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Why You Shouldn’t Save Money

Nope! Not even an emergency fund.

99% of the financial media will tell you that saving money is the most important thing that you can do. If you don’t save money then you’ll never be able to:

  1. Buy a house
  2. Retire
  3. Send your kids to college

In 500 words or less, I’ll share my philosophy on why this is one big lie.


Inflation is the slow devaluation of a currency over time. Another common definition for inflation is that it’s the “slow increase of prices over time.” Either way, inflation is essentially the reason that a McDonald’s Big Mac cost 45 cents in the 1960s but will run you closer to 4 bucks today. This might seem like a small increase since it’s only a few bucks. But, it’s actually a cost increase of nearly 800%. If you stop and think about it, it doesn’t really make any sense for the price of a Big Mac to go up at all. Let alone by 800%.

Since the 1960s, McDonald’s has gotten exponentially more efficient. Today, it has more sophisticated methods for farming, transporting, fertilizing, communicating, and antibiotics to keep cows healthy. With all this advancement, McDonald’s should be able to produce more burgers at a lower cost to keep prices down. So why in the world is the average cost of a burger increasing? Answer: inflation.

The Big Mac isn’t increasing in price. The dollar is decreasing in value.  

Inflation is typically a manageable 2-3% per year. But, due to COVID-19 and the substantial amount of new money printed for stimulus packages, the inflation rate today is nearly 9%. This means that if you saved $10,000 last year, it’s only worth about $9,100 today in terms of purchasing power. If this continues at the same rate, it will only be worth $8,281 next year.

This brings us to the concept of saving money.

Savings accounts generate no interest

Most people save money and put it in a savings account. On average, these savings accounts generate 0.06% in interest, according to Bankrate. This average is actually skewed higher by a handful of high-interest savings accounts. In reality, the nation’s biggest banks like Chase, TD Bank, U.S. Bank, Wells Fargo, and Bank of America offer much lower rates closer to 0.01%.

Not 1%. Not even 0.1%. 0.01%. This is a laughably low interest rate. 

If you worked hard to save $10,000 and put it in a savings account then the bank will pay you $1 at the end of the year. Unless you’re a big spender and qualify for the Platinum Honors Tier. Then you’ll earn $4…don’t spend it all in one place! 

What’s the bottom line?

If you keep your money in savings account, you are basically earning 0% in interest. Even so called “high-yield savings accounts” still only offer around half a percent. They usually advertise that this is “20X higher than the national average!“. This might be true, but that doesn’t mean it’s still not low.

Meanwhile, inflation is driving the prices of everyday goods up by almost 9%. If you keep your money in a savings account then you are just slowly falling behind.

This is why you should not save money. Instead, you should invest it in a place where it can grow. Ideally, it can grow at a rate higher than inflation. On a more positive note, there are plenty of places where you can invest your money!

NOTE: “Do not save money” is such a taboo concept that it helped me rank in Google almost instantly.

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