5 reasons why I like to save a lot of my money instead of investing everything

  • I recently had a conversation with a friend about personal finance and our relationship between investments and savings.
  • She was shocked that I am no longer investing and leaving a lot of money in savings, but I am sticking to my plan.
  • I am an entrepreneur and already take risks. I need that money for emergencies and new ventures.
  • Read more from Personal Finance Insider.

I’ve become the kind of person who talks to anyone who will listen about personal finances. I’ve had lengthy conversations with strangers on airplanes about various retirement strategies and budgeting tips, and I’ve talked endlessly with friends about their own financial strategies.

Not only do I learn a lot about how other people handle their money, but I also get a lot of advice that I don’t always like to follow. Recently a good friend and I were chatting about our savings accounts, and this friend was shocked to learn that more than 10% of my


net value

stands still in a bank account.

Although she tried to convince me to move much of that money into stocks, index funds, cryptocurrency, and real estate, I decided to ignore those options and stick to my plan. Here are five reasons why I plan to stick to my own savings plan instead.

1. I want to have cash on hand for bills

Over the years, I’ve rectified financial mistakes of my twenties, from credit card debt to $0 in my retirement account. Since I’m still building and being extra careful not to get into debt, I like to keep enough money in my account to pay all my monthly bills and more.

I also keep a few thousand dollars of extra money in my savings account as a buffer for the months when my bills may be higher than expected.

Although my friend advised me to take that “buffer” money and put it in index funds, having that money in my savings account makes me feel like I’m in control of my monthly finances, even if the money goes unused.

2. I need a large emergency fund

One big difference between my boyfriend and I is our career paths. My boyfriend works full time at a large company. I am an entrepreneur who has been my own boss for over seven years. Because my job comes with more uncertainty than my boyfriend’s job, I’m committed to maintaining a larger emergency fund.

While some people aim to save between three and six months in expenses on their emergency accounts, I’ve worked hard for years to save nearly ten months in expenses.

This way I can protect myself in case of unplanned events. This includes things like loss of income due to another pandemic, or a health emergency because I’m not getting paid sick leave.

3. I maximize my interest

One of the reasons I like to put more than 10% of my assets in my savings account is that I can maximize the available annual interest rate for the interest. At the bank I currently use, they offer three interest rates based on how much money you have in your account.

By putting in more than 10% of my assets, I can reach the highest level and collect 0.5% interest. While it’s not as much as I could score in the stock market, it’s much less risky and worth hitting that high yield.

4. I always save for something big

Over the past few years I’ve found myself saving up for big life events, projects, and even bucket list items like vacations and financing my own business ideas. When I save for something specific, I create a special savings account for that item or event and track my progress on a daily basis.

Although my friend recommended that I put that money into the stock market or cryptocurrency so that I can potentially make bigger profits and achieve my goals faster, I don’t want to play with this money – even if there is a chance for a faster reward.

While it may take a little more time to get it done, when I’m saving up for something important, I like to put that money in a safe place.

5. It works for my financial strategy

When determining how much money to keep in your savings account, you don’t have to stick to one rule. While some people like my friend follow the 10% of your net worth approach, it just didn’t make sense for my personal financial goals. I’m trying to stay out of debt, build my emergency fund, and plan for the future.

As I continue to optimize my finances, I plan to re-evaluate how much I keep in my savings account and what else I can do with that money to grow my wealth. For now, my financial strategy is working for me, even though my boyfriend doesn’t think so.

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