Without adequate savings, it can be hard to find the means to afford even the smallest financial emergency. In a survey by the Federal Reserve, only 61% of adults would be able to handle a $400 emergency expense. The top three options of the remaining 39% was to cover it with a credit card and make installments, not pay it at all, or to borrow money from a friend or family member. While life happens and some people fall into predicaments that make it hard to save money; there is a majority of people who simply just have bad spending habits.
In our world of consumerism and being constantly bombarded by advertisements, you can find yourself struggling to save money. Believe me, I have a hard time saving money as well when every company tries to push you to buy, Buy, BUY! No money down and 0% interest for a year? Yes!
But these are the types of traps people fall into that leave them constantly in debt. If you don’t change your way of thinking, and learn how to budget money, it’ll be hard to reach financial freedom. If you want to learn how to save money, these are some of the things that you might need to stop doing first.
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Living Beyond Your Means
One sure sign that you are living beyond your means is when you are living paycheck to paycheck. You’re spending more money than you actually make and might have to borrow money or rack up the bill on credit cards. This isn’t a great way to live. You can save more money if you stop buying stuff you don’t need and prioritize saving.
Many people also already have a plan for the extra money they earn. It’s not unusual to hear about the major purchases that people plan to make once they receive their tax refund. This is why it’s one of the most lucrative times for the automotive industry.
The key to living within your means is to spend less than you earn, saving money is hard if you don’t. However, this can allow you to create a savings and live a more comfortable life without worrying about money.
Keeping Up With the Joneses
In our materialistic society, people are judged by what they have. Everyone wants the flashy cars, big houses, and bling bling. Falling prey to media and social influence causes us to consistently want bigger and better things. By comparing yourself to others, you end up living a lifestyle you can’t actually afford.
But what you don’t know is that some of these rich celebrities can’t afford their own lifestyle anymore. Instead of saving money and making profitable investments, they’ve spent it all on extravagant items.
Breaking free of this societal pressure allows you to live more freely. I, for one, have never cared about brand named items. I’ve saved a significant amount of money by shopping at discount stores rather than the most popular ones.
Didn’t Create a Budget
When you create a budget, you’re managing what your money is spent on. It’s a way to make sure you have enough money to cover what you need and want. If you don’t follow a budget, you can end up spending more money than what you have and become in debt. It keeps you focused, organized, and on track to reach your financial goals.
You’re Too Darned Nice
Being kind is a good trait to have, but it is also bad sometimes. It makes it hard for you to say “no” to others. When you have the money, and someone you know asks to borrow it, you may want to help them with their predicament. But you’re putting your own finances at risk when you’re helping to pay for other’s lifestyles.
You should never lend money that you can’t afford not to get back. Unlike a bank loan, there’s no timeline for repayment or real consequences for not paying it back. This can lead to not only the loss of money, but the breakdown of relationships between your family and friends.
Ignoring Small Purchases
As the old Jamaican proverb says, “Every mickle mek a muckle” (Try saying that 3 times fast!). What it basically means is that everything adds up to something bigger. You might be expecting to always have enough in your bank account because you’re only making small purchases, but they add up! A dollar here, five dollars another day, and soon enough all these little purchases cause your card to be declined.
Without keeping track of your ALL your spending, you can easily go overboard and waste money. Budget all your expenses, whether they be small or large.
You Don’t Comparison Shop
Are you getting a good deal on that purchase? You won’t know unless you check out the prices somewhere else. From items to services like car rentals, you can end up saving a lot of money by shopping around.
For example, my favorite steel cut oats is $20 on Amazon. If I bought it there, I would have wasted about $11 when it costs only $8.99 at Costco.
Airline tickets are another area where I’ve seen people spend way more than is necessary. You should save money easier by not having “brand loyalty”. Some only stick to one airline, when there might be cheaper flights on another; this could even end up outweighing any loyalty points you’d receive.
You Make Impulse Buys
Some people just love to go shopping. But when you shop without a list or goal in mind, you might end up with a lot of unnecessary purchases. You might be in an emotional state and think you deserve to treat yourself with something. Or you might see a sweet deal on a brand new TV, that you feel you just cannot pass up.
You can control this overspending by taking time to think over your purchases before making them. Consider if you really need it and if it would ruin your budget to buy it. What could this money be better spent on?
You Make Poor Decisions
There are a lot of possible decisions that you could be making that are just horrible for your finances, such as:
- Spending money you don’t have by using credit cards, taking out loans, or doing installment plans. This makes you pay more money in the long run from interest charges. I always follow the thought that if I can’t afford it in cash, I don’t need it.
- Gambling your money away whether it’s lottery tickets or at casinos is just not… smart. Maybe one or two times, but consistently hoping that you’ll get lucky will have you spending more money than you’ll get back.
- You went in to get your car serviced and walked out with a brand new one. Trading in the car to get another one, just put you back another 72 months in installments. Instead, you could have used that car payment every month to create an emergency savings.
Why is it so hard to save money? Always remember… Companies are trying to make money, not help you save. Foster smart habits and it won’t seem so hard to save money anymore. To get started, look at my simple budget, and check out these creative ways to save money and lower your monthly spending.
Further reading: Stack Your Money, Stack Your Dollars with me! If you’re finding it impossible to save money, take a look at my $2,500/ month budget for more inspiration!