When you boil it down, there are four things you can do with money: spend, save, invest, or give. Every transaction, from your emergency fund contribution to your morning latte to the $20 you stick in your niece’s birthday card, falls into one of those four categories. 

It may seem like an oversimplification, but it’s accurate. And most people could benefit from making their finances a bit simpler. By breaking everything down into one of four categories, it’s much easier to see where you’re managing your money well and where you could improve. Chances are you feel more comfortable with some areas than others. 

It’s not a bad thing to be really good at one or two money tasks. But if you want to manage your money well, you must figure out how to balance your funds between spending, saving, investing, and giving.


When you think about what you can do with money, spending may be the first thing that comes to mind. Most people are naturally wired to spend money. It’s a part of daily life: paying the rent or mortgage, buying groceries, eating at a restaurant, buying clothes, paying for a streaming service, or getting tickets to a movie or special event. There are countless ways to spend money.

Many financial “experts” tend to present spending in a negative light or as a necessary evil. Here at Everyday Money, we don’t agree with that approach. Spending can – and should – be a good thing! The key is to really look at every dollar you spend and make sure it’s something that brings you joy. If not, then it’s time to rethink your spending strategy.

Obviously, the big risk here is overspending. Spending money (even on things that bring joy) can be a problem when it isn’t balanced with the other three money tasks. While spending is typically focused on the present, it’s vital to make sure you’re also putting money toward the future via saving and investing.


As with spending, saving can incorporate many different actions: building an emergency fund, and providing for short term goals. Saving is a vital part of a well-rounded plan, and it helps ensure you’ll have the financial resources you need in the future.

Just like spending, however, saving can also be done incorrectly. There is such a thing as saving too much. If you only focus on saving your money and never on spending or giving, you stop living in the present. 

For example, many people focus entirely on saving for retirement. They scrimp and save every penny and tell themselves that they can spend that money once they retire. But that plan often backfires and breeds unhappiness! 

Focusing solely on a future financial goal can prevent you from enjoying your life right now. And by the time you get to retirement, you may not able to spend that money anyway due to health issues or other uncontrollable circumstances.

So, save some money for the future! Just don’t save so much that you can’t live in the moment.


The third thing you can do with your money is to invest it. One of the most common examples of this is investing in the stock market through a retirement account. But you can also invest in real estate, outside retirement accounts, your kid’s college fund, a business and many other examples.

When you invest your money, you allow it to work for you, grow and be ready for later use. While spending is all about now, investing is focused on the future and using your money to make money for you.

Like the other money tasks, investing must be balanced. There is such a thing as investing too much. Sometimes that means you don’t leave yourself enough money to take care of your daily expenses or bills. But investing can also fall into the same trap as saving, where you don’t give yourself permission to enjoy your money now because you’re so concerned about investing it for the future. It’s all about balance.


The final category is giving. For many people, giving their money brings the most happiness. If you haven’t often experienced the joy of giving away money, try it out. Next time you have the chance, leave a big tip and see how you feel. It doesn’t have to be $200 (though you certainly can do that if you feel comfortable with it). Start small – maybe tip 40% instead of 20% on your morning latte. 

Many people associated charitable giving with church or religious organizations, but those aren’t the only options. You’ll get the most out of giving when it aligns with your values

So think about what’s most important to you and find ways to be generous in those areas. Maybe that means contributing to a veterans’ charity or a youth sports organization. Perhaps you want to support endangered animals or the environment or medical research. The options are endless. Just choose something you truly care about.

Of course, giving also needs to be balanced. If you’re too generous and give away more money than you can afford, it leads to financial instability. The key is to be generous but also wise.

Take small steps toward better money management

Your money should enhance your life. When you have a balanced plan for spending, saving, investing, and giving, it allows you to find joy in your finances. You can spend and give freely without worrying that you aren’t investing or saving enough.  

If you feel like you want to get better at one (or more) of the money tasks, start with small steps. Leave a generous next time you eat at a restaurant, or purchase something you will truly enjoy. Set up an automatic transfer of $20 a month into your emergency fund. Every little bit counts, and the more you practice the money tasks, the easier they become.

If you aren’t sure exactly how you’re dividing your money between the four tasks, analyze your budget. Don’t have a budget (or can’t remember the last time you updated it)? Try BudgetingBlocks™.  We designed this system to be fun and interactive – way better than a boring spreadsheet. You and your partner can use the blocks to view your money and allocate it into the four categories in a way that matches your values and goals. Get your BudgetingBlocks™ here!