Contrary to popular belief, a savings account isn’t the best place to keep your money. A safe would be a little more appropriate (at least that way you actually own your money in the event something happens to the bank or your account) but there are arguably much better ways to invest your money.
Does that word sound scary? Invest?
Don’t worry, even your savings account is technically an investment. You see, if you’re going to put money into a savings pot, then you’re already making an investment. Instead of spending that money immediately, you’re saving it in hopes that it will be useful in the future. This isn’t such a bad thing (it’s very smart in fact) because there are things like emergency funds that are a top priority in any family’s budget. That’s what you call having a plan for your money—giving it a purpose even if that purpose only has a slight chance of happening.
Giving your money a purpose
Even if that purpose is something in the future, it’s never a bad idea to give it one. For instance, estate planning is the perfect example of taking the right measures to ensure your money has a future even when you pass it onto your children or family members. It’s these kinds of plans that need to be fully fleshed out as soon as possible so that, if something were to happen, they can be executed and your money wouldn’t be lost to random payments or be disputed.
The lack of a purpose for your money will ultimately bring trouble to your financial situation. If you let it just sit and rot in a savings account, then not only will future inflation reduce the value of it, but it’s not being used for anything productive.
Saving money is fine, but there’s a limit
If you have money, you can give it a purpose. It doesn’t matter if that purpose is just for entertainment or to add some special touches to your anniversary—it should be used. As long as you have the right amount of emergency savings to fall back on, then there’s no issue with spending money. Pay your bills and your necessary expenses, keep some money left over for certain situations and then just spend the rest.
Not only will spending money on items improve your lifestyle, but it will give you a motivational boost knowing that your hard work is paying off and you’re not just slaving away living paycheck to paycheck.
Everyone needs a plan
Without a plan, your money is going to be lost to carelessness and eventually drop in value. Instead of just stuffing it into a savings account, give it a purpose. Learn how to invest, buy something special that can improve your lifestyle or plan something far in the future like a holiday or your retirement fund. Whatever you do (especially if you’re young) don’t let your money sit in a savings account and serve no purpose—you worked hard to earn it, so go do something with it!