Why Saving Money is a Bad Choice

“Saving is what makes people who earn money stay broke.”

Yes, there is wisdom in saving. But if you save for the sake of saving alone, you might care to re-think your choice.

 

More often, people save for “rainy days”. Financial coaches say, saving money means having available cash when you need it. We save mostly for a possible medical emergency or for buying our dream house or car. Hence, many people allocate a portion of their income/ salaries as savings to their banks. But who’s really getting richer, the banks or you?

 

I don’t intend to say that you must not save. People must save! What I want to point-out is that if you save just for the sake of saving, you will never improve your current financial status or if you will do, it will take you years to do that if not a lifetime of hard work that could have been shortened if you just had smarter financial choices.

 

If the purpose of you saving your money is to prepare for an emergency, medical or accident, many life insurance companies now are already giving premiums that are long-term and not so much costly. When you save P5,000 ($100) a month or P60,000 ($1,200) a year for emergency, you are making the worst financial choice. If you are diagnosed with cancer, you won’t even survive a week at the hospital even with your one year worth of savings. 

 

Buy a life insurance premium. In this way, you protect your savings from being washed-away by an emergency and you protect yourself and your family against the burden that may cost you by some bad financial choices you made. When you buy life insurance, don’t think about yourself, think about the future of the people that are dear to you.

 

If the purpose of you saving your money is to buy your dream house or your dream car, you are yet making another mistake. Given that you can save P5,000 a month, even if you increase it from time to time, it would take you at least 20 years to buy a descent house, much more, that dream car. You cannot buy these things from saving alone. Again, smarter financial choices.

 

Save for a definite amount of time. 1 year, 2 years, 5 years. Set a clear goal when you want that house or that car. Then decide on how much capital you need to do a start-up, buy a franchise, or invest a portion of that savings. By doing this you multiply your income streams thus multiplying your money.

No one ever became truly-financially independent by having a job alone. Any business guru would tell you to make your money work for you. Compared to saving, investing have much higher risks, but as they say, fortune favors the bold. Risks are necessary, it will be hard. But it must be hard, cause if it’s easy, then everybody will be doing it.

 

The only difference between saving and investing is risks. The former is easier, but it won’t bring you places, the latter is difficult, but it’s all worth it. 

Save to invest, do not save for the sake of saving.