You understand the value of savings.
By saving more, you’ve been able to take charge of your finances. A healthy savings account and a long-term savings and investment plan have helped you feel far less uncertain about what will happen in the economy.
By saving more, you are no longer living from paycheck to paycheck. Nor are you plagued by thoughts of what you will do if there is a financial emergency like your pet getting sick, your car breaking down, or losing your job.
Moreover, if you have already created your emergency fund, you are probably already taking care of your credit score and building some seed money for some high-yield investments in stocks and bonds, annuities and mutual funds.
However, you can also overdo the savings habit.
The Dark Side of Savings
In a dualistic world, everything has its opposite. When one extreme is pushed, it becomes its opposite. For instance, taking a regular multivitamin-mineral supplement will compensate for deficiencies in your diet. However, if you overdo it, in you will suffer from vitamin toxicity.
In a similar way, the savings habit will pull you out of financial deficiency, the stress that inevitably comes from more month than money.
If you become a little too frugal, you will not take care of your health, protect your property, or enjoy going out with friends and family.
Taking Care of Your Health
There are three ways that you can neglect your health by becoming a little too conservative with your money.
One: By neglecting your regular checkups. Yes, it does cost money to see a doctor, or even if your insurance covers the cost, there is the opportunity cost of lost time you could have spent earning more. However, unless you get early warning signs of a health problem, the result will be high medical costs if things get out of control.
Two: By not exercising enough. Exercise takes time out of your day. It also takes time to recover from exercise. Sadly, many wealthy people have focused so much on increasing their net worth that they end up battling serious illnesses due to a compromised immune system. It does cost money to buy a gym membership or get some exercise equipment to use at home, but it is money well spent.
Three: By eating poor quality foods. Foods high in salt, sugar, and fats are far cheaper to buy than organic fresh fruits and vegetables. In fact, it can cost two to three times as much to eat healthy foods. This is because of the economies of scale. Organic farmers can only grow small amounts of natural foods, while farmers using modern day pesticides and herbicides can grow far more crops.
Taking Care of Your Property
Do you have a home security system in place?
Perhaps you think that you are quite safe from a burglary in your leafy neighborhood. After all, you have good neighbors and live in the better part of town. However, there is nothing to stop anyone from other parts of your county from casing your neighborhood and picking a few nice houses to rob. This is not pessimistic thinking, but realistic thinking.
On its San Diego home security page, SecurityChoice.net says, “A surprising amount can happen in as little as fifteen seconds. According to research released by the FBI, fifteen seconds is the frequency at which a home break-in occurs in the United States. When it comes to the safety and security of not only your personal belongings but your friends and family members, home security should no longer be considered ‘optional.’ It’s now a necessary step to take for maximum protection at all times.”
You can easily deter burglary by either buying home security devices and installing them yourself or hiring a home security company to protect your home. If you do home security yourself, it will probably cost you about $1,300 to install some high end Wi-Fi security systems. If you hire a security company, the average cost is about $40 a month. Either way, it’s important to protect your property.
If you think this is a waste of money, consider this press release statement from the Bureau of Justice Statistics: “The median dollar value of items and cash stolen during completed household burglaries increased 54 percent from 1994 to 2011, the Justice Department’s Bureau of Justice Statistics (BJS) announced today. The median financial loss during completed burglaries in 1994 was $389 (adjusted for inflation), compared to $600 in 2011. The average dollar loss in 2011 among households that lost $1 or more was about $2,120. “
Enjoying time with Family and Friends
It’s almost impossible to avoid spending money when you spend time with family and friends. You don’t want to alienate everyone by overdoing thrift and never going to movies, restaurants, or shopping because you would rather put that money in your IRA. Fortunately, if you have been following our budgeting ideas, you have allocated some fun money.
In essence, by initiating a savings plan, you have focused on building wealth, not debt. However, there is a point where frugality can become stinginess. Unlike Anakin Skywalker, you don’t want to cross over to the dark side.