5 Good Reasons Not To Save Money


In my mind, there are basically two types of savings:

  1. Savings for immediate threats, like your water heater breaking, or a quick trip out of town when a relative is sick. This is often called the emergency fund.
  2. Savings for other short-term and long-term goals, investments, retirement funds, and everything else that plans for future spending.

This post is not about the first kind of savings. I’m a big proponent of the emergency fund and I think it should almost always be funded prior to making any other financial moves.

On the other hand, this post is about the second type of savings–what I would call the “elective” kind.

I can think of five very good instances in which postponing elective savings would be financially beneficial in the long run. Check them out and see if you can help me think of more.

Note that if you are in one of these situations (except maybe #5), the goal is not to sit around and not save money forever–it’s to get out of the situation so you can start saving.

1. Paying Off High-Interest Debt.

This is the most obvious and most often-cited reason for postponing savings, the strategy being that the cost of maintaining high-interest debt often far exceeds the interest that could be earned on savings or investments.

It’s often a psychological issue as well–the “weight” of debt on the financial psyche, even low-interest debt, is strong. Getting rid of it frees up focus and attention for saving and high-impact spending (more on what I mean by that next week).

In a time of economic crisis, many “experts” have suggested that cash is king–that increasing savings is still more important than paying off debt because only cash can pay your bills. Evaluating your own job situation and keeping a healthy balance between the two is important in times like these.

2. Temporary Job Loss.

When that personal crisis hits and income is choked off, it can get almost impossible to save. Depending on whether you’re single (worst), married (better), or part of an extended family (best), the support system and levels of income others can make up for will vary.

Those in the most challenging situations will start eating through their savings (hopefully, there are some!), those mid-way may find their budgets just balancing out, while those who continue to enjoy a fairly adequate income from other sources may still be able to put away quite a bit.

3. Building a Checking Buffer.

Building a checking account buffer is an often overlooked financial step that can save most people hundreds of dollars in overdraft fees every year, and a lot of headache and stress about where you account balance is today.

Don’t believe me? I don’t need to check my account balance for the next month and I know that every bill, every purchase, every transfer will be covered 100%, thanks to my buffer.

While in itself a form of savings, building a buffer has to be a conscious act, because most people’s first instinct is to treat their checking account balance as the money available to spend. It’s not. In fact, once it’s there, it should never go away again.

One way to beat the psychology is to build a buffer in even chunks, whether $100, $500, or $1,000, so you can remind yourself, “Okay, my real balance is $1,000 less than this.” Another method is to use an envelope budget and designate an envelope for the buffer.

4. Improving Insurance Coverage.

In the delicate balance between savings and insurance, a case can be made for putting savings on pause if insurance coverage is grossly inadequate to protect you in case of disaster. Now, I’m not talking about silly insurance, but the big ones–health, car, life, homeowner’s/renter’s.

With limited income, you may have to make a choice–putting away discretionary money into a savings account for future spending or emergency use, or using that discretionary money to improve insurance coverage and protect against threats that would eat away at your savings. If you want more thoughts on the subject, you might want to read Saving More vs. Insuring More.

5. Anti-Savings Philosophy.

Let me explain, because this doesn’t work for everything. The two most common areas I see this in are college savings and retirement savings.

If your financial plan is not to pay for your children’s education (whether you believe they should pay their own way, take out loans, etc.), you would obviously not be saving for college. A lot of people are simply against helping their kids in this regard, and letting them figure it out on their own.

Some people also reject the common notion that retirement is a time to stop working and start “having fun.” They either plan to work indefinitely because they love what they do already, or create passive income streams throughout their life to provide them with enough working income at retirement. If this is the case, the need for true retirement savings is greatly diminished.

Can You Think of More?

I’m sure there are many more reasons to avoid saving money but these are the five I think I’ve seen the most. Can you think of any you’ve used or you’ve seen others use in the past?

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18 thoughts on “5 Good Reasons Not To Save Money

  1. “Can You Think of More?”

    Yes. Not pleasant to think about, but helping a family member in crisis. While we like to think it’s all about money, people are more important. If you’re not saving money because a relation is in trouble, it says your priorities are in the right place.
    .-= Kevin@OutOfYourRut´s last post: The High Cost of Convenience =-.

    1. That’s an excellent one, whether through financial assistance, or simply the added burden of someone living in with you temporarily, etc…

      I’m part of a pretty large extended family, and I’ve seen this at work time and time again when someone’s in trouble. I’m glad that it works that way.

