It used to blow my mind when i would see how much some of my clients had in their savings accounts. Three hundred thousand dollars was pretty common. Four hundred thousand was seen fairly frequently but not as much. At $400,000 dollars you are losing $12,000 per year to inflation earning those pitiful returns. That means every single year that money will buy $12,000 less than it would the year before and it is just going to keep getting worse.
Sometimes the people would listen but maybe I just suck as a salesman. They wanted to keep it there. These are the same folk who usually lock up obscene amounts of money in a CD for .05% for 14 mos. Foolish. Just plane foolish.
You do need to have a small savings account however if you want to make your life easy. The good news is that there are now some that suck way less than the others. Some of them don’t even suck at all. I have seen a couple that pay upwards of 2.10% and even 2.47%. That makes your local bank savings account seem like a rip off. Just by making that single switch that same $400,000 would only be losing around $1,000 to inflation. Still not ideal but that right there may have just saved you a heck of a lot of money.
Don’t be fooled into thinking that a penny saved is a penny earned. That doesn’t factor for taxes or inflation. Get smart about saving your money and using it to earn more money. You work hard for this stuff. Pay attention.