5 Signs You’re Saving Too Much

Cynthia Measom   Thu, October 21, 2021

For many people, saving too little is the problem. However, for others, it’s the exact opposite because they are saving too much. Too much of anything can be dangerous, including stashing excess cash in a savings account or under a mattress.

But how do know if you’re putting too much cash toward savings? To help, consider these five signs that indicate your savings balance is out of control and learn how you can start being smarter with your money.

Why Is It Bad To Have Too Much Excess Cash?

“Cash is king except when rates earned on cash are low and the cost of goods you pay for are rising,” said Michele Lee Fine, RICP, founder and CEO of Cornerstone Wealth Advisory. “The world around you is getting more expensive, but your saved capital remains flat.

Being in ‘too much excess cash’ has a cost called opportunity cost. You may be wealthy today sitting on a lot of cash, but as your cash balances remain level, they are not outpacing inflation and actually losing value. Inflation is a stealth tax, and if your savings don’t earn more than the inflation rate, your savings and its purchasing power is actually diminishing.”

Chris Kampitsis, from The SKG Team at Barnum Financial Group, agrees:

“If you keep all of your nest egg in conservative cash — it is near certain that it will lose some spending power every single year,” he said. “Think of the cost of a mid-sized sedan now versus thirty years ago. If you kept that cash in the bank the last thirty years, would you still be able to afford the same car?”

But people who are hoarding cash also need to think about why they feel the need to sustain this behavior. “What is this really about?” said Lisa M. Dieter, CFP(r), founder and wealth advisor, EmberHouse. “Do you need the cash to feel secure? Do you feel unworthy of bigger-ticket expenditures? What is in your money history that could explain the need for so much cash?”

Now that you know that having too much excess cash can be to your financial detriment, here are five signs you are saving too much.

You’ve Become Too Frugal

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