We all know that saving money is critical to building a better future for yourself. All you need to start saving are a goal and savings plan. However, there are some budgeting and savings mistakes that can quickly cost you money. Here are some common mistakes to avoid to help you save more!
1. Unrealistic goals
Before you start saving, it’s important to set realistic, specific goals. Whether it’s for a plot of land, your house or your retirement, a good rule of thumb is to try and save between 10% – 20% of your total monthly income. Many people fail to meet their savings goals because they attempt to save too much, too quickly. It’s easy to become overwhelmed with a big saving goal from the start. Just pick a small amount and start saving today.
2. No savings plan
When people try to save without a plan, it often ends in failure. Once you’ve determined your goals, it’s critical that you make a plan, like a budget, to help you achieve your savings goals! A budget is simply a plan to track both your income, expenditure and saving.
3. Only prioritizing small expenses
If you cannot meet your savings goals by cutting smaller expenses like eating out, it may be time to explore ways to save money on big expenses, like finding cheaper housing. People often only focus on small expenses that will not allow them to save enough to meet their goals. The bigger the expense you can cut back on, the bigger your savings will be.
4. Your budget is too strict
Don’t set yourself up for failure by creating a budget that does not allow for any fun. While you don’t want to over do it, if you don’t allow any room for enjoyment, you’re likely to burn out and become discouraged. When people get discouraged, many drop their savings plans entirely. So, make sure you make a little room for fun in your budget.
5. Not paying yourself first
Don’t wait to pay yourself. As soon as you get paid, make sure to put money into your savings before any other expenses. Once you get into this habit, it will be easier to save over time.