1. Not paying yourself first
Every fortnight you pay your bills, buy a few fun things, give yourself a bit of spending money, and vow to save whatever’s left at the end of the pay cycle. The good part? You’re at least trying to save money. The problem? There might not be much money left over. Having the money in the same account gives the impression you have more money to work with than you actually do. It is also harder to set any goals for savings because you don’t know how much you’ll be able to put away each week. The solution? Pay yourself first. Make the first “bill” you pay each cycle your savings bill. The best way to do this is to decide on an amount and use your online banking app set an automatic transfer up on payday. Out of sight, out of mind, until you want to check your savings and see how much your little pot of gold has grown.
2. Buying things on impulse rather than researching cost
Spending is as important to saving as actually putting the money away in the first place. Not comparing prices on the items you buy is basically throwing money away and hampering your efforts.
3. Not really knowing where your money goes
Sure, you can list a few regular monthly bills off the top of your head, approximate how much they spend on entertainment, how much they spend on shopping, but do you really know where all your money is going? If you want to save money, you need to know how you’re spending it. Get about three months’ worth of statements and write your expenses down or get an app to track your spending.
4. Forgetting annual bills until the last minute
Car registration, insurance premiums… yearly expenses can totally throw your savings out of whack. Take the sting out of these fees by dividing the cost by 12 and setting aside monthly amounts. This way, you’ll never have to deplete your savings for massive bills again.
5. Paying extra on all your credit cards
Look, this option is definitely better than not making any payments above the minimum at all. But if you want to pay off your debt faster in the long run, put all the extra money towards the debt with the highest interest rate and pay the minimum on the rest. When one card is fully paid off, then put all the extra payments on the card with the next highest interest rate until you’re debt-free.
6. Putting all your savings in the one place
It’s super exciting to watch your savings balance climb higher and higher but when you do this, it’s harder to see how close you are to specific savings goals. For example, if your savings for a home deposit is in the same place as your rainy-day fund, you could be dipping into your home fund in an emergency. And if your wedding fund is in the same account, it’s easy to accidentally think you have more money than you do, because you’ve allocated that money twice! Create a few sub accounts with different goals. Many online banking apps make this easy, and you can even name each account after the savings goal.
7. Not setting specific goals
Following on from the last point, you have to actually HAVE goals to be able to save for them. Having something in mind to save for gives you more motivation to put away your pennies each week, and doesn’t seem as thankless a task when your saving finally pays off.
8. Seeing saving as a chore
Putting away cash shouldn’t be seen as a hassle; you’re setting aside money to give yourself a treat later on. Come on, you’re basically paying yourself! You should be as enthusiastic about saving as you are about payday.
9. Not getting the best interest rate
How many of you are still with the bank that your first job paid your wage into? Don’t be the guy who thinks “It’s too much trouble to change banks.” Shop around for the best interest rate for your savings and have your money make more money for you.
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