  2. You make a great point that sometimes saving isn’t always the best thing, depending on your individual personal finance needs. Another reason not to save is so that you can enjoy life now. We are cultivating income streams now, and my work, and what my husband plans to do when he gets done, are both conducive to working later in life. We have retirement accounts, but we are not interested in building them up so much that we don’t enjoy ourselves now. We are in our prime now. Do we really want to save up at the cost of a little enjoyment today, when we can take better advantage of these experiences?
    .-= Miranda´s last post: Friday Fun Video: MacGyver Gets It Done…With MasterCard =-.

    1. Yup, a lot of people feel the same way, my wife included. 🙂 I tend to run on the more cautious side and like to know I’m preparing ahead, but she’s taught me that life is much more than planning for the what-ifs.

  3. Miranda, there’s much to be said for enjoying life in your prime as you say. I heard a saying some years back, “Yesterday’s a canceled check, tomorrow is a promisory note, but today is CASH!”

    Make a provision for the future, but don’t obsess may be a rational way to view it.
    .-= Kevin@OutOfYourRut´s last post: The High Cost of Convenience =-.

  4. You mentioned high interest debt, but you could extend this to ALL debt – even the mortgage. We have recently stopped saving for retirement in order to get rid of our mortgage.

    Once we accomplish our goal, the roof over our heads will no longer be at risk, our expenses will be reduced dramatically, and we will be able to direct our money to savings as we see fit, taking advantage of retirement plan tax breaks as needed.

    I realize this may not be for everyone. But it is one option, provided you have the discipline to save once all of your debt is gone rather than inflating your lifestyle.
    .-= 2 Cents´s last post: Do You Need a Budget? =-.

    1. I agree–I think you can make the case for almost all debt, just based on not having to worry about it any more, as well as all of the other benefits you mentioned.

      The discipline to pull something like that off is big, I agree there as well. We’ve tried to pull things like that off on a smaller scale, and it was very tough to stay on course.

  5. I don’t have another one to add, but I can offer another suggestion in how to build a checking buffer–round up when you write expenditures down in your check register. If I pay a bill that’s $45.25, I write down $46 (Bank of America stole this idea from me and turned it into a savings program! :P). It wouldn’t work for those folks who want to know how much they have down to the cent, but it’s a great way to build a cushion without feeling a pinch.

    1. I’m a big fan of BofA’s program (although not a big fan of BofA). Personally, we have the Wachovia Way2Save, which does something similar–withdraws $1 for every check card transaction and bill pay made.

  6. Hey, New Daddy! 🙂

    How about unexpected opportunities? Maybe somebody is having a fire sale and they’re practically giving away some large ticket items at an unbelievable price. Or maybe you have a chance to get in on the ground floor on a business opportunity. By all means, take the foot off the savings accelerator for a few months if need be.

    There are just as many potential opportunities out there to capitalize on as there are risks that could require us to tap into those savings!


    Len Penzo dot Com
    .-= Len Penzo´s last post: Drive-By Movie Review: The Taking of Pelham 1 2 3 =-.

    1. Two awesome examples, Len. I was actually thinking of putting business opportunities on the list, so I’m glad you mentioned it.

  7. I’m definitely onboard, we put a break on all saving to bust our non-mortgage debt, starting next month we really begin to get the emergency fund going to full strength and onward and upward. Your categories are great, the buffer is important too and builds a lot of security. I use You Need a Budget (software) and it’s built around the idea that you’re budgeting next months money. Now that we are debt free I’m going to operate on that notion so I have an entire months salary sitting in our budget so we can just worry about next month. A nice place to be.
    .-= Paul @ FiscalGeek´s last post: We’re Debt Free! =-.

    1. I’m currently using YNAB as well, so I hear you about the importance of living on last month’s income! By the way, congratulations once again on becoming debt-free!

  8. It all boils down to personal priorities. Too many times someone will get dogmatic about personal finance — and at that point it’s no longer “personal.” That’s not to say there aren’t very good rules of thumb, however!

    I have a daughter with an inherited autoimmune disease. Sometimes my personal savings plans get put on hold in anticipation of her medical treatments. Insurance covers most of it, but not all.

    1. Another excellent reason that I did not mention! (We had to stop this month to prepare for paying off my wife’s hospital stay as well).

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