Why Saving Money Will Never Make You Rich

“Don’t buy Starbucks.”

“Don’t eat out. Get your groceries instead.”

“Save every penny!”

“Seriously, you need to live frugally to save money to become wealthy!”

How many of us have heard these sayings from often well-meaning but misguided adults?

Indeed, living frugally is a wise step toward saving money. However, it's crucial to recognize that the path to wealth is not solely paved by saving. Not buying the $6 latte from Starbucks isn’t going to make you a millionaire—well, not anytime soon, that is.

Saving your way to wealth isn’t the way to financial freedom anymore. You must find a way to make more money to become rich.

By focusing on increasing your income, you open up a world of possibilities and potential for wealth creation.

The Money-Saving Trap

“Why is saving my money a trap?”

It’s a trap because it's precisely what they want you to believe.

They want you trapped in a constant cycle of never having enough, so you’re forced to work a job you don't enjoy until you've saved enough to retire when you are old and gray.

This brainwashing is how the system keeps people stuck, working for it (the system) until they die.

To get rich, you must break out of this system. But it's not going to be easy.

When I say that you have little to no chance of saving your way to becoming a millionaire while you're still young, I'm not trying to crush your dreams—quite the opposite.

I want you to accelerate your timeline and start building the life you want now while you're still young enough to enjoy it.

So, if you want to become rich, pay attention.

Your Money Isn’t Real

Would you like to live in a world where all your choices are influenced by someone behind the scenes secretly pulling the strings and conducting your life like some kind of orchestra?

Of course, you wouldn't. Unfortunately, this is far closer to reality than you might realize.

For years, institutions like banks and governments have been taking advantage of people who have yet to learn how to manage their money, and it's not their fault.

The schools just don't teach them this stuff.

Saving money gives people the illusion of control.

Meanwhile, the banks are making big profits right under our noses.

Let me explain.

In the past, you were actually able to walk into a bank with your money and demand to exchange it for gold.

This makes sense, as it's somewhat inconvenient to travel with big blocks of gold to buy goods and services.

So therefore, governments created money. This was called the gold standard, but it stopped in 1933, and the US dollar, like most other currencies, became fiat.

Your wallet contains fiat money, which is most likely a government-issued currency that is not backed by a physical commodity.

This means that your dollar only holds value because the government says it does, which gives them much more control over the economy as they can decide which rate money is printed.

So, the money most people chase and hoard is a bit like monopoly money. It only has value because the game says it does.

To put the icing on the cake, the banks then offer to store your money in return for a measly 0.5% interest while using it to generate huge profits.

It's no secret banking is one of the wealthiest sectors. However, it wasn't always this way.

They used to be just places that looked after your money and made a fair profit.

However, over the years, they've become increasingly hungry for new ways to use your hard-earned money to boost their income.

Selling subprime mortgages, one cause of the 2008 financial crisis, is an example of this.

Just to clarify, I'm not saying the banks are completely evil. Like most other businesses, they act in their own self-interest, so we can't blindly trust them to have our backs.

Many millionaires like Robert Kiyosaki, the author of Rich Dad, Poor Dad, are keen on saving what they call “God's money,” gold and silver.

They call it this because it has real value rather than the promised value of fiat money.

This is a good strategy for the rich, as it offers a great way to protect their wealth.

However, your trading potential growth for security is only suitable for some, especially while you are young and can afford some risk.

Your Money Is Disappearing

Imagine you have $10,000 in your bank account, earning 0.5% interest annually, well over the average rate in the last five years.

If you froze yourself for 1000 years in one of those cryogenic chambers when you emerged and checked your bank account, you'd have nearly $1.5 million.

Isn't that amazing?

NO. It's pretty terrible. Because that $1.5 million would buy you less than the original $10,000 would today.

Even though it has had all that time to build up, it’s been losing 1.5% in value yearly.

Now, obviously, this is a pretend scenario. However, the point remains the same.

By leaving your money sitting in a bank account, it's slowly being eaten away by inflation every single year.

At the time of writing this article, the rate of inflation in the USA is reported to be 3.2%, but it's probably much higher than this.

The way they measure inflation is prone to manipulation, but we won't discuss that right now.

The main point is that your money is becoming less and less valuable by the second.

But why does this happen, and why can't we just stop it?

