The advice of increasing your savings for a better financial future is universal. Every article, book or advisor you come across for money management will tell the same.
While it is true for most situations, people sometimes go overboard with their savings and that translates to missing out on living your life to the fullest.
Below are 3 situations where oversaving is as damaging as overspending-
1. If you are saving too much, by cutting down on your NEEDS (not WANTS)
Please keep in mind that one earns money not just to save, but to spend on needs and necessities. Saving a certain proportion of your earnings is essential, but if you are cutting down on a decent quality of life after working so hard, it isn’t worth it!
Example— A client of mine used to work hard all day long and earn a decent salary, but wouldn’t sleep with the AC on at night for fear of high electric bills. If your savings mentality comes in the way of a decent night’s sleep after a good salary, that is not a desirable trait to have!
2. If you are saving too much, and just not investing it properly
You might be good at saving without affecting your quality of life, but equally important is to invest those savings wisely and realizing the power of compounding. Make your money work for you and invest actively!
Example — Savings bank account will return almost 3-4%, FD’s almost 7-8%, long-term equity/mutual fund investment can yield upto 16% annually. Invest according to your life goals and diversify your portfolio to reap benefits!
3. If you are saving too much, but pushing your life goals and aspirations for a later date
Nothing comes cheap in this world. Your life goals and dreams might come at a price, but they are important for your happiness too. Be it a trip you dreamt of or learning a new skill or buying a new car, sometimes you have to invest your savings in your happiness too.
Save well, but utilize your money too!
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In conclusion, it is crucial to maintain a balance between spending and saving by creating a financial plan that is most suited to you based on your life goals, aspirations and current situation.
Save but do not go overboard, spend wisely to make your life happier and easier.
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