Reasons Why Saving Money Can Be Bad For You

No doubt, saving can be good for you in many ways. It can cover your emergency funds, you can save for specific huge expenses, or make retirement plans with it. However, everything in life needs a balance. Anything too much or too little can be bad for you. Saving is no exception, and it’s true that saving money can also be bad for you.

Is that even a thing?

Yes, there are 3 major areas in which saving money might end up affecting you negatively:

• Psychological link to money and savings.
• Financial errors while you save money.
• The mistakes of compromising on quality while saving.

Let’s dive deep into all three areas to better understand how saving might drag you down.

How can saving money affect you emotionally?

Everyone has their own psychology when it comes to money. Though money is a tool, it’s also an emotional relationship. As you’re growing up, you develop habits and financial beliefs based on your family’s beliefs and the culture you live in.

There are several aspects of money with Earning, Saving, and Spending being the major ones. If you save too much or more than you need, you can end up having a dysfunctional relationship with any or all of these aspects. This way it can be bad for you to save if you have not been doing it in a smart way. 

Ways saving money can be mentally bad for you

Here are some of the ways saving money can turmoil your mental or psychological peace:

• You usually save while compromising your comfort and enjoyment. To put it simply, you set aside your needs and self-care to save a bit extra. This may seem less extreme to you, but it can be harmful once your saving instincts go against your health.

• Continuously looking for ways to save can lead to stress. If you feel the need to save more and that causes anxiety, you need to work on your financial relationships. This regular mental stress can affect your physical health as well. 

• Not just you, but saving money affects your relationships also. Your ways and measures of saving might not match that of your family and friends. This difference can stir troubles in your relationships. Suppose you are saving on the cost of not meeting with your friends, you might lose the bond over time. This isn’t in any way worth saving, right?

Can saving deteriorate your financial condition?

You may have heard that saving is an essential thing to do for a good financial strategy. However, putting money into a savings account is not always a smart move to make. Here’s how:

• Putting extra money in a basic bank account restricts many financial wealth opportunities. You must have some money in an easy-attainable savings account. This will work as your emergency fund. Besides that, if you are collecting more money in a basic account, this will be a financial error. You should put that money into higher-yielding savings or investments that will help you multiply the amount actually.

• If you are saving money in cash, you can lose it over time due to inflation. The dollar you have today will still be a dollar tomorrow. However, it’s unlikely to provide you with the same value as today’s one dollar.

• Savings on the cost of personal growth can be dangerous in the long run. If you don’t go to college or start a business because you want to save that money for the future, you might miss out on a lot of good things. Thus, you should never focus on only saving but making money as well.

• It might make you pay through taxes. According to The Money Pixie, there are many tax breaks for spending money, but you might miss them due to saving. If you are earning interest on savings, it will be taxed. Similarly, if you are saving money by not having a home, you miss out on homeowner’s tax. Thus, it’s not every time a financially wise decision to save a lot.

The drawbacks of saving on small and big items

There are two ways you can approach saving money. We have talked so much about putting money into a savings account. However, you can also save on specific items. To explain easily, lowering your spending costs on bis and small items. But, you should know that this, too, can have disadvantages. See how:

• Lower cost things can also be of lower quality. You should always buy things that are long-lasting and of better quality. This way, you’ll enjoy them more and for a longer duration without having the need to spend on a new replacement quickly. Spending a little extra on the quality will save you for later. However, we are not suggesting you buy the most expensive one, just don’t go with the cheapest qualities.

• The cost of saving money comes with spending and sometimes wasting your time. In search of a product at the best possible cheaper rate, you spend hours browsing the internet and reading reviews. This takes a lot of your time and time is the most valuable currency of life.

• Similarly, you spend hours driving around to reach the cheapest gas station or comparing products online to get the best deals. As a result of which you end up spending (wasting) time and money in one way or another.

These are some of the ways in which you can hurt yourself in the process of saving more. Thus, figure out your relationship with money and make a smart financial plan which doesn’t only include saving but a perfect amalgamation of savings, earning, investing & spending methods.