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10 reasons why saving money alone can’t make you rich

Does saving money make you rich? No it doesn’t . You would be better off seeking for a better strategy . This is because no one has been able to build wealth just by saving money.

Don’t get me wrong, I believe in saving money. One should save towards what one wants in the future. Managing savings is good discipline which can result in having a comfortable but not wealthy quality of life.

So whenever someone tells you to save  to become rich ask if he or she has done so. The point I’m making is it’s not possible. Here are ten reasons why saving money alone won’t make you rich:

Saving is not the way to financial success

I’ve read books, listened to CDs and watched the DVDs of the rich. None of them attributes their success in amassing wealth to saving. However they mentioned taking advantage of opportunities, meeting needs and solving problems as what propelled them to substantial wealth and fortune.

Currencies continually lose value

All currencies –  Euros, Pounds, Dollars depreciate regularly. For example what $1  could buy twenty years ago does not equate to what it can buy now.  You cannot build wealth  by just saving because money’s value is constantly eroded. The prices of goods and services constantly increase while the value of money used to purchase them goes in the opposite direction.

Return on saving money is small

The returns  from keeping money in savings is so minute and inconsequential.  These low interest rates do not encourage savings. One is hardly motivated  to save.Consider also that the banks are the ones making greater returns by lending out your money at higher interest rates.

Savings must go along with investment to build wealth

Money meant for building wealth must be saved, and invested afterward. Investment is channeling resources into ventures that will multiply by putting the money to work. The rich constantly look for opportunities to put their money to work, so it can multiply and produce more wealth for them.

Savings makes the banker rich

The best place to keep your savings securely and safely is in the bank. The bank  trades with these savings by giving loans at high interest rates to borrowers and then paying little  interest to the owners of these funds. In fact banks even go as far as charging depositors for keeping and withdrawing their funds. It is also common for banks to make deductions on depositors accounts that is higher than the interest earned thus making the banker richer and depositors poorer.

Banks can fail

Several banks collapsed thus causing depositors to lose their funds. Thousands literally lost whatever they had kept in savings in these banks, with some being paid a pittance compared to what they had saved. There are many who are still trying to recover their lost funds.

Even though steps have been taken to ensure that this doesn’t happen again the fact that it occurred is a pointer that  it could happen again.

Your willpower can only go so far

Writing down how you intend to spend money in the future, and keeping to it, is the financial equivalent of a starvation diet. It is unsustainable. It may be possible for an organisation,  to follow a tight budget for 5, 10, or even 30 years. This is not true for personal finance, which has to take into consideration cognitive effort.

The average person has limited willpower – or else quitting smoking and losing weight would be non-existent problems. Most people cannot maintain a strict budget for long, let alone until retirement.

Expenses will arise to deplete your savings

No matter how disciplined one is necessary expenses arise that one may have to offset from savings. For instance, if a family member requires expensive treatment, or you lose your source of livelihood. There is no option but to draw substantially from your savings to stem the tide. The only way one can effectively plan for this is by having an emergency fund  with at least 6 months of expenses for such contingencies. But what if it is inadequate? Then one begins to use up savings and liquidate assets.

You become timid to take advantage of opportunities when you focus on saving

Those driven to save become cautious when opportunities to grow their savings come their way. Now there is nothing wrong in exercising caution and weighing the pros and cons before investing. Building wealth has an element of risk. Cautious people prefer to secure their meager resources instead of seeking to multiply it.

You can’t understand money by saving it

No one can be more committed to amassing wealth for you than yourself. An undue focus on saving and playing safe with what you have may lull you into a false sense of security that you have some savings somewhere. This could limit your hunger and desire to understand how money works which is essential if you want to amass more of it.

Even though savings will not make you rich,  don’t stop saving! Saving is the first step anyone who desires wealth must take, for it is proof money is under your control and not vice versa. The key is adding other steps such as investing to your savings effort and it eventually begins to yield wealth and fortune.

 

5 thoughts on “10 reasons why saving money alone can’t make you rich”

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  5. Adeleke says:

    Good orientation, but sir how do you think we can save and also invest with it too. .advice please ..

     
    1. Kenneth Doghudje says:

      Dear Adeleke,

      Thanks for your comments. With regards to investing your money there are a lot of opportunities out there. And I try not to recommend any. What I’ve done instead is to write another article with guidelines on what to look out for before your invest. Here’s the link: https://moneytalkng.com/home/avoid-scammers/

      I’m also in the process of creating my first free course, “Before You Invest Your Money.” In it I aim to share a checklist of what things to consider before you invest your money. This focuses on helping people to do their due diligence before investing. You can sign up for my newsletter using the following link so that you can be informed when it’s launched – https://eepurl.com/bBQLsT

       
    2. Kenneth Doghudje says:

      Thanks for your comment Adeleke,

      Saving requires discipline and motivation, which sadly no one is able to teach another. I believe it all starts with having a goal you’re working towards and doing everything necessary to achieve it. I would suggest you get a few books on money to increase your motivation.

       

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