MISTAKES TO AVOID WHEN SAVING MONEY
One third of all working adults have not saved any amount of money for their retirement, according to a survey conducted by Bankrate.com. The website also found out 26% of Americans ages 50 to 54, and 14% of those aged 65 and above do not have savings.
Saving money is the most important yet neglected aspect of personal finance in the world today. Hence, people keep on committing the same mistakes in saving money. The article will emphasize some of these mistakes.
This is the biggest reason why people fail to save money, especially the working individuals because they love splurging on anything and everything. They love living in the moment. But are several advices and tips on the best ways to budget your money. We find the act of going through an expense sheet, statements, bills, and the like dreadful. But if you are not going to employ the proper budgeting, you will not able to grow your savings fund, not to mention your financial goals.
Failure to Monitor Spending
After budgeting, the next step in setting a financial goal is to monitor your spending. One has to follow his progress in time between, say bi-monthly or monthly. There are some applications or websites an individual can use to track his spending, or a simple expense sheet will do.
Allocating a Little Money for Savings
Our mothers always tell us to save money for the rainy days. However, most individuals have little or no money in their emergency fund. The ideal amount for this fund is three months’ salary or six months worth of expenses. For example, Valerie earns $4,000 a month, so she should have at least $12,000 in her emergency fund.
Living on Every Salary
Do not stretch every single centavo in your spending allowance every pay day. Separate the spending allowance from your regular fund. Then, set a ‘fun fund’, a certain amount of money aside from the allowance that you can use any way you like or for rewarding yourself. This should be the amount that works for you. Another term for ‘fun fund’ is buffer fund. In other words, be a discretionary spender not a money monk.
Not Setting Financial Goals
Why are you saving money? Is this for your retirement? For an important occasion? For a new house and lot? For a car down payment? Or for something else? Whatever your financial goal is, there are various motivational guides to follow. It serves as a constant reminder of what you are aiming for. Also, be realistic and stick with your financial goals, especially on how you are going to achieve it.
Waiting for the Right Time
Many people are guilty of this mistake: procrastinating on putting up their savings plan or their emergency fund at the very least. Achieving a financial goal takes a longer time than you may have expected. For instance, it takes three months’ income for an average American to put up his emergency cushion, if he will set aside $500 a month for that.
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