5 Savings Habits That Could Actually Be Working Against You
Written by
Chris Adam
Edited by
Rebekah Evans
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On the surface, using any money-saving habit may sound like a good idea. After all, it can help your financial life to have money on hand for emergencies and set aside for the future.
But there are some savings habits that may actually be working against you. Below are five such habits you may want to avoid to keep yourself financially fit.
Also here are “soft” saving habits you should be implementing.
Keeping Too Much in Cash
According to Christopher Stroup, founder and president of Silicon Beach Financial, parking all your money in a savings account feels safe, but inflation erodes purchasing power. Once you’ve built a six-month emergency fund, Stroup said consider shifting extra cash into diversified investments that can grow faster than inflation.
Saving Too Much to Retirement Accounts
Kevin Estes, CFP and founder of Scaled Finance, said it may be a mistake to put too much of your savings into retirement accounts. “While the company match and tax savings are nice, liquidity is an issue. A checking, savings or taxable brokerage account could work well if funds are needed soon.”
Over-Prioritizing Debt Payoff at the Expense of Saving
“Eliminating debt is smart, but if you stop contributing to retirement accounts you miss compounding growth,” according to Stroup. “A balanced approach, such as paying down debt while still saving, often builds more long-term wealth.”
Saving Without a Specific Goal
Stroup said mindless saving can stall progress. “Without earmarked goals like a home down payment or retirement, you risk leaving money idle or misallocated. Assigning each dollar a purpose keeps savings intentional and more effective,” he added.
Hoarding Loyalty Points Instead of Cash
Loyalty or rewards programs can be beneficial if you’re a regular customer of a certain establishment – but that doesn’t mean they should replace your savings accounts.
“Many people treat rewards points as savings, but they can lose value quickly,” Stroup said. “Don’t let points replace real savings. Cash savings and investments remain far more reliable in building long-term security.”
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