Free Money is Often the Most Expensive Money

Free money may seem like an attractive offer, but it often comes with hidden costs and consequences making it more expensive in the long run.

Free money (from the government, a company, or an individual) may actually take away your freedoms. Accepting “free money” may bind you to the demands of others (i.e. to get this money, you may need to do or not do x, y, or z). This does not allow you to be free.

Inflation is theft.

One of the biggest concerns with free money from the government is inflation. When money is just printed or injected into the economy without a corresponding increase in goods and services, it leads to an increase in prices. (“Too much money chasing too few goods.”) This subsequently steals your purchasing power and erodes the value of your savings which can lead you to be worse off than you were before. While this “free” money may provide temporary relief, understand how it will affect your future and the prices of everything you purchase later.

If you receive “free” money (especially from the government such as a stimulus or debt forgiveness), be sure to put that money where it will benefit you the most long term. Here are a few ideas:

• Put it into an emergency fund.

• Pay off high-interest loans.

• Purchase assets that will increase in value or pay you.

• Invest in yourself with education or skill enhancement.

This can help you not go backward in your finances when the economy adjusts to the money that was injected/received, and we start experiencing inflation.

Remember, what the government can give you, they can also take away.

Most people have a hard time seeing past today. If you need money, explore all options such as low-interest loans and work-study programs before accepting “free” money from any person or entity.

Free money may provide temporary relief, but it's important to weigh the long-term costs and consequences before accepting it.

The goal is to achieve sovereignty, total independence, and self-reliance without relying on others.

Additionally, do not lend money! Per Dave Ramsey, this is the fastest way to ruin a relationship. Only lend what you can afford to lose. Is this amount worth losing your friendship over? He suggests, if someone asks to borrow $100, instead you can say, “I cannot lend you $100, but I could give you $10 or $20 (or whatever amount works for you), and you don’t have to pay me back.”

For financial planning information, options, and directions, take a look at the Make a Plan page.

For ideas that can help with saving money, check out the Budgeting, Saving, Groceries & Gas, and Recipes pages.