When you save money, you are doing something inherently good. That may sound strange, so let me explain.

You Can’t Waste Money

Let’s say you buy an apple and you never eat it. It just rots. Did you waste the money you spent on the apple? The answer is no, because the money is just the method of exchange; it is just how we keep score. The money you spent will be spent again, by someone else.  Something was wasted, though. The apple was wasted, because the apple that rotted will not be eaten by someone else.

You cannot waste money, but you can waste what money buys.

Saving and Generosity

Now let’s say that, instead of buying that apple that you aren’t going to eat, you save your money. What has happened? That apple is now available for someone else to eat. Further, by saving your money, you have provided that money to someone else who seeks a loan. You have, by some tiny amount, lowered the interest rate and the rate of inflation.

What this means is that you have been generous. And in fact, it is not possible to be any more generous by giving money away than by saving it. It is possible for your generosity to be more targeted or more efficient if you give it to a cause worthier than the worlds’ collection of borrowers. But whether you give away money or just save it, the generosity has already happened. The generosity consists in not consuming for yourself, and allowing your money to work for someone else.

So by saving you are benefiting yourself in the long-run by earning an interest rate, and you are benefiting some borrower who is paying that interest rate. This should not be surprising. The surprise comes in because we usually find it difficult to accept that the accumulation of wealth is a form of generosity to others.

Of course if everyone saved everything and no one spent, that would be a problem. I can improve my life expectancy a little bit by eating less, but that doesn’t mean I can improve it a lot by eating a lot less. And it certainly doesn’t mean I can increase it to infinity by not eating at all. But in the real world we are all not saving enough, especially in the United States, so the truth is that becoming wealthier through savings and investment means we are making others wealthier.

The Greater Good

Now the point that this generosity could be more targeted or better focused should not be ignored. There are ways of giving that probably do a lot more good for the world than simply saving and investing. However, it is obvious that not every plan to make other peoples’ lives better actually accomplishes that goal. It is equally obvious that some organizations which are supposedly dedicated to the greater good really make things worse.

Just as it is possible for your generosity to be better focused, it is also possible to give to organizations that do more harm than good. So if you want to improve the efficiency of your generosity, you have to do the same things everyone has to do if they want to improve efficiency. You have to do your research, and you have to keep monitoring your decisions.

So it is not at all strange that so many people decide to dedicate themselves to charity in the years after their careers are mostly finished. That’s when they have enough time to do it right.

And maybe we should all admit that we’ve given a lot of money to unworthy causes. Unfortunately, the most common unworthy causes tend to be family and friends. But perhaps there is sometimes something else going on besides generosity when we give to others.


There is an old Eskimo saying: “Gifts make slaves like whips make dogs.” What does this mean?

In many cases, gifts are given to make the recipient dependent on the giver, or to encourage the recipient to act in a way that the giver finds acceptable. The giver is then the one with the power. Often, gifts are given in an effort to establish the giver’s social position relative to others.


None of this was written in an attempt to convince you that you should never give. Instead, it was written to really drill the point that generosity comes from frugality. Wealth also often comes from frugality, and this should not be surprising. Normally, if you do better for others you do better for yourself.

There are a lot of ways we self-sabotage. Maybe, just maybe, this post will help stop some of your own self-sabotage.