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Business News/ Money / Personal Finance/  5 financial mistakes that deter you from saving money

5 financial mistakes that deter you from saving money

Not too many people make money or know how to make money. The reason is inadequate savings that disable them to have enough to invest. They end up with “No money today, and no money tomorrow too.” This perpetual cycle of income and expenditure with no consideration for savings forces them to face untimely poverty. 

This is you relying on pennies later in life when you do not save enough early in life. (Pixabay)Premium
This is you relying on pennies later in life when you do not save enough early in life. (Pixabay)

You can plan and chalk out a detailed financial goal that will amount to nothing if you do not have money. Money attracts money, which is why you must focus on your savings first before jumping headlong into the investment cycle. Sadly, not many people view savings with the seriousness and attention they deserve. They will save one month diligently only to squander away the savings on some big, luxury items the next month. The easy availability of credit cards has lured the younger generation to rely solely on credit.

You can focus on your financial goals only when you have set aside enough to decide on your investments. This means that you can invest to secure your future only when you have enough in your hands at present. There is no investment without savings, a truth that many people fail to recognize or tend to ignore in the daily grind of life.

You may either earn more to save enough or limit your expenses well within the earning limit to save for the investments without having to compromise on the latter. However, adequate savings may be a far-fetched dream for people making the following mistakes.

Not tracking expenses

You must be aware of the actual amount that has been spent similarly to how much you have earned. This is important, less you spend on unwarranted and unwanted things. If you do not control your urge to spend, you may splurge more than you can handle or postpone your expenses on life’s necessities. So, tracking your expenses at every step is the key to saving money and ensuring that you do not spend beyond a certain limit.

Not planning for emergencies

You never know when misfortune strikes at your door, which is why having an emergency fund in place becomes more necessary. Planning an emergency fund through regular contributions is important so that you do not have to bear heavy expenses at the last moment. Sudden expenditure to pay for emergencies can derail your plans to invest regularly.

Craving for the latest gadgets

Showing off your latest fancy gadgets is the latest fad that the young generation has fallen prey to. Needless to say, these gadgets come at a price. For those who cannot pay, credit card companies and companies extending “Buy Now, Pay Later" schemes are availing the much-needed facility to pay later for things bought now. The money has to be repaid through equal monthly instalments (EMIs), the failure of which will invite fines and penalties for you to consider.

Get rid of the craze surrounding things that would do no good to you in the long run. Focus on paying for necessities now so that you have enough to invest and take care of your future, especially, in the post-retirement phase wherein you would have no access to a regular income source.

Paying too much

Do you find it uncool to negotiate the prices of items that you must pay for? Well, change your attitude toward money then as you will definitely find it enticing to negotiate and renegotiate the prices of items before you buy them. Remember that you must pay for the value that you derive from the product and not what is stated on the cover. There is often a huge margin between the selling and manufacturing prices of goods, be it apparel or electronic goods. This means that haggling to pay lower than charged will save you a lot of money that you can then save and invest.

Tendency to overspend

The numerous credit cards in your wallet indeed make you feel powerful. You then compensate for your eagerness to show off your money by unnecessarily spending on items that you may never need in the long run. Avoid spending on services, subscriptions and added features that you do not need or use every day. Binge spending on high-priced items to enjoy the good life will ultimately push down the gutter of poverty and financial worthlessness, if not controlled timely.

What are savings bonds?
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What are savings bonds?

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Published: 23 May 2022, 05:41 PM IST
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