It may seem counter-intuitive to what you may think is an economic textbook answer. With practically inevitable hard economic times ahead, most people’s natural reaction is to begin curbing their spending and to start hoarding cash. However, this behavior of spending less and saving more has a very negative impact and becomes nothing more than a self-fulfilling prophecy of economic hard times. The herd mentality puts jobs, even yours, and more at risk.

Being prudent with your money during hard economic times is important, but spending less will have an exponential effect on businesses, jobs and more. Businesses rely on revenue through sales to pay their employees, meet financial obligations to creditors and invest in new projects that make them more money. Declining revenue will force businesses to layoff employees and not invest in future projects. Those layoffs compound the problem even further because more of the population now has less money to spend. This vicious cycle starts all over again; jeopardizing millions of jobs.

But what if you really don’t want to spend your money? Wouldn’t a savings account be the best alternative? Not necessarily. Credit is frozen or has retracted severely from even several months ago. Banks use your checking and savings deposits to loan out to other customers or even banks. Tightened lending standards means lending may only occur to the best bank customers. This shrinking pool of people who can actually borrow, but at higher rates, may deter them from borrowing altogether. Fewer people borrowing means banks end up with a surplus of cash that they can do virtually nothing with. Banks can’t lend your money to earn interest and when you combine that with more and more people adding money to savings accounts, it lowers the rate of return for everyone.

What should you do then? Continue to spend your money.  If you don’t want to save, then invest in dividend-paying stocks (which are very cheap these days) and low-yield bonds.  This will put money in the pockets of entrepreneurs and businesses who will turn around and use the money to create jobs and start new projects thereby jump-starting the stumbling economy. If you’re really a doomsdayer, purchase goods with intrinsic value like: food, fuel and clothing. At least you can use this stuff if the economy collapses and it will always give you something to barter with while people are burning their dollar bills to stay warm. Whatever you do, keep the economic blood pumping by spending money.