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S E30: Consumption and Saving - Spend Now or Save to Spend Later

Think Like An Economist

CHAPTER

Consumption Smoothing

Economists call consumption smoothing. This is about having a steady amount of spending, or consumption over time. If you smooth your consumption, you'll be roughly spending a similar amount through your life. Smoothing is about taking money from your rich self, who pride, doesn't need it as much, and giving it to your poorer self,. who pride, needs it more. It's about shifting your money around til when you need it most.

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