A penny saved, is a penny earned. But how much truth is in that?

Becoming a millionaire is not impossible, but it is not easy.

There is no doubt that you should never blow your money, nor save any money at all. However, the general consensus that we must save every penny possible, except for things that are essential to our livelihood – such as food, rent, bills, and the occasional luxuriant spends to keep our mental health afloat – can, ironically, be an absolute detriment to our financial life.

We all know someone who seems to spend their entire lives at work. That may even include yourself. Whether it is the long hours, or working several jobs, then juggling it with their studies or their parenthood; an astonishing amount of people just cannot seem to catch a break. To make matters worse, an awful chunk of their efforts provides little to no change to their bank accounts.

Commonly, the aim may be to buy a house, or to pay off their debt. People save for years, maybe decades, to pay it all off. Do not get me wrong – saving money is fundamental. It is a necessity to spend wisely, and to make sure you always have enough to last you until the next payday. Now the issue comes in when the idea is that saving is the sole path to a financially abundant life. The truth of the matter is that continuously growing a savings without putting any of it into an investment could actually trap you in a loop.

People save their ways into millions?

They do exist, but it wouldn’t have happened if they didn’t spend decades saving their money. For example, in the United States, you could use your 401(k) and turn it into a million in roughly 15 years (hyperlink source). That also goes to the UK, where you could use your ISA (source hyperlink). To make a million in revenue, it takes investing. And those who had become a millionaire in a shorter matter of time either had a savings account for their planned investments, or took it straight from their balance. That can either be into property or stock market. You could start a business with a smaller investment with youtube, network marketing (hyperlink to sales funnel) etsy, ebay, and much more. You can check out my blog about cheap businesses and online businesses here.

Although you may be saving money, you are not earning.

Not necessarily earning, as that 401(k) savings means so little unless you put roughly $14 a day for 44 years. That is pretty much the same with having an ISA in the UK. If after your bills are paid and food is put on the table and money isn’t being used any further; it becomes pointless, and the purpose of things is to use it.
The average millionaire has 7 streams of income. These are usually stocks and property; which needed investing in. On top of that, you may be losing value of your money due to inflation, which will be explained later in this post.

You will be in a loop

Firstly, it is very rare that anyone’s money saving plan goes exactly as they planned. Research by the StepChange Debt Charity explains that 29% of adults in the UK say in 12 months they had no spare money to make into savings. 45% of those earning less than £20,000 have not been able to save anything in the 12 months. People just find it difficult to keep a savings, and it is commonplace to move money back into their current accounts from their savings. It takes a while for people to build a sustainable savings, and that can negatively impact peoples’ mental health and self-esteem.

Inflation is a thing

For those who don’t know what inflation is, inflation is when the general prices of things in the entire country go up. If you like a depressing example, in 1950 a year’s tuition in at the University of Pennsylvania was just $600. Today, it is $55,584. A more recent example is that tuition fees were not a thing in the UK until September 1998; that year they became £1,000 a year. Tuition fees in the UK rose by £8,000 in 12 years and they continue to rise today. Would saving have been worthwhile, if prices were to dramatically increase in years time? How would you know how much to save if it involved a goal long into the future, if prices were to change eventually?
Moneyfacts revealed that 44 out of 669 savings accounts beat inflation – 6.6% survived their savings losing value, whereas 93.4% were negatively affected. Thus, inflation affects just about everyone, hitting those on lower incomes even harder.

It will be pretty hard to enjoy life and what it has to offer

In order to save money, you will need to turn down parties, opt out on cinemas and dates. It will mean having to stay at home if you are not at work. And unfortunately, that isn’t so much fun, especially if you are an extrovert. Australian nurse Bronnie Ware authored in The Top 5 Regrets of Dying, in which she tells readers one of the most common regrets of dying patents was that they had been working too hard for money all their lives instead of enjoying it and spending more time with their families and friends. Depending on how much money you want to save and given your circumstances, you may need to sacrifice your social life entirely. You deserve to have fun sometimes, and that is responsibly, and not be so hard on yourself. Life is too short for that.

A single emergency may drain your savings

Life is unpredictable and money is necessary in many aspects of it. You may need to unexpectedly pay a heavy price to save your life; you could lose your job and be in a time where the job market is particularly poor and it may take you a while to find another one and you need to use your savings in the meanwhile, or you may have a medical emergency and needed to cover the cost for it. We have all been in a position where we wonder where our money went, when pay day was just last week! That applies to your savings. Too many people have found themselves disheartened and feeling like stressing and sacrificing to maintain and build their savings over time were not worth it as it vanishes all in one go.

I am not saying you shouldn’t save your money at all. Please do keep an emergency fund – it is recommended that you have 3-6 months of money saved at least. However it is best that you do not continuously save money for the sake of saving for a rainy day. It is best that you use money to make more money.

Keeping a savings instead of investing it into something is too comfortable and nothing great comes from remaining in your comfort zone. Money can come and go, but time you can never get back. Investing can shorten your path to the riches. If you value your time, you will need to go from money-saving to income producing.

Invest when you are willing to take that risk and you have a fall-back plan secured.