Most of us know that money saving is important.
But that’s of no use when you don’t take the task at hand and start saving.
You just cannot quench your thirst by seeing water you have to drink it.
The same goes for saving money.
You necessarily have to start saving money and that too in the right way.
So if you take up money saving, it is important that you do it in the right way.
Suppose, for example, if you are of the opinion that you can save money by buying a cheaper product, you are probably not on the right track of saving money. It can happen that the product may break down soon and you end up buying another one. Instead, you should opt for buying a better and expensive product that can last for a life time.
So it is necessary to start saving money in the right way that actually helps you to save money.
Here, I have come up with 10 Most Common Money Saving Mistakes that you should avoid at all costs if you really want to save money and that too in big numbers.
1. Not Having any Saving Plan (Saving targets, saving for, etc)
Money Saving is like a journey. As a journey has a destination, likewise Money Saving too has a destination that is you have to come up with your own Saving Plan or Saving Target. You have to know for what you are saving money for.
Not having any saving plan will not help your cause of saving money. A Saving plan gives you all important motivation for saving money for a particular purpose or aim. You have your dreams and aspirations to fulfill, and invariably they require money. Whether it is buying a car, purchasing an expensive gadget, may be your child’s higher education, buying a house, or saving for your post retirement days, each of these would require money.
So set up your saving plan as soon as you start the journey of saving money. Decide upfront for what you want to save money for. This would help you to track how much you have saved for your aim or saving target and how much more you have to save for achieving you’re saving target.
2. Not started Budgeting
Once you set up your saving plan, it’s important to know how much you can save on a regular basis. You require knowing what would be your saving month on month. In other words, you have to start budgeting. By not budgeting you just can’t figure out how much you can save in a month. Budgeting lets you prepare the chart of your overall earnings and expenditure in a month. Moreover, you can then come to know how much you are spending on a particular category and can reduce that figure if you find it unreasonable. So in a way you are making provisions for your monthly saving target. By budgeting, you come to know how much you can save in a month.
3. Not Keeping Track of Spending
Not keeping track of spending is another very crucial money saving mistake. Although you have to spend money, but if you want to save money then you have to begin tracking your spending. Every dollar counts. You can save a dollar or can spend it. When you track your spending, you get to know your spending areas. How much you are spending and where you are spending. Suppose you have figured out that you are spending $100 on buying groceries, you can then come up with waves in which you can reduce that spending. So in a way, you are becoming conscious of your money spending spree and thus realize that you need to spend each of your pennies smartly if you want to save big money soon.
4. Not Having any Saving account
It has been seen that although people save money, but they tend to keep it in their locker or safety vault in home. Well you can think that what’s wrong in it, but from money saving point of view it is not at all a good sign. In fact, it is a human tendency to spend money that is at their disposal. In nine out of ten times, people are found spending their saved money which they have kept at their home. So not having a saving account is a big money saving mistake that should be avoided at all costs.
A savings account is beneficial in more than one ways. First your money in safe as it is kept in a bank. You get some interest on the money you hold in your saving account. Last but not the least; you are not able to spend your saved money easily. At least you have to visit the branch to withdraw your money. In this context, you should also not have a debit card linked with your saving account as it makes withdrawing money easy. You just have to go to an ATM to withdraw your money.
5. Not Investing Saved Money
Well, it just not only important to save money, it is also beneficial to invest your saved money. Investing saved money is important if you want to have a large corpus of money with you. And Investing gives you an opportunity to do this. Not investing saved money you are letting off the chance to grow your money. After all, you need appreciation and interest on your saved money and investing gives the opportunity to make this a reality for you.
You can invest your saved money in bonds, stocks, real estate, mutual fund, commodities, or any other investment instrument that gives excellent returns. Having said that, every investment instrument has its own risks of investment. Moreover, higher rate of interest higher is the associated risk. So before investing your saved money, you should do a thorough analysis, and research.
6. No emergency fund or no saving for creating an emergency fund
Usually it has been seen that people save money for good things in life. But, what if an emergency situation arises in your life? Would you then use the money that you have saved for meeting your dreams and aspirations? Well, the solution lies in building up an emergency fund.
Actually you have no control over emergency situations in your life. It may happen that you meet with an accident, run massive losses in business, or are out of a job. Such emergency situations demand money. If you have made provision for it in the form of an emergency fund, then you can easily tackle such situations. Otherwise, it is really hard to manage them.
So when you begin saving money, make a provision for an emergency fund. Ideally an emergency fund is equal to six months of your monthly earnings. You can open up a separate saving account for an emergency fund and save money regularly in it so that you can build up your emergency fund. With Emergency fund, you are assured that you can meet any challenge that comes up in your life.
7. Large spending on Entertainment, eating out etc
Large spending on entertainment or eating out doesn’t do any good to your cause of saving money. In fact, Fun Money (money that you spent on entertainment, dining out, etc) is probably one of the largest drainer of your money. So, if you want to keep up your good work of saving money then help yourself and reduce the amount that you spent as Fun Money. Usually people spent upto 25% of their monthly earning as Fun Money. In some cases, this figure can be even higher than this. So, you should look for ways of reducing your expense on Fun Money and should be saving your hard earned money for good causes.
8. Not searching for deals with value
You simply cannot stop yourself from shopping. However, if you are on a saving spree then you should look for ways so as to shop intelligently and save lots of money while still shopping for the best of goods, products, and stuffs. A good way of saving money on shopping is to find deals which safe your money. Nowadays, the Internet has become a popular channel for shopping. There are lots of shopping websites and as well as coupon websites, which come up with attractive deals, offers and discounts. So you just have to devote some of your time searching for deals with value. Not doing so you are wasting the opportunity for saving money. You can use discounts and coupon codes to shop and save money, as well.
9. Always buying in bulk
The belief that always buying in bulk helps save money is not a true notion. Well, one thing is sure, and that is you should have a good provision of money that lets you buy in bulk. However, buying in bulk always help to save money is not a right belief. Actually, before you buy in bulk, you should check the unit price of items. If you find that there is a substantial difference in the unit price of a bulk item and the unit price in a small packing, then go for buying in bulk if that saves your money otherwise there is no point in necessarily buying in bulk.
10. Buying Cheap Rather than Buying Value
Well, most of us believe that buying cheap is a way to save money. However, this may well turn out to be a false notion. It is not always beneficial to go for buying cheap products. A cheap product may not last long and you end up buying another one in its place. So in a way you spend more as you have to buy that product twice or thrice. Instead if you had spent few dollars more, you could have bought a better product for yourself. So you see that buying cheap is not a remedy for saving money. Actually you should look for value and buy products which though expensive have a high probability of lasting for a longer time duration. Thus, you would have a better product and would be able to save money too.
So you see that you need to approach money saving in the right way to be able to actually save money. Money Saving isn’t difficult at all. However, it needs your right approach. In this context, you need to pay attention to the 10 Money Saving Mistakes that I have illustrated above. You should avoid these most common money saving mistakes if you really wish to save money and that too in big numbers.