Can saving too much be bad for you?

I’ve always been an aggressive saver. When I was little, my parents taught me to always have money for a rainy day, and I’ve been wearing rubber boots ever since.

To give you an idea of ​​my obsession with savings, I worked three jobs during my college years to increase my savings rate, and to this day I continue to combine my day job with several other part-time jobs. For me, saving and investing has always been a priority, but I also know what it means to go too far.

I recently looked back at my life and wondered about all the things I may have missed over the years because I worked multiple jobs or didn’t want to spend.

Which got me thinking: could saving too much be bad for you?

Don’t forget saving is a personal matter.

Saving money is good, but it also depends on your personal situation. Although there are many “rules of thumb” for saving, everyone’s financial situation is different. Don’t feel like you have to fit into a single budgeting methodology if it just doesn’t work for you.

To set savings goals, first determine how you want your finances to look in the short, medium, and long term. Then take an honest look at your current financial and career situation to determine what is possible depending on where you are.

Once you establish this personal context, your savings decisions become clearer. Always start with the end goal. This is the key to knowing if you are saving at the expense of other things.

How much does the average person actually save?

According to the Federal Reserve Survey of Consumer Finance (SCF), the average American’s savings balance varies greatly by age:

Age group Average savings balance
up to 35 years $11,200
35-44 $27,900
45-54 $48,200
55-64 $57,800
65-74 $60,400
75+ $55,600

As you can see, the older you get, the more savings you tend to accumulate.

More importantly, according to the Bureau of Economic Analysis, Americans are saving about 6% of their income in 2022, below the 2021 average of 12% (although this is skewed by historically high savings rates earlier in the year). ).

If you compare these numbers with generally accepted savings rules of thumb, such as the 50/30/20 model or the 80/20 plan, you’ll quickly see that most Americans don’t save enough. There are many reasons for this, and aside from the skyrocketing inflation we’ve seen lately, it’s understandable that many of us have had a hard time finding extra money to put aside.

Read more: 7 tips to protect your finances from inflation

But even though, in general, Americans don’t save enough, it’s important to note that you can also develop bad saving habits.

With movements like FIRE (which stands for financial independence, retirement early), there is more pressure than ever before for young people to achieve financial independence as early as possible—and to do so through very aggressive savings.

Saving is, of course, important to your financial health. But the way you do it can actually be detrimental to your mental health and long-term professional success.

Can too aggressive saving be a bad thing?

If you are reading this article, you have probably heard of many aggressive saving and investment philosophies such as the FIRE movement.

On the surface, these approaches to personal finance sound great, but the potential negative mental and emotional consequences are often not discussed.

Impact of aggressive saving on mental health


While it may seem counterintuitive, overly aggressive savings can be just as bad for your mental health as other, more negative financial activities like compulsive spending. Savings can become an addiction that affects your life and relationships.

Saving too aggressively can also lead to anxiety when it comes to spending on anything. This phenomenon tends to show up, especially when aggressive savers retire. These people have developed an ingrained sense of thrift and an emotional attachment to their money because of the sacrifices they made to get it.

Saving your life

We have all heard about the bad side of FOMO and YOLO, but there is also a positive side that cannot be ignored. If you’re saving too aggressively, it can easily make you feel like you’re wasting your life on some day in the future that may never come.

In some cases, FOMO can be a good reason not to aggressively save if you’re in reasonably good financial shape, don’t have high-interest debt outstanding (such as credit card debt), and have set aside an emergency fund.

From personal experience, there are a few things I regret not doing because I was so focused on saving and working and I will never have the opportunity to do it again. You only live once, and it’s important to balance your savings goals with what’s important to you at this point in your life.

Read more: When to spend money

Refusal to invest in yourself


There is some truth in the statement “to make money, you need to spend money”. Many of the things that can help you grow professionally will cost you money, including courses to help you learn new skills or networking events where you can meet new people.

Read more: How to Communicate Like a Pro: Tips for Newbies and College Graduates

If you save too aggressively, not investing like that can hurt you in the long run. Feel free to spend money on your professional growth. As Warren Buffett once said, “The best investment you can make is in yourself.”

But don’t confuse investing in yourself with things like throwing thousands away on designer clothes or luxury vacations and dining if you can’t afford it.

How much should you save, according to experts?

In general, this figure is usually 15-20% of your income after taxes.

There are also many studies by organizations such as Merrill that provide detailed information on how much money you should have saved by a certain age. For example, the Financial Wellness Tracker, owned by Bank of America, asks you to multiply your salary in certain age ranges to determine how much you should have saved by a certain age.

According to the tracker, if you are between 26 and 30 years old, you should multiply your current salary by 0.7 to determine how much you should have saved. This means that a 28-year-old earning $60,000 a year should have approximately $42,000 in savings.

Don’t forget it’s not all about saving

While there are many well-researched and widely publicized approaches to how much you should ideally save, remember that you can only save a certain amount. The reality is that living costs a certain amount, so you can never reach a 100% savings rate. The best thing you can do to increase your savings naturally is to earn more money, pay off bad debts like credit card debt, and not succumb to lifestyle inflation.

Always set clear financial goals that are meaningful to you personally, but don’t forget to live and enjoy life. You only get one of them.

There will always be compromises when it comes to how you spend and save your money, but don’t let yourself fall into the trap of unhealthy savings.

Featured Image: Alexey Fedorov/

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