Common Mistakes People Make When They Are Saving Up

Common Mistakes People Make When They Are Saving Up

If there’s one thing that financial literacy tells you, it’s that saving your money is one of the best things that you can do for yourself. Doing so will make sure that your financial supply grows despite the expenses you have to settle regularly. Due to this, most people believe that as long as you’re dropping bills into your piggy bank, you’re good to go.

Even if saving up is beneficial, there is still a chance that you might make a few mistakes in the process, and these mistakes can take different forms. To help you save up the right way, here are some mistakes to avoid while saving your money.

Not setting any goal

Some people are perfectly content with what they currently have but continue to save up because they are told it is a good idea. However, this is a step in the wrong direction. While saving up is good, not having a motivating purpose as to why you’re doing it can make sustaining it difficult. To ensure that you are regularly and constantly filling up your savings, set a goal or find something that you can look forward to so that your motivation to save up will not waver.

Not having a budget

Another financial literacy tip that you most probably are aware of is to come up with a budget that covers the things you’re paying for on a monthly basis – this budget also covers how much money you will be saving up. Knowing how much money you’ll be saving every month is important because this will help make sure that you won’t spend too much and go over your pre-determined monthly expenses. Apart from that, having a budget can also make sure that you regularly increase the amount of money you have saved up.

Putting all your money into one basket

Most individuals transitioning into the adult phase only have one bank account, and this is where they put all of their personal savings in. If you are starting out, there is absolutely nothing wrong with this. But if your savings start to increase, it might be a good idea to open another savings account. This isn’t because bank accounts have a specific limit on how much you can deposit, but because it’s for your own safety – putting all of your savings into one bank account is very risky. To be on the safe side, open two or more separate bank accounts and delegate your savings into each one of them.

Taking your savings too seriously

If you want to grow your savings more quickly, you might think that keeping your expenses to a minimum is the best idea. But there’s a caveat to doing so – if you force yourself to spend as little as possible, you might end up paying more in the long run. For example, you can save more money if you choose an appliance with a lower price tag. But if these appliances are made of a lower quality, you would have to purchase another one the moment they stop working. Remember, a higher price tag doesn’t automatically mean a bigger expense. Sure, you might spend more money initially, but because they last longer than their cheaper counterparts, you end up saving more money in the long term.

Not assigning your savings

It’s important to avoid saving up for a singular purpose. Instead, try to categorise your savings into two or three parts, one of which should be an emergency fund, while the others are for you to decide. If you organise your savings as to what they are for, you avoid emptying it in one spending, so it leaves you with extra money should you suddenly need it.

Saving up to pay off your existing loans

If you use a financial loan correctly, you can enjoy a couple of benefits. That said, sometimes, the outstanding balance can overwhelm what you’re capable of repaying if you don’t handle it appropriately. When this happens, some people set aside their repayments and save up instead so that they can pay it all off in one go. However, delaying your loan repayments is not exactly a good idea.

If you feel like the outstanding balance from your loans are too much for your regular income, you might want to consider applying for a debt consolidation loan in Singapore. Doing so will settle your unsettled loans, prevent ballooning interest rates or late payment fees, and synchronise the repayment schemes into one.

Conclusion

Saving money is essential not only for rainy days but for your future in general. Avoiding these mistakes will give you a seamless money-saving journey and, believe it or not, bolster unexpected complications that may arise in time to come.

Bookmark the permalink.

Comments are closed