"The only way not to think about money is to have a great deal of it." - Edith Wharton

SavingAdvice.com Blog

Bridging the gap between saving money and investing

Joe Wallace

Saving Money: Four Mistakes To Avoid Like The Plague

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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.

AppFess and minimum:Best for:
Digit30-day free trial period. $5 per month Setting aside automatically
Acorns$1 per monthSpare change investing.
Qapital$3 membershipLetting you set rules to automate savings.

Saving Money: Learning From Parental Mistakes

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Learning about saving money from parental mistakes is not always the most fun thing to do, but when I look back over my own personal journey it’s obvious that I took the earliest cues from my mom and dad–for better or worse, and had to evolve from there. But what kind of parental mistakes are we talking about here?

There are the obvious ones–treating credit cards like an ATM, running up too much debt on one card and being unable to dig out completely without help, things like that. But the real education I got about saving money came from taking a tough and critical look at how I was raised and the money examples I was given along the way.

Here are the five things I have learned by doing this:

  1. The nature of money and saving has changed dramatically since I was in high school back in the 1980s. It was changing in my parents’ early life together too, but the ability to adapt to a changing financial landscape is key to weathering those changes and have money left in the bank in the meantime. Adapt and survive.
  2. It’s not enough to save money–you have to save money with a purpose. You remain committed to goals that are clearly defined and lose your resolve faster when you don’t.
  3. Sometimes you have to make a game of your financial goals and treat them accordingly. In the same way you “Do Not Pass Go, Do Not Collect $200” in the game Monopoly, you’ll need to establish firm rules for the game (money challenges, saving challenges, etc.) and stick to them like they were written in stone.
  4. You have to anticipate problems along the way that may set you back financially rather than treating every new problem like a completely unanticipated disaster.
  5. You have to explain your money management strategy to the entire family and in terms they can understand and support.

Number five is especially important–or at least it was for me. When I was little, some of the most detailed financial advice I got was “You gotta pay yourself first.” Which I understood in general terms, but I didn’t know what that truly meant. If someone had taken the time to explain to me that you have to anticipate a flat tire, last-minute dentist visit, a cut in job hours, etc. by saving up for such things, it would have made a lot more sense to me in a pragmatic way.

Explaining these things clearly for spouses and children makes the difference between actually making progress in your financial planning with the support of your family and treading water with everyone asking why they don’t go out to eat anymore.

Making the plans? Crucial. But explaining how the plan works and getting everyone affected by them on board? That requires some additional thinking time. But it’s well worth the effort–especially when you’re trying to get the kids on board with a lifestyle change involving a more frugal approach to life.

Bonus : Giving technologies that help me save more a try. Here are some savings apps that are useful and worth a try.

AppFess and minimum:Best for:
Digit30-day free trial period. $5 per month Setting aside automatically
Acorns$1 per monthSpare change investing.
Qapital$3 membershipLetting you set rules to automate savings.