Several people believe that(keeping )their money in a savings account is a safe option. It looks like the most safe choice-your money can be taken out at any moment, there is no fear of losing it, and banks even give some interest. But, a financial market specialist Gaurav Kumar says that this habit of caring money in the savings account can cause you to lose wealth over time.
A large number of people are unaware that the money that is not used and is deposited in a savings account is getting less in value because of the low rate of return and the inflation rate. The money you gradually lose as the inflation rate eats savings is the main reason to quit the savings account. Learning the facts of how it happens and looking for better options will keep and increase the money you worked hard for.
The Hidden Problem with Idle Money
At first glance, keeping money in a savings account feels practical. It’s liquid, secure, and readily available for emergencies.
However, CA Gaurav Kumar explains that this approach has a major hidden drawback:
“When the interest earned on your savings is lower than the inflation rate, your purchasing power decreases. This means that while the number in your account stays the same—or grows slightly—the actual value of your money is going down.”
For example, if your savings account offers 3% annual interest but inflation is at 6%, you are effectively losing 3% of your wealth every year without realizing it.
Why Inflation Matters
Inflation is the rise in the prices of goods and services over time.
As inflation increases, the same amount of money buys fewer things.
CA Gaurav Kumar explains,
“Imagine you have ₹1,00,000 sitting in your account today. After a year, even if you earn some interest, the cost of everything around you will have gone up. Without proper planning, your savings will not be enough to cover the same expenses in the future.”
This silent erosion of wealth is why relying solely on savings accounts can be dangerous for long-term financial health.
The Psychological Comfort of Savings
Frequently, individuals tend to store substantial sums of money in their savings accounts as it gives them the feeling that it is safe. There is a certain psychological satisfaction in being able to look at a stable balance which is always available for withdrawal without any time limit.
But, CA Gaurav Kumar states that such a mentality can keep you from accumulating substantial wealth.
“It is true that safety is important, but so is growth. A dollar that is left without being used is a dollar that is not working for you. The essential thing is to find a compromise between cash availability and returns.”
Smarter Ways to Manage Your Money
To combat the erosion of wealth, CA Gaurav Kumar suggests diversifying your funds instead of leaving them all in a low-interest savings account.
1. Create an Emergency Fund
Keep 3 to 6 months’ worth of expenses in your savings account.
This ensures you have quick access to cash for medical needs, sudden job loss, or other emergencies.
2. Consider Fixed Deposits or Liquid Funds
For short-term goals, fixed deposits and liquid mutual funds offer slightly higher returns than savings accounts while maintaining relatively low risk.
3. Invest for Long-Term Growth
For money you don’t need immediately, explore investment options like:
- Mutual funds
- Equity markets
- Retirement plans
- Government bonds
These instruments tend to outperform inflation over time and help your wealth grow steadily.
4. Automate Your Savings and Investments
Set up automatic transfers from your salary account into your emergency fund and investment accounts.
This helps develop financial discipline and ensures consistent growth.
Why Professional Guidance Matters
Navigating different investment options can be confusing, especially for beginners.
CA Gaurav Kumar advises consulting with a qualified financial planner or Chartered Accountant to build a strategy tailored to your needs.
“A professional can help you balance safety, liquidity, and growth while avoiding common mistakes. The goal is to make informed decisions, not random guesses.”
The Future of Wealth Building
Of late the financial landscape has been undergoing a transformation at a fast pace. Time money will be worth less due to Inflation, the global economic situation is changing, and there are new types of investment products and, therefore, it is even more crucial for you to be in charge of your money.
On the other hand, if you take the initiative, you can avoid your money losing its value in the form of a low rate savings account and actually grow your wealth.
CA Gaurav Kumar is of the opinion that the future belongs to the ones who start the planning process early and maintain the discipline.
“Had you initiated the small steps today, say reallocation of your idle money, you would have been on the path of financial freedom tomorrow with a strong and solid base.”
Conclusion
You may consider it a safe option to put all your money into a savings account but it is not a strategy to build your wealth.
The main reason for this is inflation and low returns. The money that is left idle loses its purchasing power slowly, which results in the limitation of your financial growth.
You can keep your money safe and get the money to work for you by ensuring a cash reserve, finding better-rate investments, and accessing professional advice.
As CA Gaurav Kumar puts it,
“Don’t allow your money to just sit there doing nothing. Take control of your finances, make a plan and enjoy the wealth expansion.”
The secret to financial stability is not to let money be idle but to use it to achieve your dreams and goals.
