Avoid these 4 mistakes if you're trying to build your savings
Having extra money on hand can be beneficial. Life is complex and financial challenges can pop up at any time. If your savings account balance is minimal, it may feel impossible to take care of unexpected bills that come your way. If you're hoping to save more, make sure you're making the right moves to set yourself up for success. Find out what mistakes to avoid if you're trying to build your savings:
1. Ignoring the need to budget
If you don't monitor how you spend your money and set spending limits for yourself, you'll likely overspend. It can also be easier to impulse buy without a budget to guide you. The more you overspend, the harder it will be to save money.
If you're not yet following a budget, that could be one reason why you're not hitting your savings goals. A budget will help you keep you accountable and help you better plan out where your money goes. People in all types of financial situations budget their money.
Don't let being new to budgeting scare you. Budgeting apps can make the process easier.
2. Not automating your savings
While automating your savings isn't a must, it can be very beneficial. Why? Once you set up an automatic savings plan, you no longer can make excuses, and there's no more forgetting to save your money.
If you struggle with saving, now is an excellent time to set up automated transfers through your bank. It only takes a few moments to set this up. Over time, your regular savings will add up.
3. Taking on new debt
If saving more money is a big financial goal, make sure you're not continuing to take on new debt. If you're charging credit cards without much thought or are taking on other debt, you'll have less income to put toward your savings.
If you have existing debt, it's good practice to focus on paying off your debt before beginning to save. Why? Interest charges add up, and if you have high-interest debt you're ignoring, your balance will only grow more.
The good news is, it's possible to pay off debt with commitment and a plan.
4. Stashing your money in one bank account
Another mistake that could be keeping you from reaching your savings goals is putting all of your money in one bank account. You may think it's a good solution, but it can be tempting to spend your entire balance.
If you're committed to saving, opening a separate savings account to keep your non-spending money separate is worthwhile. You can also earn interest with a savings account, which means your balance will grow if you continue to let your money sit.
If you alter your behaviors to establish new habits, you can avoid the above mistakes and may be more successful with your savings efforts. As you create new spending and savings habits, your entire financial situation can change for the better.
If you struggle with managing your money and reaching your financial goals, you're not alone.
This article was written by Natasha Gabrielle from The Motley Fool and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
