A big difference between rich people and the rest is that the former group understands the art of money management. More than what to do, it’s important what not to do. So identifying the ‘money management mistake’ is crucial.
Rich people or wise investors know well how to cut back on their expenses without cutting their needs—they know how to make money work for them even when they are asleep. So, the first step to grow your riches is to learn how to manage your money.
And it leads to one of the most fundamental questions in the books of financial planning—what do you do with your savings?
Does a large chunk of your monthly income go to savings account(s)?
That’s how it has been for ages—at least for the low and mid-income population. The majority of them take a portion out of their monthly income and deposit it in their Bank Savings Account. So prevalent is this practice across the world, very few actually think to question its value. In reality, though, putting money in the savings account is a big mistake that everyone should do away with. It’s a big block on the way, in fact, on your journey to make big money.
Putting most of the money in your savings account is most possibly the biggest money management mistake that you need to check. And it is becoming more so day by day.
Here are 4 reasons why you should never put your money in savings accounts:
Interest rate is low– Although it varies, it’s no secret that interest rates on saving accounts are quite low. So for all those who actually save money in the bank for the sake of this meager interest rate, it makes very less sense. Why?
Purchasing power stays the same– Even when interest rates add pennies to the amount, often your purchasing power stays the same – and even sinks – thanks to higher inflation. Meaning, even when it’s slightly more than the deposit amount, the real value of your money stays the same.
There are better avenues– ‘Don’t save to save, save to invest’—this is quite a clichéd saying but it’s quite true. Your savings could yield much more profits and even turn you a millionaire if you push the buttons right. Instead of savings account, go for better avenues like the stock market, bonds, and real estate.
Saving money for emergencies is important. Of course, creating a buffer against disasters is a must thing. However, you must do that in a way that makes more financial sense without ridding you of the potential to make higher profits. So avoid putting your savings in the bank savings account. Instead, be smart and invest it in avenues that make you more money even when you’re sleeping.