Saving money isn’t easy. The late actor John Barrymore summed it up best when he said, “Why is there so much month at the end of the money?” So often it seems like money goes out faster than it comes in. Start growing your savings by avoiding these major savings mistakes.
Not setting goals
Goal setting is the first step in building savings. If you don’t know what you are saving toward, then you don’t know how much to save. Also, working toward a goal will also keep your motivation up. Think about short-term goals, like saving for a new handbag or vacation, and long-term goals, like a down payment on a house or car.
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Set goals to pay down student loans and, most importantly, high-interest credit cards. While it might not be intuitive, improving your credit score will also help you save money over your lifetime.
Remember that you also need to start an emergency fund to have savings on hand for any unforeseen circumstances. Also, it is never too early to set goals for retirement and start saving via a 401(k) plan.
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Not tracking your expenses
In order to be financially successful in growing your savings, you need to create a budget. Start by looking at your goals and how long you want to take to achieve them. Figure out how much you need to put aside each month for each goal.
Next, take a close look at all of your money that comes in and all of your expenses that go out. Breakdown your expenses into categories, like groceries, rent, eating out, entertainment, shopping and more. Assign each category a target amount you feel comfortable spending each month. Don’t forget to check in with yourself every month to ensure you are on track and readjust each category as needed.
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You will never be able to maximize your savings if you spend freely without any self-control. Try to stick within your budget allotment for each spending category and challenge yourself to save money in creative ways.
When you take a trip to the grocery store, always have a plan and a list to avoid impulse purchases. Skip your morning coffee run and make a cup of coffee at home. Renegotiate your cable bill with your provider and pull coupons for purchases you regularly make. If you are looking to splurge or treat yourself, consider a yoga class or manicure instead of a pricey massage or new pair of shoes.
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