Saving Money Might Decrease Its Value
Is Saving Money Issential? Do we actually need to save money? How saving money decreases our money value? Learn drawbacks of saving money.
Initiation:
We all know that money has become a crucial element for human survival these days. The whole world is running after it. Not only the world, even we are also running after it. That’s obvious.
Some months ago, I read a book “Rich Dad Poor Dad” by Robert Kiyosaki and I was much influenced by it. In the book, the writer suggests not to work for money rather to make money work for us. The book totally changed my mindset about the money.
We do jobs to earn money. No matter how much we earn, we are never going to be rich until and unless we do not learn to manage money. Money management is a skill to increase the productivity of our money. Here, I am sharing some ideas why we should not save our money. Sounds quite amazing, doesn’t it?
So let’s get started with a story.
A Small Story:
It was during my adolescence, I had an extraordinary want for a bicycle. Being borned as a middle-class kid, my parents could barely bear the cost of even 4,000 rupees for the bicycle. Leftover with no options, I, had to save money to purchase a bicycle in the future. One year later, after I had collected 4000 rupees, I went to a similar shop to purchase the bicycle however the adversity, the bicycle’s cost was then 5000 rupees. All thanks to my parents, I got a bicycle and I was so happy about that.
Even, some days before I went to a bicycle shop to ask the price of a similar bicycle, it was almost doubled. That day I realized that the value of money is not always the same. It falls every day.
I learned a beautiful lesson that saving is not sufficient to grow our money rather, it decreases our money value. Did you get how? It’s just because the value of money depreciates day by day. And it is better explained by the term inflation.
Inflation:
Inflation is the rise in the price level of the selected goods and services over a certain period of time. Simply, it is the reduction in the purchasing power of money. Making it easier to understand, the price of a bicycle was 4000 rupees in my childhood but I need to pay the double amount to buy the same bicycle at present. This means the purchasing capacity of money is reduced to half.
What Happens While Saving Money?
Let us consider, you deposited a certain amount of money in your bank account.
If it is a normal savings account then you will be provided with 4 to 5 percent interest per annum and perhaps 8 percent in case of Fixed Deposits. That’s fine, your money starts to grow.
But, what about inflation? At present, the average inflation rate of Nepal is 6 percent means the purchasing power of your money will be reduced by 6 percent till next year. And it’s a complete loss of your money if you are getting 4 or 5 percent interest. Don’t you think your money is reducing day by day?
And what if you are getting 8 percent of the interest in Fixed Deposits? Your money is growing by 8 percent per year. This means, if you deposit 1 lakh rupees then you will get the return of 8 thousand rupees over one year. But, your money value will be decreased by 6 thousand due to inflation and the actual increment in money value will be 2 percent only.
Is Saving Money Completely Bad?
From the above ideas, I didn’t mean to say saving is bad. Saving is essential and we must save at least 10 percent of our salary. But, long term saving of money might not be good. We do much hard work to earn the money and it’s not rational to lose the money unproductively.
Rather than leaving your money unproductive, invest it, grow the business of your own. Identify your capability, study about the market needs, invest, and reinvest the profit. And this is the only way to grow money.
What if you do not have much time to get engaged in business? Well, I have an idea. Try investing in stock markets.
Stock market?
Simple to understand, investing in stock market means buying the shares of already built companies. Just buy the shares and you are a owner of the certain percent of the company.
If you do not have much time to get engaged in business, investing in stock markets might be efficient. Don’t worry; it doesn’t need a huge amount of money. Just start through the IPOs. IPOs are quite safe to invest.
Keep in mind, in the Nepalese Stock Market, you are your capital. Because in IPO (Initial Public Offerings) the market does not look for the amount of investment, rather it seeks the number of investors. All investors are treated equally and are allotted an equal amount of shares. You need not be stressed on the off chance that you have invested a thousand rupees since you will be dealt with similarly to the individual investing more than your amount.
Thank You !!
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Read: I Am Discovering Myself, Are You My Friend
