Many people place the bulk of their money in ordinary savings accounts. While this is certainly better than spending every cent of your money, you’ll still end up losing what you save because of inflation. Obviously the $100 you set aside today won’t be worth as much 3 years from now, and the interest rates you get from a regular passbook account won’t match the loss of value.
As a general rule, your savings account should only hold about 3 months’ worth of expenses—like rent, transportation, allowance, utilities, and what you’d generally need to survive. Then, invest the rest.
