As the cost of living is demanding more and more expenses, it very essential to know where and when to save money for the future risks life might throw at us. This way we can get a good hold on our finances and be in control of it. We all have different approach when it comes to saving money. And while on this journey we may make several mistakes and it can cost us a huge loss and even send us back on the money saving pathway. Few of the common mistakes that everyone make while their savings journey are-
- Not having a proper financial plan
- Excessive expenditures
- Living off of the debts
- Not having an emergency fund
- Not being true to one’s self about the present financial situation
- Not having a savings account
A budget is the most underrated yet very important part in the money management. When you are aware where the money is going, it will help you to manage properly and know what can you afford and what you can’t which gives you a sense of control over your finances. To avoid excessive spending and other mistakes like this, it is better to pre plan and make a budget and stick to it to gain more control over the finances. But the opposite can lead to unwanted spending and will leave you with no ways to track the finances. Not tracking the income can lead to expenses not being covered which in turn, will lead to other savings mistakes.
Using of credit cards, loans and over drafts to pay the bills and other expenses is another mistake. It is important to remember that having a detailed budget with the specific expenses is a safe thing to do. Having a budget and not following it will lead to unwanted expenses. Therefore, reviewing the budgets made to avoid curbing on the excessive spending and finding out the areas where in you can omit the expenditures will allow you to save more money.
The best way to save more money is to have the income of six months to have it placed as emergency fund, this helps to avoid a crisis or a financial emergency. Without these fundamental emergency funds, people tend to use credit cards in order to get out these situations. If one is to come under such situation, they should focus on paying the short term debts by keeping the minimum payment amount and paying a little more to have less burden and get lower interest rates, this will help in paying the debt quicker. Commitment to save for the future emergencies is a must as it requires discipline and strong will to identify the savings plan and make it as a goal. Start by identifying the current situation and work on the areas which need more attention and handle it well, as the way you handle money, it works for you. There must be an account where in you should be putting the extra money saved. It is more likely to use this saved money if it lies in the account for too long and it will be difficult to trace the savings. Having a tax free savings account is also a good way to save on taxes, a lifetime of capital gains, tax free days. Remember to follow these methods to save more and get closer to your money savings goals.