Savings

Avoid these 4 mistakes if you’re trying to build your savings

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You may be making mistakes that could limit your ability to save more money.


Key points

  • By changing your financial habits, you can set yourself up to reach your personal financial goals faster.
  • Failure to stick to a budget and other mistakes can prevent you from reaching your savings goals.

Having extra cash on hand can be beneficial. Life is complex and financial challenges can arise at any time. If your savings account balance is small, it can seem impossible to pay the unexpected bills that come your way. If you’re hoping to save more, make sure you make the right choices to set yourself up for success. Check out the mistakes to avoid if you’re trying to build your savings:

1. Ignore the need to budget

If you don’t watch how you spend your money and set yourself spending limits, you risk overspending. It may also be easier to buy on a whim 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, this could be one of the reasons you’re not meeting your savings goals. A budget will help you stay accountable and better plan where your money is going. People in all types of financial situations budget their money.

Don’t let being new to budgeting scare you off. Budgeting apps can make the process easier.

2. Do not automate your savings

Although automating your savings is not essential, it can be very beneficial. Why? Once you set up an automatic savings plan, there’s no more excuses and forgetting to save your money.

If you’re struggling to save, now is a great 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. Go into debt

If saving more money is an important financial goal, make sure you don’t keep taking on new debt. If you charge credit cards without thinking too much or take on other debt, you will have less income to spend on your savings.

If you have existing debt, it is recommended that you focus on paying off your debt before you start saving. Why? Interest charges are piling up, and if you have high-interest debt that you ignore, your balance will only increase.

The good news is that it is possible to pay off debt with a commitment and a plan.

4. Hide your money in one bank account

Another mistake that could prevent you from reaching your savings goals is putting all your money in one bank account. You may think this is a good solution, but it can be tempting to spend all your balance.

If you’re committed to saving, it’s worth opening a separate savings account to separate your unspent money. You can also earn interest with a savings account, which means your balance will grow if you keep letting your money sit.

If you change your behaviors to establish new habits, you can avoid the mistakes above and be successful in your savings efforts. As you create new spending and saving habits, your whole financial situation can improve.

If you’re struggling to manage your money and achieve your financial goals, you’re not alone. Check out these personal finance resources for additional tips.

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