While saving money is a valuable habit, there are several common mistakes people make that can hinder their progress. Being aware of these mistakes can help you avoid them and stay on track with your savings goals.
Here are some common mistakes people make when saving money:
Underestimating the power of small savings
People often overlook the impact of small savings on their overall financial situation. They often ask, what can this little amount afford me? When it comes to saving money, every penny saved counts. Don’t dismiss the significance of cutting back on expenses or finding ways to save a little extra each month.
Not having a budget
This is one of the biggest mistakes people make when it comes to saving money. If you don’t know where your money is going, it’s impossible to save any of it.
Not having a goal
Many people save just for ‘saving sake’ or just so they could brag about the amount of cash they have in bank or at hand. What are you saving for? A down payment on a house? Purchase of personal health care products? Land purchase? Retirement? Once you know what you’re saving for, it will be easier to stay motivated.
Don’t just save money, attach a value to every penny saved.
Not tracking your spending
It’s important to track your spending so you can see where your money is going. This will help you identify areas where you can cut back. If possible, make a list of the things you want to get, save towards it and tick the items on the list as you get them to avoid unnecessary spendings.
Succumbing to impulse purchases
Did you know that once you have a little money at hand, almost every want becomes a need? How funny! Impulse buying can derail your savings efforts. Avoid making impulsive purchases by taking time to evaluate whether a purchase is necessary or simply a fleeting desire. Implement a waiting period (say 24 hours) to ensure you genuinely need the item before buying it.
Ignoring small expenses
Small, recurring expenses can add up over time and this can disrupt your savings goals. People often overlook them, thinking they are insignificant. However, small expenses such as subscription services (especially data subscription) can have a significant impact on your savings. Pay attention to these expenses and find ways to reduce or eliminate them.
Saving what’s left over
Waiting to save whatever is left after expenses is a common mistake. Instead, prioritize saving by allocating a specific portion of your income toward savings first, treating it as a regular expense.
Setting unrealistic goals
Setting overly ambitious savings goals can lead to frustration and demotivation. Imagine receiving a monthly allowance of N10,000 with N7,000 expenses incurred and saving to get the latest model of Prado jeep? How unrealistic! While it’s good to aim high, make sure your goals are achievable based on your income and expenses. Start with smaller, attainable goals and gradually increase them over time
Have you made any of these mistakes in the past? It isn’t too late to adjust and correct your savings habit.
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