Yes, It’s Possible to Save Too Much Money
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- By Luke Landes
- December 30, 2011
Over the recent decade, and more so since the start of the recession, the public has begun paying more attention to the concept of saving money for the future.
With the future of home values and stock prices more uncertain now that one might have assumed within market bubbles, more emphasis is on saving money and earning income. This is a good trend, but it’s possible to have too much of a good thing.
As a writer who focuses on finance, it’s easy to frame everything in terms of money. Money is not valuable by itself, however.
Money exists for commerce, and if not for today’s commerce, for some time in the future. Money cannot be a goal on its own because it has no meaning, no function beyond what it can be traded for in exchange.
Saving Money Just to Save Money
I asked a friend about his life goals, and he said, “My goal is to retire with $5 million.” While it’s great to have a target like that, if it is reasonable based on income potential and investment options, a goal should get to the core of a life’s purpose.
Why $5 million? What is it that you’d like to do with that money beyond pay for your expenses–and possibly your family’s expenses–without worrying?
I’m concerned that people who focus solely on money-related goals are not making the best use of the limited time they have alive. There is no prize for having the largest bank account balance as you fade away from life on a hospital bed.
Being rich when you’re ninety years old doesn’t give you much time to enjoy the fruits of decades of scrimping and saving every penny. I can almost guarantee that if tomorrow, you were to discover you had one week left to live, your first regret would not be having saved too little money.
Planning for financial independence in the future needs to be balanced with making the most of your time today. Every time we choose to save–not spending every cent of income we receive–we put aside the desire to do something today for the chance of doing something better in the future. However, it’s possible that future never arrives, regardless of how long you wait.
Best Way to Save Money
The good news is that making the most of your time today doesn’t need to be expensive, and you can find ways to balance these two objectives. Rather than accumulating things, use the money you have left after handling your expenses and savings to enjoy experiences that are most meaningful to you.
Because nothing in this world is certain when planning for the future, how can anyone offer advice to a specific individual about the best way to save money or how much he or she should save?
If you put ten percent of your income into the best savings accounts and retirement investments, it may not be enough to provide you a comfortable lifestyle in the future, so some people suggest saving more.
On the other hand, if you focus on saving ten percent of your income, and in order to do so you make uncomfortable sacrifices, you may never get to enjoy the savings you’ve created.
Most people will take the slow road to accumulating wealth over the long-term. If we’re talking about averages, getting rich slowly is more likely than getting rich quickly, but even still, it is not likely.
Inflation, investment mistakes and life’s unexpected turns all get in the way. Don’t deny yourself all the joys of experiencing life now. If your approach to saving is causing you to miss out on aspects of life that you find important and will later regret, consider the idea that you may be saving too much money.