We understand that savings are important, while at it, it is paramount to be aware of some of the mistakes that we can make along the way. We not only want to be savers but we want to be good and healthy savers.
Here are some mistakes people make when saving money. Be on the look out to avoid making them.
Saving after spending
Spending is inevitable. We spend on rent, mortgage, food, transport, bills among many other expenses. Some of my friends like to say that we go to work to get paid so that we can have money to transport us back to work everyday. The point is money is coming in and going out at the same time.
The mistake that most people make is saving after they have spend. The best way to save is to Save before spending. This means that you reward yourself first. It means Saving is a priority to you. When you save before spending, you will be able to live within your means, because then you can make do with what is remaining.
Saving before spending is intentional saving and is meaningful saving.
The idea of Saving seems interesting, inviting, something that is worth doing. However, without action, it will only remain to be a dream and a thought. Only thinking about saving will not bring the required change, that change will come when we begin to do, to engage and actually do the saving.
This includes becoming aware of your budget and planning around it. You can look into apps that help with budgeting. Make a plan as to how much you will save and spend. A well written plan acts as the vision. It allows you insight into the bigger picture of saving and how much you will have saved over a certain duration of time.
Savings that are very easily accessible
There are two ways to look at this. The extremes of each are not healthy. If the savings are too easily accessible then that increases the temptation to access the saved money and spend it. On the other hand, savings that are too difficult to access beat the logic of putting away money in the first place.
Too much of something is poisonous as popularly said. This is true in Saving. You need to strike a balance that works for you. Spenders especially may struggle with having savings easily accessible while savers may get frustrated while trying to access the funds they saved. Find a balance and keep an eye on the vision.
Lack of research on market rates
We wouldn’t want our savings to earn zero interest. That is why we save with financial institutions, banks, cooperative societies and the likes. It is wise to at least earn some interest from the money we are saving.
A mistake people make when saving money is not doing proper research before committing to the financial institutions. It is up to us to do our due diligence. Ignorance is no bliss. We have the responsibility to find which are the best, reliable institutions with the correct rates for us.
With the internet, this information can be only a click away.
Lacking an Emergency fund
An Emergency Fund is different from savings. An Emergency fund helps with unexpected expenses. Unexpected Expenses are for example medical emergencies, Car breakdown expenses, Unexpected gift expenses, unexpected breakdown of a budget.
The lack of an Emergency fund is a saving mistake because when we experience the unexpected situations and we have nothing to cushion us, we will take away from our savings or be forced not to save at all. Therefore to avoid being caught up, it is better to have an Emergency fund.
Denying yourself too much
We cannot downplay making ourselves happy. Being happy and content is a prerequisite for a healthy lifestyle. While saving is important, killing yourself in the process is missing the mark.
Denying yourself too much is a saving mistake because it will eventually cause you to detest saving. You will lose the momentum and the willingness to save. A balance is necessary without a doubt because again neither should go overboard.
Perhaps putting away money for your enjoyment and entertainment will keep you motivated enough in the savings process.
Ever heard of the statement use money to make more money? That is exactly what our savings are supposed to do for us. They are to allow us to make more money. Savings can be used for different things, for repaying debts and loans, for vacations, for big purchases. You can have a saving goal.
While majority of us are able to save, we may not know how to invest. how to make money from what we have. Find something that you are comfortable investing in and investing because not investing is a mistake people make when saving money.