Saved too much money? Why and when this can become a problem!
In a world where good financial management is a must, the idea that you can save too much money may sound absurd at first. But if you take a closer look, you’ll realize that being overly frugal can actually lead to problems you may not have anticipated. That’s why we’re going to explain the three risks of saving.
The risk of cash
If you decide to store a significant amount of cash at home or in your business, you may be underestimating the risks involved. Many people don’t realize that home and business insurance policies usually only cover cash up to a certain amount. These limits vary depending on the scope of insurance, and once the amount of cash you have saved exceeds this limit, the excess amount is no longer covered. This can lead to significant losses if you are the victim of theft or another loss event.
The security of bank deposits
Even money that appears to be safe in the bank is not protected against all risks. Although the statutory deposit guarantee in the EU covers deposits of up to 100,000 euros per customer and bank, amounts above this could be at risk in the event of a bank insolvency. This makes it all the more important that you find out about the safety nets and limits of your banks.
The interest of the tax office
One aspect that is often overlooked is the tax office’s increasing interest in people who save a lot. Even though no wealth tax is currently levied in Germany, the tax office can carry out investigations into the origin of your assets during tax audits or in the case of self-employment. Questions may arise about your source of income and the use of your savings. They may also check whether the money you have saved has been properly taxed. The existence of a suspected money laundering report could also be the subject of the check.
These insights into the potential pitfalls of an overly ambitious savings plan shed new light on the topic of financial management. It is essential to provide for the future and have a nest egg. However, it is equally important to find a balance to avoid getting into financial or legal difficulties unintentionally. Being aware of these risks can help you plan for a solid and secure financial future without unwanted side effects.
And if you would like to find out more about this topic, you can also watch our video: Bank PLEITE – Money GONE! Is my money safe in the bank?
