Tax-deferred/ tax-exempt accounts

[FrankCFA]

Kaplan, B2, p275

Example: Tax-deferred vs. tax-exempt accounts
An investor pays current and future taxes at 25% and is willing to give up $3,000 in consumption. The investor can contribute $3,000 in after-tax dollars to a tax-exempt account or $4,000 to a tax-deferred account.

Could someone please explain what’s “willing to give up $3,000 in consumption.” mean? Many thanks.

 

[cgottuso8190]

It’s just means he’s willing to save $3,000 instead of spend it.
Dude is willing to forego spending that $3,000 on hookers and blow now so that he can save it to buy dentures and a few decks of cards when he retires.

 

[FrankCFA]

Got it. Thanks.