Saving money is something you often talk about doing, yet when the time comes to put some of it into a savings account, you either have bills to pay or a purchase to make. After a while, this becomes a cycle and while debt is continually being paid off, a lack of savings is putting you back to square one.
More often than not, the mistakes preventing people from saving their money can be traced to daily habits. For instance, purchasing a cup of coffee does not seem like it would be detrimental to a savings account, but when the practice of buying a coffee becomes an everyday thing, the expenses will add up quickly. By the end of the month you will be scratching your head and wondering where their entire paycheck went.
But coffee is not the only thing preventing you from saving. There are many common mistakes that are easy to make on a daily basis when it comes to your finances. Consider the following practices you should avoid while trying to save money:
1. Not planning ahead
When saving, you need to have goals established for where your money is going. Whether you want to set aside funds for retirement or a vacation, having specific goals in place will help you have a better sense of perspective for saving. This is especially true if you set dollar amounts for those goals.
According to the Las Vegas Review-Journal, having goals in place will act as motivation for trying to save. Without goals, you may feel like you are just setting money aside you’ll never use. Though that is not the case, sometimes you need tangible reminders.
2. Assuming an investment will only increase
People living paycheck to paycheck aren’t the only group running into financial difficulties. Investments are big part of life and you might rely on them as a vehicle to grow your wealth. While this is the point of an investment, sometimes the value doesn’t always keep up the way you expect it to, as noted by the Shamrock Financial Corporation.
Some people make their investments in the form of stocks, while others choose real estate as a way to build equity. However, these are both based on markets that go through changes. This doesn’t mean investments are too risky to even consider, but you should be aware that investments work both ways. Ultimately, seeing a return on that investment is what counts. If you want invest in something and then just sit back and wait for it to grow, then you might be in for an awakening if you haven’t been paying attention to the market or speaking with a financial advisor about the investment.
3. Keeping your accounts at the same bank
Having separate accounts for savings and checking is necessary, but when these two accounts are held at the same bank, it is easy for you to dip into one or the other. When a checking account is getting low, and you have access to both, either through your banking app or at an ATM, you are more inclined to simply push money over from savings.
According to Nadine El-Bawab,, individuals who are serious about saving should place their savings account with another bank.1 This will make it more difficult for you to switch back and forth and borrow from your savings when your checking is getting low. Additionally, there are financial institutions which may offer better deals for a savings account that is only intended to be added to and not withdrawn from. You should take this into consideration when placing your money.
The most common mistakes you might be making are those you don’t even realize you are making. However, these can also be the easiest to remedy.
For more information about saving money or other financial concerns, visit the Cash Central Resource Center
The views expressed by the articles and sites linked in this post do not necessarily reflect the opinions and policies of Cash Central or Community Choice Financial®.
1El-Bawab, Nadine. (2021, Sept 1). Retrieved from: https://www.cnbc.com/2021/09/01/why-your-checking-and-savings-accounts-should-be-at-different-banks.html