Avoid These Money Saving Pitfalls!

Use the money saving saving  pitfalls to build up your savings
Use the money saving saving  pitfalls to build up your savings

Use the money saving saving pitfalls to build up your savings

Building savings can be challenging, but the reward is security for your future. Without savings of $5,000 to $10,000 a sudden problem could be a major hardship for you and your family; don’t let unexpected emergencies such as hospital visits put you into an untenable situation!

According to financial publisher Bankrate.com, around 25% of people have no savings stashed away. How can you avoid being that one-in-four, and why is it so difficult for us to save? Below are a few tips to keep in mind for saving, as well as several traps to avoid on your road to becoming financially secure.

It’s the small things in life…

It’s the small things that add up! Fast food might seem cheap and easy, but even if you just went to McDonald’s once a week and only spent $7, that would add up to $364 dollars a year – and of course many people go more than once a week. Cooking at home will always be cheaper and more nutritious.

Make a coffee in the office instead of buying a coffee every day. Daily coffees of $3.50 cost you $1,277 per year. If you have a partner, then that’s $2,554 each year on coffees alone.

Set a Hard Budget

Try limiting your weekly expenditures by taking a set amount from your savings at the beginning of the week and using no more than that. It will keep you disciplined on saving money.

People tend to come up with random numbers when deciding how much to save, or how much money they need to use each week; carefully budget what you know you will need instead. This will help you educate yourself about your finances.

Record Your Progress

Having a goal can help a lot. Keep a goal chart; as you record your progress, it provides encouragement to keep going. It is a visual representation of your increasing savings. Keep it somewhere easily visible, like on your fridge: you’ll see it often and it will remind you of what your goal is.

Separate Your Day-to-Day Account from your Savings Account

Most people have savings accounts linked to their checking account, treating it as a ‘buffer’ account, which tends to make it far too easy to move money over. Spending money becomes an easy and thoughtless thing to do in this case. It should be far more difficult for you to access your savings, so as to ensure that they are there when you need them for emergencies. Medical bills and unforeseen home repairs can and WILL come at you out of nowhere. Your savings account is your safety net!

Check Your Savings Account Interest Rate

A savings account is probably the lowest risk investment you can possibly make, and the national average is a fairly conservative expectation for yearly interest earned on your deposit. But make sure you shop around for an interest rate that will make your savings work a little harder for you.

Earning money is hard, and holding on to money is even harder, but by sticking with these tips, and avoiding the traps, you’ll be well on your way to financial security.