How Saving Is Costing You: The Quiet Math Nobody Teaches
By: Teresa Loos-Tedrow | Co-Founder | Next Legacy Group
How Saving Is Costing You: The Quiet Math Nobody Teaches
Why Inflation Is the Hidden Cost of Saving?
We were raised on a simple rule: save, save, save.
Build a cushion. Don’t take risks. Be responsible.
And yes—having cash set aside for real life is smart. Emergency funds matter. Being able to handle a surprise expense without panic is a financial strength.
But here’s the part most people were never taught:
A regular savings account can slowly make you poorer—even while your balance goes up.
The Problem: Your Money Earns One Number While Life Gets More Expensive by Another
Most traditional savings accounts pay a rate that sounds like something but behaves like almost nothing.
The national average savings rate has been around 0.38%.
At the same time, inflation continues doing what inflation does.
Consumer prices have increased around 3.3% year-over-year.
That gap tells the whole story.
Inflation doesn’t show up as a fee in your banking app.
It doesn’t send a notification. It simply reduces what your money can buy over time.
A Simple Example
Let’s say you keep $10,000 in a typical savings account.
At 0.38% interest, that account earns about $38 in one year.
But if prices rise 3.3%, the purchasing power of that same $10,000 effectively drops by about $330.
The Result?
Your balance stayed the same—but your money lost roughly $292 in real buying power.
So even though your account didn’t go down, your life still got more expensive.
Your savings didn’t protect you. It simply sat there and absorbed the impact.
The Dollar Has Been Slipping for Decades.
There’s a reason people often say things like:
“I remember when gas was…”“We bought our first house for…”
That’s not just nostalgia.
It’s math.
Federal Reserve data tracking the purchasing power of the consumer dollar shows that $1 today buys roughly 30 cents of what $1 bought in the early 1980s.
That doesn’t mean the financial system is collapsing.
It means cash loses value over time unless it grows faster than inflation.
Who Actually Benefits From “Save, Save, Save”?
Let’s be direct.
Banks benefit.
Deposits provide banks with low-cost capital.
They can lend that money at higher rates and keep the spread.
Saving itself isn’t the problem.
Unproductive saving is.
And unproductive saving usually means money sitting long-term in an account that cannot keep up with inflation.
A Better Approach: Give Every Dollar a Job
Instead of asking, “Am I saving enough?” A more powerful question is,
What job is this money supposed to do?
Many investors think about money in three distinct buckets.
1. Safety (0–6 Months)
This is your emergency reserve.
It covers things like:
• Unexpected expenses• Job gaps• Immediate life needs
This money should stay liquid and accessible.
The goal here is security, not high returns.
2. Stability (6–24 Months)
This bucket is for money you may not need tomorrow but could need within the next year or two.
Examples include:
• Taxes• A vehicle purchase• Tuition• A future down payment
Many investors want this capital to perform better than a basic savings account without exposing it to excessive volatility.
One option some investors explore is private debt backed by real estate.
Instead of owning the property itself, capital is positioned more like a lender—deployed with defined terms and backed by a real asset.
The goal is not a home run. The goal is consistency and stability.
At Next Legacy Group, this type of real estate-backed lending structure can help investors build a stability layer—without managing tenants, repairs, or renovations.
3. Growth (2+ Years)
This is capital designed to compound over time.
Historically, long-term growth often comes from owning productive assets—assets that generate income and may appreciate in value.
One asset class many investors focus on is multifamily real estate.
Multifamily properties provide housing, which remains a fundamental need.
They also offer multiple value-creation levers, such as
• Operational improvements• Professional management• Expense optimization• Strategic renovations• Aligning rents with the market
At Next Legacy Group, multifamily investments serve as a long-term growth engine designed to produce durable cash flow and compounding wealth—without investors needing to become landlords.
Cash Is a Tool, Not a Destination
Cash has an important role in a financial strategy.
Use cash for safety.
Consider stability strategies that may perform better than idle savings.
And focus on owning assets that have the potential to grow and produce income over time.
Because if your entire plan is simply to stack cash, inflation has a quiet counter-plan: reduce your buying power every year that money sits still.
Want to See How Investors Structure Their Capital?
If you're sitting on cash and wondering how experienced investors balance safety, stability, and growth,
We invite you to explore our investor education resources.
Learn how multifamily real estate and real-estate-backed strategies fit into long-term investment portfolios.
➡ Start here: https://funnel.nextlegacy.net/home
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