What dad forgot to teach me about finance

My dad is a great dad. An outstanding dad, I would argue. He taught me about preparation, trying hard, believing in myself and all sorts of great things little girls should learn. He also taught me a few things about finance. I learned early on that a credit card was not play money and that living beyond my means, means trouble.

But there is one important thing my dad didn’t teach me: Saving money is not always good.

Kids around the world may be shaking their finger (and their piggy bank) at me at this point. What? Don’t save money? That’s blasphemy. Aren’t we all supposed to work hard, play hard and save? Isn’t that the American Dream?

(Spoiler alert: No.)

You see what dad didn’t tell me was that at a certain point, saving is actually doing me disservice, not a service. He was right to tell me to create an emergency fund. Check. He was helpful to tell me to contribute to a 401k. Got it. But what happens after that was akin to radio silence.

Like many of my friends, I grew up thinking “good little girls” are supposed to put money away for retirement and then save the rest. No joke. And if you’re reading this and thinking — “hey, isn’t that what you’re supposed to do?” — do not feel bad or embarrassed. Over 60% of the people I’ve interviewed have admitted to thinking this too. And over 90% admitted to over-saving, even if they know better.

The truth is our savings account no longer becomes our best friend when we have an opportunity to invest. That means that once we have enough for an emergency fund and expenses, the rest of that money you stare at each month is actually called “investible assets.” And when you’re keeping any amount of investible assets in your savings account, you are literally losing money. Yes, you read correctly. Losing. Money.

So the $10,000 I was staring proudly out for five years after getting my first real job made .002% interest. Had I put that money into a low-risk investing option (ie. CDFI Fund or a CD), I could have made well over $1000 extra dollars. Seems crazy when I think about it. Had one wise soul just said, Cat, this money should not stay in your savings account, I could have had a much larger nest egg to sit on.

Bummer, dad.

So I guess I’m here in hopes to be a wise soul to you — or anyone who wishes to read this. If you are sitting on a chunk of change in your savings (beyond your emergency fund), please do yourself a favor. Make a move. Don’t wait a decade to find out everyone else has invested that money — leaving you in the dust and with thousands of dollars less. And if the “I” word scares you as it did me (I always thought it was the old and affluent that “invested”) then try a low-risk option that doesn’t lock up your money forever. I shared a few examples below to save you from the mind-numbing task of sifting through Google results.

Whatever you pick, I encourage you to take it for a spin first. Try out $1000 or maybe $100 a month and see how it feels. Do you like the process? Can you see your money growing in a safe and transparent environment? If the answer is yes, then congratulations, my friend. You just made a move to save yourself (literally) thousands of dollars.

We could blame a lot of people for why no one is sharing this information more plainly. But life is short…and my dad is awesome.

Good resources:

Savings Comparison: https://www.nerdwallet.com/rates/savings-account?bankingsidebar&savingstool

High-yield Savings Option: www.cnotegroup.com

High-yield CD: https://www.synchronybank.com/banking/products/cd/?gemid1=omd