The #1 Mistake Most Savers Make

Hi Reader,

Welcome to The Money Series, and if you are new here, thank you for signing up. Personal Finance can feel ambiguous and overwhelming, but I am here to help simplify the journey.

You do know that leaving too much money in a regular bank account could be hurting your finances, right?

I get it. With the risks tied to investing, it often feels safer to keep money parked in your bank account. After all, most countries have deposit insurance that protects your funds if a bank fails, right? But the truth is that keeping the bulk of your money in a standard bank account might appear safe, but it’s far from smart. Here’s why:

☑️ Cash is your ‘laziest employee’. Think of it this way: you work hard for your income, but when you leave it in a bank account, it just sits there doing…nothing. Not only has the money remained the same but inflation has also reduced its value. If instead, you put the money in a fixed income investment that earns 5% per annum, you’d have turned a $100 into:

• $105 after year one

• $110.25 after year two

• $162.90 after 10 years

Compare that to leaving the same $100 idle in your account in which you’d actually be able to buy less with it over time.

☑️ Emergency funds should work smarter, too. Yes, you need cash for emergencies and I always stress this. Ideally, your emergency fund should cover 3–6 months of living expenses (up to 9 months if you have unstable income or many dependents). The key thing is to keep this money in a high-yield savings account where it earns interest and can be withdrawn quickly, not in a regular account that pays next to nothing.

☑️ Too much cash fuels impulse spending. When you see large balances in your checking account, it’s tempting to spend more than planned. ‘Out of sight, out of mind’ can work in your favor here. Keep only what you need for bills and everyday spending visible, and put the rest to work elsewhere. Not seeing that large amount each time you open your banking App might actually help curb impulse spending.

☑️ Short-term savings deserve better ‘homes’. If you’re saving for a goal within a few years (like a car or a wedding) and don’t want to risk investing those funds, a high-yield savings account is still your best friend. That way, inflation doesn’t eat into your savings, and you still earn steady interest.

With your money, you want to be as tactical and timely as possible, save up for emergencies, and invest wisely in assets whose risk-return profile you clearly understand. By automating transfers to investments and savings, you ensure your money is working for you without the stress of managing it manually every month.

Reflect on This:

• How much of your income is just sitting in your bank account right now, quietly losing value?

Till next week, I am rooting for you, money-ly!

Dee

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Disclaimer: This does not constitute financial advice. Please conduct your research or consult your financial advisor for important financial advice.