Do you ever stop and wonder what happens to your money when you spend it?
There is a term in economics called the multiplier effect.
Essentially it explains that one persons spending is another person’s income.
When you spend $1 it multiplies because the next person spends a portion of it, and so on and so on.
Not to complicate things, but after dusting off my Economics textbook the formula goes something like this; If everyone spends 90 per cent of what they earn and saves 10 per cent, then the multiplier effect of one dollar you spend will be 1/(1 – 0.9) or a multiple of 10 times.
Wow! Think about that; every dollar spent in this example is amplified 10 times.
That dollar and subsequent portions of it continue to be spent over and over again.
This concept is usually discussed at a macro economic level, but it is relevant to a local economy, such as Summerland.
When you make the effort to stop at a roadside egg stand, it isn’t the value of the eggs, but 10 times the value of the eggs you pumped into the local economy.
How can we as consumers best put the multiplier into effect for Summerland, The Okanagan, or B.C.?
o Buy Local – the most obvious is to support businesses that are locally owned.
o Be Vocal – if a store doesn’t have a local option that you know exists, ask them to carry it.
o Think it Through — shopping at a local store is good. Buying the locally produced item is good. But where do the main ingredients from that locally produced item come from? Just because a company has a warehouse in the area doesn’t necessarily help the local farmer.
o Be Aware – ask yourself, “is this purchase multiplying in my community?”
o Challenge Yourself — what items do you buy that you haven’t explored the local option?
Solutions to Summerland’s economic development challenges do not reside solely with our mayor and council.
One transaction at a time, you can make a difference and it just might be 10 times more than you think.