Last updated: May 31, 2023
While there are many productive things that you can be doing to save and grow your money, there are also a whole host of things that you might be doing that are hindering your savings.
It is just as important to understand what you should not be doing, so you can avoid any costly mistakes. This will help you save more money, and extend your money even further.
Sometimes even the smallest decision regarding your money can make the biggest difference to your savings. It is good to make mistakes and learn in life, but it can be extremely helpful when you get an insight into the most common mistakes that are made when it comes to savings, so you can avoid them in the first place. Avoiding common and silly mistakes can save you hundreds, perhaps even thousands, depending on how big the mistake is.
Creating and maintaining good money habits is key to success. This includes all the things you can actively be doing and all of the things that you should avoid at all costs.
To help you build a foundation of good habits, here are some of the most common mistakes that you should be avoiding.
#1 Not creating a budget
Not creating a budget that is unique to your needs and circumstances is one of the most common mistakes that people make. It is often the small things that we purchase, that we don’t consider expensive, that add up to a lot of money that could otherwise go into your savings account. This could be things like an innocent trip to the corner shop for some treats, buying your lunch at work, buying a coffee in the mornings, etc. When you do this every day, and sporadically, it can add up to a lot of money. You may also spend money on memberships, such as for a gym, or eating out.
While everyone should enjoy their life and not sacrifice the things they love to save money, there should be a compromise. The best way to create a compromise that will help you balance everything is to create a monthly budget. This will help you to think about what you are spending your money on, so you don’t waste it on unnecessary items. You might skip the shop a few days in the week and make your lunches. Small things like this will add up to a lot of money by the end of the month.
A budget will also enable you to do the things you love, within reason. You will then be pleasantly surprised at the end of the month when you have hit your savings goals.
#2 Not investing your money
Savings accounts are great tools to use when you have a goal in mind. You can take your money out of your everyday account and keep it separate. This is a great way to track your savings and watch them grow. However, one of the biggest mistakes people make is limiting themselves just to their savings.
Savings accounts tend to have no other benefits, such as the ability to earn interest on the money you have in there. Very few banks offer this, but when they do, it is usually a little amount, such as 0.01%.
Learning about investments and making the right ones can be a game changer for you and your savings. They enable you to separate your money into another account while earning money on it. There are a variety of different investments you can make, depending on your circumstances and your goals, for example, property, shares, and bonds.
If you don’t know anything about investments, it is best to find a financial advisor who will be able to help you, as they will have the relevant knowledge and experience. You can search for one using financialadvisers.co.uk.
#3 Spending on a credit card and not paying it off
Using a credit card can be a great way to spend your money each month, but only if you are using it strategically. You can use a credit card each month to purchase items such as petrol and food shopping, as long as you pay it off in full each month. It has been suggested that this is a great way to help you build your credit score. You can also use a credit card to pay for big-ticket items, such as a holiday. This is only beneficial to you if you have a low 0% interest rate, and are paying as much off as you can each month.
The reason using a credit card each month can be a mistake is if you are using it incorrectly. If you do not have a credit card with a 0% interest rate or you are not paying it off in full each month, you will be wasting a significant amount of money in interest payments, that could instead be going into your savings account.
To help you grow your savings, avoid these top mistakes. investments and making the right ones can be a game.
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