Ivy | Savings accounts make you broke
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Savings accounts make you broke

Savings accounts make you broke

Freedom fighters, ditch your savings accounts. They cost you

money, don’t keep money saved, for long, and create a crushing debt/savings cycle. Savings accounts cost money in two ways. First, the monthly maintenance fee. If your average balance falls below a specified minimum, this fee can cost you $60 or more a year. Looking at this through the eyes of an investor, you have an “investment vehicle” that’s losing you $60 a year. Yuck! Secondly, have you ever had money in your savings account, but accidentally overdrew you checking account, causing you to get slapped with a $34 fee? You’re not alone; it happens all the time. It’s painful!

But, maybe all the fees would be worth it if savings accounts really helped you keep your money saved. But they don’t. They create a damaging debt/savings cycle. It goes like this. You decide to start saving. You open a savings account. It feels good. You stash away money each month. Six months go by, and BAM! Life happens! So, you transfer the money from your savings to your checking, and before you know it your savings is spent. Repeat that cycle a few times and it starts to feel like you will never get ahead.

Now, don’t get me wrong. Saving is essential; you’re simply missing one key step before you start saving. You need to plan for Life. Life has so many unexpected moments that we can guarantee that the unexpected will happen. It’s predictably unpredictable. So, before you start saving you need to plan for Life by building an oxygen mask of one month of living expenses in your primary checking account. This gives you a little room to breathe while ending the savings/debt cycle forever!

The main objection I encounter is, “I’m afraid if I keep the money in my bank account it will get spent.” Fear not, my darlings! I have a solution. To ensure that the money stays in your checking account you do need one more accessory: The magical map to wealth.

Do you suffer from this savings/debt cycle? Add your comment below

With love and money magic

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