When you’re trying to save money, there are a lot of mistakes you can unknowingly make which could hinder your progress. It’s hard enough to save money, especially if you’re on a low income. So, if you want to ensure you’re saving correctly and getting the most from your hard-earned cash, there’s a few things you’re going to want to avoid.
Here are some of the most common money-saving mistakes and how they can be avoided.
Not Setting Up Automatic Savings
When you first plan to save money, your motivation ensures that you keep making regular payments into your account. However, after a while, it’s easy to fall into the “I’ll save double next month” trap.
There will always be reasons to put off saving. Whether it’s an unexpected bill or you want the occasional treat, you’ll always find something else to spend your savings on. It’s common to view savings as a luxury more than a necessity.
So, to make sure you stick to your savings plan, it’s important to set up automatic savings. That way, the savings will be taken automatically from your account before you’ve had a chance to think about it.
Saving Money Instead of Paying Off Debts
While savings are undoubtedly important, it’s more important to focus on paying off any debts you currently have. Think about it. If you’re saving money but not paying off debt, you’ll be paying extra on interest payments.
By paying off debts first, it enables you to use the money you would have spent on the debt to boost your savings.
Keeping Savings in the Same Account as Earnings
Do you use a separate savings account? If not, you’ll want to open one. The trouble with keeping your savings in your personal account is that you’ll be tempted to spend them.
It makes it a lot more difficult to keep track of savings when there are other incomings and outgoings into the account. You’ll also miss out on interest as personal accounts don’t tend to provide interest on the money within them.
Impulse buying is a major problem when you’re trying to save. If you tend to spend money on things you don’t necessarily need and you weren’t planning on buying, you may need to get your impulse spending under control.
Start asking yourself whether you really need to make the purchase. If not, place the money you would have spent into savings instead.
Placing Yourself on a Spending Ban
It might seem like a good idea to place a spending ban on yourself. However, this can actually hinder your savings progress. When you feel restricted, it can tempt you into going on a spending spree – a little like when you’re trying to stick to a diet that cuts out your favorite foods. You’re going to cheat if you feel restricted, so try not to place a strict spending ban on yourself.
These are some of the most common savings mistakes you can make. If you want to get the most out of your savings, keeping them in a separate account and setting up automatic savings is a great idea.