Why I Would Never Save My Money for a Rainy Day

I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to help you understand your money better. Here are the reasons why I would never save my money for a rainy day.

1. Losing Value to Inflation

The second you put that money in a bank account, it begins to lose its value. Each year, we experience 2% to 3% inflation on average. This means you are never going to save the amount of money you thought you were saving.

2. Money That Doesn't Work for You

Once you deposit that money in a bank account, it can no longer go to work for you. What do I mean by that? If you don’t want the money right now, someone else does, and they will pay you for it in the form of interest. By investing that money in a low-cost index fund, you could potentially earn between 5% and 10% annually, allowing you to buy even more goods and services in the future.

3. The Bank Profits from Your Money

If this one doesn't convince you, I don't know what will. The second you put your money in a bank account and aren't investing it, guess who is? That’s right, the bank. They're taking your money, turning around, and investing it. They earn around 10%, while they pay you around 0.01%. Are you okay with that? I'm not.

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