Do you feel a creep of envy every time one of your friends makes a big-budget buy from their saving accounts? Do you continually wish that your nest egg was a little more…well, full? You aren’t alone. More than half of Americans are struggling to save right now. And, as you’re probably aware, it’s a problem that can quickly start to take its toll.
After all, savings aren’t just some luxury lifestyle choice. Having a decent nest egg can quite literally change your life for the better, allowing you to settle into financial security that’s never a possibility otherwise. Whether your boiler breaks or you get invited on a last-minute trip with friends, savings make it all possible.
Unfortunately, modern living doesn’t lend itself to a positive saving mindset, and your best financial intentions might have struggled to get your nest egg out of the hundreds in recent years.
In truth, though, it’s still entirely possible to build the strength of your savings account. You simply need to improve your saving mindset by considering, and addressing, these potential reasons for your failures so far.
# 1 – Waiting for the ‘Right’ Time
Waiting for the ideal time to save is one of the worst financial mistakes you can make because the ideal time doesn’t exist! There will always be other things demanding your money, and if you constantly give in to them, then you can kiss goodbye to ever building your wealth.
This is especially true if you’re waiting until your earnings increase before making a savings plan because our spending has a habit of increasing along with our incomes. In other words, you will likely spend your pay increase via things like a bigger mortgage or car finance loan before your savings even get a look in.
It’s far more effective to create the ‘right’ time to save by simply setting a savings budget that works with your income as it stands. You don’t need to set aside huge sums that leave you in debt across other areas. You simply need to make sure that you’re setting small, manageable amounts aside each time you receive your pay packet.
# 2 – Not Budgeting for Savings
Speaking of budgets, this is another area where your attempts to save might be failing. Too often, people make the mistake of assuming that they can only save whatever money they have left at the end of the month. This mindset makes saving less likely by ensuring that it’s always your last spending resort, secondary, even, to frivolous expenses. And, let’s be honest, how often does the end of the month come without a cent left to keep in the bank?
Instead, it’s always worth making sure that you budget for savings just as you would for your bills. To do this well, sit down and work out spending priorities like bills, food, gas, and so on. Once you know how much you need for these, you’ll develop a clear idea of your ‘floating’ finances and should be able to set a reasonable savings budget that rolls over each month. Setting this money aside without compromise has the benefit of both building your savings and showing you more clearly how much personal spending you can actually manage.
While it may feel like a leap at first, setting up a standing order to transfer your savings where you want them each payday can make this budget a standard part of your spending routine that never needs to fall by the wayside.
# 3 – Lacking Savings Goals
Even if you’re budgeting your savings, it’ll be difficult to get a true hold on things unless you also set clear savings goals. For some people, this will mean saving for a particular thing, which could be something tangible like a new car, or something much further afield, like your retirement. By keeping this goal in mind, you give yourself far more incentive to set that money aside across a shorter period.
Alternatively, if you don’t have anything specific in mind, your savings goal could be about reaching a set amount of money. There’s a range of advice about how much this should be, but most experts recommend saving enough money to cover up to six months or so of expenses. You may also want to save a little more to ensure that you can cover things like unexpected home or vehicle repairs.
The main benefit of goals like these is that they provide a clear endpoint for your savings journey. If you then work out how long it’ll take to reach that goal, you’ll feel both motivated and more positive about saving than you would if you were simply piling money into a separate account each month just because you feel like you should.
# 4 – Choosing the Wrong Saving Method
There are as many ways to save as there are reasons for doing so, and this fact can unfortunately lead to setbacks of its own if you aren’t careful. After all, even if you’re saving, choosing the wrong method could see you on a long and hard path that won’t necessarily serve your needs in the long run.
One great way around this is to research specific savings accounts, which offer typically higher interest rates, and also provide you with a safe space to put money aside. Even within this category, however, there are different options to choose from, such as cash ISAs, which provide tax-free allowances, easy access accounts, which allow you to withdraw money at any time, or fixed rate bonds, which see you committing your money to that account for set periods. The best option for you will depend on everything from why you’re saving, to how well you’re able to avoid spending that money along the way.
And remember that savings accounts aren’t the best option for every saving goal. For instance, if you’re saving with a long-term focus like retirement in mind, alternatives like investment may be preferable. Even if you’re not a seasoned investor, speaking with a financial advisor, or utilizing tools like this blast block explorer to find investment opportunities with the best long-term potential, could see you not only setting money aside but also potentially seeing major returns on those efforts when you need them the most.
# 5 – Overpaying on Your Debts
You may be surprised to see this point on the list, but bear with us. While clearing your debts is an undeniably important financial goal, too many people make the mistake of stretching their finances to achieve this outcome. While they may end up debt-free this way, savings will also be impossible to secure as a result, leading to a nest eggless future that increases the risk of further debts down the line.
Instead, it’s a far better option to balance debt repayments that also leave you monthly financial wiggle room for actual savings. This doesn’t need to mean picking the lowest repayment rates with the highest interest, but opting for middle-level repayments may end up making sense, even if interest is slightly higher this way. That’s because you’ll be able to keep on saving, while also spreading interest costs in a way that doesn’t necessarily feel like too much of a hit. And, your future financial self is sure to thank you for it.
Are you fed up with having nothing in the bank? Get to the bottom of your mysterious inability to save by considering whether any of these mistakes might be to blame.