangle 7y ago

As the other commenter said, unless you are hiding your money under your matgress your money is being used by society in some manner.

cheerlessbog 7y ago
Hiding your money under the mattress increases the value of money being spent because it reduces the amount of money in circulation in the near term.
- im3w1l 7y ago
  In a system where money is debt, money under the mattress means someone else is in debt. That is someone that has to be more risk averse. Normally this is balanced by someone who can take more risk because they have more money. If hoarding money under your mattress becomes a movement then it may be that it tilts society to unhealthily risk averse and no one is in a position to try ambitious investments. I haven't fully thought this through so please poke holes in the argument if you can :)
  - cheerlessbog 7y ago
    Money is not debt its paper or equivalent whose only purpose is exchanging for things. The government can and does print as much as it likes without creating any obligation on anyone else. They could print a billion dollars to put under your couch without any affect on the economy at all until you spend it.

_bxg1 7y ago

My parents tithe 10% before tax each year. When I became an atheist I decided it wasn't going to make me less generous, so I "tithe" 10% of my pre-tax income to an assortment of charities and put the rest of my excess in savings. Of course the right amount varies greatly by an individual's circumstances, but 10% seems like a good rule of thumb unless you're super-rich.