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“You can get past the dead end. You can break through the ceiling. I did and so have countless others.”

Finance Tip Friday #37: Over Saving Your Money

Money Savings Smartphone Finance  - satheeshsankaran / Pixabay

YES! You can over save your money.

Saving your money is critically important to your financial wellbeing, yes, but there comes a point where you can save too much. Hear me out.

Your money needs to be working for you. When your money is sitting in the bank, it is doing nothing for you. Now, if interest rates for savings ever goes up by any significant amount (4%+ interest rates), then sure, you could argue that keeping a significant amount of money in the bank is worthwhile.

Unfortunately though with the surplus of cash that banks are sitting on, they don’t have an incentive to pay us any significant interest rates. They really don’t need our money. But who knows, maybe savings account rates will go up. Time will tell. If they do go up to 4%+ rates, then I will likely keep a significant amount of money as cash in the bank.

Regardless, you need to have your money working for YOU. Time after time when I consult with nurse practitioners, I hear that they have $50,000+ in savings just sitting there. This is not wise from a long-term financial perspective.

First, you need to have a 6–12 month emergency fund. We are not factoring that in here. For true financial redundancy and security, having 6-12 months of expenses in the bank is critically important. So, make sure you have that.

Also, make sure you have enough cash in the bank to cover your day-to-day life for 45 days.

In terms of business, ensure you have 3 months of operational expenses in the bank.

Beyond the above, the rest of YOUR MONEY needs to be invested and working for you. If it is not, you are simply just delaying financial independence and your ultimate freedom.

I am guilty. I will admit. For a few years I was just sitting on a lot of cash. I was scared of investing it. I was “used to” seeing that money in the bank. While the money was sitting in the bank doing nothing for me, the stock market and real estate market was growing. I LOST OUT ON SOME BIG RETURNS. I probably delayed my financial independence goal by a year or two… It was stupid in hindsight, but it is what it is. I learned a lesson.

Now a days, I move every dollar I make into investment vehicles. I maintain my personal/business emergency funds and keep some money in checking for day-to-day life. Outside of that, everything is reallocated every 2 weeks. That is right, I am actively doing this week to week essentially. Not only is my money working for me, but my money is protected from an asset protection standpoint (more on that in the upcoming Asset Protection Course I am developing).

I invest my free cash into 4 investment vehicles:

  1. Real estate.
  2. My retirement accounts and my post-tax stock market brokerage account.
  3. My businesses.
  4. Alternative investments like artifacts, gold, guns, etc…

What has this resulted in? My money working for me. It has resulted in passive income streams. It has resulted in residual income. PLUS, I get to see the magic of compound interest do its wonders.

I know many of you reading this are sitting on a lot of cash. STOP IT. It is not smart. You need your money working FOR YOU. Sure, during economic downturns it might be scary to invest your money, but like I explained in last weeks article, NOW is the time to invest while the markets are down. This is what results in BIG returns.

So, if you are sitting on some money, consider investing it vs. having it sit in the bank and being DESTROYED by inflation. You have already lost close to 9% of its worth this year alone. Think about that… You need to be reallocating that money into other investment vehicles on a MONTHLY basis at a minimum. It will only accelerate your financial goals.

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