Are you interested in saving money? Here are some mistakes you should avoid like the plague starting with the failure to save any money at all. In my own life, I have learned that when you aren’t putting something away for the inevitable flat tire, dead battery, chipped tooth, broken toe, or even a car accident, you leave yourself at the mercy of all these variables and more.
Step one toward saving money the smart way and not the hard way? Start as early as you can even if you are only putting a small amount of cash aside for contingencies. If you don’t plan for trouble in your life, you may find yourself financially wiped out by problems you can easily anticipate later.
The following advice is all based on mistakes I have personally made and would like YOU to see coming and prepare accordingly. The situations this advice is based on can happen to all of us eventually–be warned and prepare early!
Mistakes To Avoid When Saving Money: Failing To Prioritize
Some people start putting money aside to go camping, surfing, or for getaway weekends. Others sock money away to purchase equipment to help them do their hobbies. But if you haven’t created a savings “cushion” to act as an emergency fund, your vacation or hobbies are in jeopardy the first time an unexpected expense comes along you don’t quite have enough cash to cover otherwise.
Create a rainy day fund first–you can get a LOT of mileage out of it when you start thinking about the most likely surprise expenses you may encounter as part of your daily routine. Do you drive a great deal? Expect to have to replace your tired and battery–save up money to cover these expenses and keep growing that fund. One day, you’ll need it and when the time comes you want to have to raid your vacation account to get back to normal.
Money Mistakes: Setting Your Insurance Deductibles Too High Or Too Low
The emergency fund we just talked about? It won’t help you at all if you don’t plan accordingly with areas such as your insurance deductibles. For example, if you get into a car accident and have to pay for a new windshield, how does your deductible affect your need to dip into your emergency fund? Set your insurance deductible too high and your policy will force you to pay for the majority or all the repairs out of your emergency fund.
Conversely, setting the deductible too low costs more per month and may hinder your chances to save more money in any way. Strike a balance between your deductibles and your ability to pay in cash for better results.
Failing To Set Goals
This article leads with encouragement to set goals for your savings efforts starting with an emergency fund but what other things do you want to do with your savings? Making goals and a plan on how to deal with your non-emergency savings sets you up to succeed when the chips are down.
Know what you want to do with your money (a combination of retirement funds, emergency funds, and nice-to-have purchase goals) and you will be much better prepared to visualize what it takes to meet your goals. Give yourself specific concrete milestones and benchmarks for your savings–tell yourself you want to start saving money in the areas we’ve discussed here but also try to figure out how much you should realistically save and make attainable plans rather than too-lofty expectations.
Failing To Get Back Into The Savings Game After A Setback
You WILL have financial setbacks that affect your savings plans. It’s inevitable. The biggest mistake you can make is to fail to get right back into your saving routine and habits the moment you have the ability to do so. Don’t let a setback knock you off the road to saving more money–make a plan that anticipates what you will do when that happens and stick to it. Expecting these setbacks to happen and deciding what to do about it is far better than hoping that such a day will never come–it will.
Failing To Use a Savings Platform
Lastly, one of the biggest mistakes in savings is not trying to automate it. The reason is quite obvious. There are times when you accidently use your savings, instead. So, trying using savings automation like these platforms.
|App||Fess and minimum:||Best for:|
|Digit||30-day free trial period. $5 per month||Setting aside automatically|
|Acorns||$1 per month||Spare change investing.|
|Qapital||$3 membership||Letting you set rules to automate savings.|