Demand-Pull Inflation

Demand-pull inflation is the first reason why.

A good example of this is the car shortage during the pandemic.

This caused a higher demand for used cars, increasing the price.

Cost-Pull Inflation

The second factor is cost-push inflation.

This lovely phenomenon is running rampant in the real estate market.

Developers are seeing building materials and wages going through the roof (pun intended).

Increased Money Supply

The third factor that everyone always talks about is the increased money supply.

Inflation occurs when the money supply increases faster than the product production rate.

Put simply, when there's just too much money and not enough products, like when the government pumped all that free money into the economy during lockdown.

So, I hope you can see now that your savings are being eaten away from every angle.

Spending Isn’t the Answer

We live in a consumption society that has psychologically programmed us to behave in a certain way.

You've been lied to all your life by your parents, friends, and teachers, tricking you into doing things you don't want to do, and on many more occasions than you realize.

So I'll give you the choice just as Morpheus gave Neo in the Matrix:

“You take the blue pill, and you wake up tomorrow, and you believe whatever you want to believe, or you take the red pill, and you realize how deep this rabbit hole goes.”

As I have no way to know which pill you picked, I'm assuming you want to know the truth.

Once you start seeing money differently, as a tool to grow your wealth rather than something you use to buy things, you can have everything you want.

I repeat: Money is a tool to grow your wealth and not simply to buy things. 

From here on out, use money as the tool it is to make more money.

It's crucial to have an emergency fund of three to five months' living expenses, but you should only dip into this as a last resort and not take a spontaneous trip to the Caribbean.

How To Beat the System

You need assets.

Assets are your way out of the financial prison you’re in.

The markets historically offer an average yearly return of 8% to 10%, which is a good option for most people.

Of course, this isn't guaranteed, but based on the last hundred years of data, it seems pretty reliable. 

It's extremely simple to log into an investing app, buy a low-cost index fund like the S&P 500, and hold it for the long term.

But there are four things you need to consider before you start investing:

1. Transparent, low pricing, and no fees for investing in ETFs*. You don't want to pay a 1% fee every time you buy an ETF. This will just eat into your returns.

2. The ability to invest in money market funds as they normally have better interest rates than savings accounts while not being as risky as investing in stocks.

Instead, these money market funds are invested in high-quality short-term debt from governments, banks, or corporations.

These are great as you can draw your money out quickly, and the interest, otherwise known as the “yield,” is paid into your account on the first of every month.

But it's worth noting that money market funds are not insured or guaranteed, unlike savings accounts under FSCS protection, and may lose value.

3. Use a multicurrency account to earn interest on your non-invested cash,
ideally up to 4.5% for the US dollar.

4. Have a wide range of stocks available to avoid restrictions from your platform.

Remember, with investing, your capital is at risk.*

You Need to Start Now

Many people see saving lots of money as a safety net.

I've even heard some people saying they like the look of the numbers on the screen, but what they don't realize is the opportunity cost.

How many times have you sat on the sidelines watching people make money and thinking,

“When's it going be my turn to make some?”

Think of all the people who left their money in their savings accounts during the last couple of years because they were too scared to take a risk (anyone remember Gamestop?).

The scary thing is the biggest risk is not taking one, as they miss out on some crazy crypto and stock market profits.

Seriously, do you think saving $6 on your latte will make you rich? Come on. Deep down in your gut, you know that isn’t the way.

You must attack this issue now.

With each day you waste, your dollar loses its value.

You create financial value by building up your asset profile.

Start taking action toward this goal. Do it now.

The BMM Takeaway

The idea of saving all your money in a bank account is Boomer thinking.

It might have worked back in their day, but now things are changing, and we need to adapt. And if you don’t adapt, you’ll die financially.

I'm quite optimistic about the future as people are taking control of their finances, which is a great sign.

Money is a tool not to be hoarded but to be used.

You shouldn't keep all your money on the sidelines; it's much better to let it go out and play.

More often than not, the worst thing that'll happen is you'll be back where you started.

Remember, you miss 100% of the shots you don't take.

Disclaimer: The information contained in this article is not intended and shall not be understood or construed as financial advice. The team at Big Money Methods have done our best to ensure the information provided in our articles is accurate and valuable information. Regardless of anything to the contrary, nothing through this website should be understood as recommendation that you should not consult with a financial professional to address your particular information.