Money is a large part of most peoples living situations as we need it to do pretty much everything. Not all of us are able to afford a dream lifestyle, and while there are options to buy things on finance or with loans, many people still prefer the option of saving. Here are some common mistakes that people make when trying to save money.
Not setting a budget
Creating a budget is one of the most important parts of saving money, as this will set out a clear outline of how much you can spend and save per day/week/month so as to save the desired amount. However, many people still don’t set a budget, either because they feel restricted, or they simply do not know how to make one. You should not feel restricted by creating a budget, instead, it should help you see how much free money you have available to spend, and the process is fairly simple to reverse engineer. Start by taking your total income and subtracting any expenses, including rent, bills, food, gas, etc. What you will be left with is how much you can save each month when living to your means. It is not recommended that you save this entire leftover amount as you will have a much lower quality of life, so instead try and find a reasonable balance.
Not setting a goal
Once you start saving, get into the swing of it, and have a large lump saved it can be fairly addicting and you might just want to keep on saving forever. In some cases, this is not a huge problem as being prepared, and having a little nest egg saved for a rainy day can be fairly smart, and it is better to have something than nothing. However, if you are not saving for anything in particular or if you do not have a goal amount you are trying to reach, then you might end up sacrificing a lot of enjoyment and opportunities in favor of saving. So, when you are looking at saving, set yourself a goal, even if it is just to reassess your financial situation, as there is nothing to stop you from continuing to save, as long as you are not doing it blindly.
Not utilizing free and reduced items
It is common that when a person or set of people decide to save their money, they will automatically restrict or reduce their consumption of expensive and/or luxury items so as to help them spend less and therefore save more. However, something that is generally missed or not considered by the same people trying to save their money, is how they can get some of these luxury items, or more expensive items for less. An obvious way is to look at sale items, or in the reduced sections of shops. For example, in a grocery store, there will generally be some meats and vegetables that are going out of date and will have significant savings, while allowing you to still enjoy a tasty and filling meal. Alternatively, a lot of shops, brands, and businesses will offer free samples of their products and services, which may help you stretch out your budget in other areas.
Setting unreasonable timescales and not considering unplanned costs
After you have set a budget, it is easy to calculate a timescale whereby you will reach your goal. The mistake that many still make is by setting an unreasonable time scale due to trying to save too much in a short space of time. This is often due to not considering unplanned costs, such as vehicle problems, emergencies, or home maintenance that is required. It is easy to budget for your standard daily life, but it is impossible to tell the future and therefore know about all your expenses throughout the year. So, when you set yourself a timescale make sure that you give yourself some leniency, and don’t push your savings to the limits.
Going all or nothing
If you struggle with your finances then you might find that you are very all or nothing even when it comes to saving or spending money, and as such another common mistake that many people make when saving is setting too many restrictions upon themselves. Just because you are trying to save, doesn’t mean you should remove all the luxuries and enjoyment from your life.
In conclusion, if you take the time to set a goal and create a strong budget that you can follow consistently then you will be a lot more likely to succeed in saving without making these mistakes.