My FIRE Journey: Why I Stopped Saving Money
All right, so I know you're thinking, "H.A. stopped saving money?! But, isn't she always talking about the importance of saving?" Yes! So, don't get me wrong, saving is important, but yes, I stopped "saving" money. Okay, okay, I'll come clean. What I've actually done is stop putting my money in savings accounts. Why is that? Well...
Savings accounts are a terrible way to grow your money. Sure, if you're just looking to purely save money, then savings accounts are the right choice - and I still highly recommend that you save money on a regular basis. But, if you're looking to grow your money, you have to look elsewhere. This is where I am at. Let's look at how I got here.
I have been saving diligently for many years, and for most of those years, it was a mere $5.00 a paycheck. When I had built up a few thousand dollars, I decided to invest my savings into some old investment accounts I had gotten through a former employer. At the time, I knew nothing about retirement accounts or investing, but I wanted to pad the dismal amount of money I had in retirement accounts. So, I simply added my savings into the accounts I already had in existence - half in my Fidelity account and half in my Vanguard account. Then, I just went right back to saving money faithfully each week in my savings accounts.
Fast forward to a handful of months before I decided to pursue FIRE. I was doing some research on saving more and spending less. This led me down a path of learning about investing which, once again, introduced me to the concept of FIRE. This time instead of dismissing it, I paid attention and realized that this was something I could do to achieve the ultimate dreams I had given up on. Once I was on board with pursuing FIRE, I began implementing the basic foundation of how the concept works. One of those concepts is making your money work for you.
In an effort, then, to make my money work for me, I've stopped saving money and instead invest my money. I stopped my automatic savings plan and turned that into an automatic investing plan. Instead of having money automatically saved in my online savings account, I now have that money automatically transferred to my Vanguard account where it's deposited/invested in my favorite index fund. Instead of the paltry savings rate of interest I was making, I'm now making compound interest* on a higher rate of interest. You can't beat that!
*Compound interest gives you interest on your interest. How? Well, say you have $1000 that you gain interest on. Say you gain $5 in interest one month, well, the next month you will make interest on $1005. Your money works harder for you this way.