3 Times Saving Money Is a Bad Idea, According To Rachel Cruze
Written by
Jennifer Taylor
Edited by
Levi Leidy
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Saving money is important, but even money expert Rachel Cruze has limits. In a recent YouTube video, she explained when to stop pinching pennies.
Coming from a financial expert, this might sound surprising, but she isn’t advising irresponsible spending. Instead, she’s encouraging people to enjoy their hard-earned money rather than keeping it at arm’s length.
It’s possible you fit into the category of people Cruze believes should loosen their grip on their wallets. Keep reading to learn three times she said continuing to relentlessly save all your money is a bad idea.
You’re Financially Solid
Near the end of 2024, 34% of adults reported themselves as living comfortably, according to a Federal Reserve survey. Assuming you fit into this category, it might be time to save a little less and spend a bit more.
“If you have gotten out of debt, if you have money saved in an emergency fund and you have some extra margin, some extra money, go and enjoy it,” Cruze said.
Of course, getting to this place is no easy feat — especially if following Dave Ramsey’s Seven Baby Steps program, which Cruze is likely referencing. This would mean you’ve at least paid off all debt — except your house — saved three to six months of expenses in a fully funded emergency fund and are investing 15% of your household income in a retirement fund.
Money Has Become Your Identity
Be proud of yourself if you have a good job that pays a comfortable salary and/or a solid amount of money saved. These accomplishments are impressive, but they don’t define you as a person. Instead, Cruze said money should be used to enhance your life.
“Your value does not come out of your salary or how much is in a checking or an investment account,” she said.
If this strikes a chord, she said it’s time to start using some of your money to build the life you want. Create an identity that represents who you are as person, instead of the wealth you built.
You’re Sitting on an Unnecessary Surplus
Protecting your assets is important, but locking everything up and throwing away the key is probably taking it too far. If you have a lot more money than you need, Cruze suggested finding a meaningful way to spend some of it.
“When you look at your relationships, when you look at your family, when you look at experiences and all of it, there’s something to be said,” Cruze said. “The future of your money can be put and handled in a really wise way, but you have to be proactive with it.”
For example, gifting your children at least part of their inheritance while you’re still alive can help them avoid having to pay an inheritance tax. You might also take your family on a trip, make a sizable donation to a charity close to your heart or start college funds for your grandchildren.
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