Saving money is considered a virtue by most of us. However, there is actually a “wrong” way to do it. We all know prices are going up all the time. In fact, the Centre for Economics and Business Research recently stated that the average home price in the UK will increase 25% in the next five years. Thus, it is of utmost importance that people understand how to avoid making money saving mistakes right from the start. The following are the top 5 ways on how to NOT save money if you want a bright financial future.
1. Buying Only Cheap Items
Low priced stuff is attractive for us. However, the buying-lowest-price regime doesn’t work out very well when your goal is to save money. This is because low price is usually equivalent of poor quality and unreliability. Instead of buying the cheapest item available, look for value. Always ask yourself what will deliver you with the most value between the current buying options. For instance, purchasing a cheap TV that costs about half of a TV of a reputable brand may not be the best choice. In terms of food items, also look at the price-health relationship. This means that you should analyse food in terms of both price and how healthy that specific food is. Natural ingredients may be more expensive but will provide more value to your health and your pocket than cheaper products – which are normally high in fat and sugar.
2. Annulling Yourself
Going as far as making yourself utterly unhappy by not buying things you like can actually halt the whole money saving strategy. This doesn’t have to be a long and painful process. For instance, if you like to go out two times a week to eat to a restaurant, you don’t have to restrict yourself completely. Instead, try going only twice a month or so. The problem with being so harsh on yourself is that you may end up quitting the whole idea of saving money because you can’t picture yourself living that way. Just like with many other habits, it’s just a matter of tapering off one step at a time. Quitting “cold turkey” can take away the purpose of saving money itself. In order to achieve this you may want to make a list of your current expenses, specifically, those that you can cut down. Then, make a plan in which you detail the steps you are going to take.
3. Reducing your Spending Too Much
What? Really? Although reducing your spending is the first thing that pops into mind when looking forward to saving money, if done excessively it can do more harm than good. Stopping the purchase of luxury items or the like is not only acceptable but necessary. However, essentials such as healthcare, education, and pretty much anything that prevents you to incur in a larger future expense should not be excluded from your budget. In order to avoid this, make sure you spend in medical appointments and home repairs even if this initially seems like a burden to your wallet.
4. Thinking you can Do it in One Day
There are no quick fixes when saving money. In fact, it takes commitment…and time. You should be aware and should also embrace that your lifestyle needs to be modify to a certain extent. Reducing one expense after another may end up in disappointment. Instead, you should look at it from a holistic perspective. Usually, money problems arise from issues that have been held for long periods of time. Thus, the cure is just as gradual as the initial problem. Money problems don’t solve themselves in a day. It takes both time and effort to go back on track. Frustration can only come if you think this is a short-term process. Embrace it and don’t be overly anxious about doing it too fast. Again, planning and sticking to the plan is what works most. A change in mentality is also useful at this stage of the process.
5. Having your Savings Account in the Same Bank You Have Your Checking Account
As humans we try to spend as little effort as possible in each of our actions – without compromising gains. The easiest thing to do is to open up a savings account in the same bank where you own your checking account. However, this is an incorrect approach. You should make it hard for yourself to have access to your saving funds. Yes, I know it can be a nuisance to walk a few walks and proceed to open a savings account with a bank you aren’t familiarized with. Nevertheless, it’s the best thing you can do to resist the impulses of withdrawing the money prematurely. This will ensure you will actually have saving funds at some point in the future.