Everyone talks about the benefits of saving money. Obviously, there are many. Saving money helps gives you financial security, prepares you for emergencies and the future, reduces stress, and so forth. However, everything has a flip side. Although we don’t talk about it much, there are disadvantages of saving money. It’s important to understand those if you want to have a healthy financial mindset.
Why People Don’t Talk About The Disadvantages of Saving Money
Our society is weird about money. On the one hand, we hear about it and think about it all of the time. On the other hand, there’s a lot of secrecy and weirdness about it. We all have different beliefs and assumptions and money psychology.
Some people talk bit about spending a lot of money. Others focus on a lot on sharing how they save money. But nobody is really talking about the disadvantages of saving money. Why? Because we tend to have a scarcity vs. abundance culture. It doesn’t make room for nuance. When the truth of the matter is that mostly saving money is a good thing but it does have a negative side.
5 Big Disadvantages of Saving Money
So, what are the disadvantages of saving money? Here are five of the big ones to think about:
1. You Miss Out on Experiences and Opportunities
There’s a big difference between being frugal and being cheap. Frugal people save money so that they can enjoy the simple things in life. However, they also know how to splurge on the occasional experiences that really matter. If you miss out on family vacations, events that you would find truly inspiring, or educational opportunities, then you’re just being cheap. If it costs money to have those experiences, then budget accordingly. Don’t just avoid them in order to save money.
2. Disadvantages of Savings Accounts
Yes, you should certainly have a savings account. You might even have more than one. However, beyond the amount that you need for an emergency, this isn’t the best place to park your money. Instead, you should be looking into higher value investments. So, there are specific disadvantages of saving money in a savings account rather than making that money work for you.
3. Saving Instead Of Paying Off Debt
Some people get so focused on increasing the number in their savings account that they make poor financial decisions. One of the most common is saving money instead of paying down debt. You’re afraid that you won’t have the money that you need to pay bills. So you save it. However, you’re actually wasting money paying interest on that debt.
4. Sometimes You Get What You Pay For
Let’s say that you have to hire someone for a really important job. Maybe you need someone to make a huge repair to your home’s roof. Or perhaps you’re hiring a babysitter, an accountant, or someone else who is going to play a crucial role in your life. If you’re only focused on saving money, then you might choose the cheapest person for the job. That’s a mistake.
Sure, you should weigh cost in the decision making process. However, experience and ability are also extremely important in these situations. If you hire a terrible roofer for your house, then your roof might just cave in. In the end, you lose money trying to repair it again. If you hire a terrible babysitter, who knows the emotional cost that will have for your child.
So, if you always go the cheapest route, know that you might get what you pay for. And sometimes that’s one of the worst disadvantages of saving money.
5. Your Mental Health May Suffer
Here are just a few examples:
- You constantly stress out about saving money.
- Therapy seems unaffordable even if you could truly benefit from it.
- You isolate yourself because you want to save money instead of going out with friends.
- Your relationships suffer because of disagreements over saving money.
Frugality is a mindset. There are healthy ways to save money. However, when saving money becomes an obsession or a hindrance in your life, then it isn’t healthy.
Counting Pennies points out that your physical health might suffer as well. For example, if you save money by avoiding going to the dentist but then your teeth get worse.
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Kathryn Vercillo is a professional writer who loves to live a balanced life. She appreciates a good work-life balance. She enjoys balance in her relationships and has worked hard to learn how to balance her finances to allow for a balanced life overall. Although she’s only blonde some of the time, she’s always striving for total balance. She’s excited to share what she’s learned with you and to discover more together along the way. Learn more about her at www.kathrynvercillo.com.