A lot of people are not so good at saving money, this explains why majority lives paycheck to paycheck, and why only a few adults have the funds to handle an emergency situation. If your personal savings is in a bad state, it’s important that you take steps to improve on it. Here are some reasons your saving attitude might be bad — and how to fix them.
1. No Budget
There are many folks who don’t save money because they just assume that they can’t spare the price of saving. And the reason they assume such is that they can’t tell where their money keeps disappearing to — all they notice is that by the end of each month, there doesn’t seem to be any money left.
If that been your case, here’s an easy fix: create a budget and start following it. This way, you’ll know what you’re actually spending your money on, and where there might be room to cut down so you can improve your savings rather than completely ignore them.
Follow this step to create a budget; make a list of your recurring monthly expenses, add-in any one-time bills that pop up randomly throughout the year, cumulate and compare your total earnings to your total expenses. If the difference is zero it means you’re spending out your entire paycheck every month — then you’ll need to cut down on your spending, and your already created budget will help you pinpoint the categories of expenses to tackle first.
2. Not paying yourself first
Having a budget is great, but then what happens when you become tempted to spend $200 in a given month on leisure when you really only supposed to spend half that amount? Suddenly, you might be deficient on your targeted savings, and it all boils down to not prioritizing it.
Here’s a better bet? Master the habit of paying yourself first. Doing this is an easy matter of signing up for an auto transfer and having your savings of each paycheck move into your savings account before you even get the chance to spend it. In the earlier mentioned scenario, you would not be able to spend an extra $100 if it wasn’t available to you. So, think of that auto saving transfer as kind of an insurance policy.
3. You haven’t ever experienced a financial emergency
A lot of people do not save for emergencies simply because they’re convinced that they don’t need to. If that’s your conviction, it’s perhaps because you’ve never had a catastrophic bill skunk your finances. But be sure of this: No one has immunity against emergencies. You could wake up one morning to find water licking down down your roof, or go into your car to start it only to find out the battery is gone. Similarly, you could fall sick or get hurt and get slapped with a series of devastating medical bills, or out of the blue, you get laid off at work.
All these instances could leave you on the hook for a boatload of cash you don’t have, then you’ll be in big trouble because without any savings, you’ll have no choice but to rack up huge debt. Instead of waiting for an emergency to strike, and be destabilised, assume that one will eventually happen, and plan for it already.
Step up and make some changes, If you are lacking in savings. Reduce your expenses to free up more cash to save, and think about getting a side-job to boost your progress along. No matter your income level or age, you should aim at having at least three months’ worth of living expenses in the bank account, so if you haven’t gotten anywhere close, stop making excuses and start saving now.