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The Mistakes That Stop Your Savings Account from Building Up

We would all love to wake up in the morning and find that our savings account has grown while we were sleeping. Sadly, this isn’t going to happen to any of us anytime soon. Instead, saving money is a long and gradual process which takes some hard work and a lot of thought.

 

If you want to make a success of your savings then there are a few common mistakes you should try and avoid. The following are a few of the most important ones.

Saving Too Much or Too Little Each Month

Perhaps the most obvious mistake is that of putting away too little each month. After all, your savings will never grow if you don’t pass a reasonable amount to your savings account on a regular basis. However, a less obvious problem is that of trying to save too much. If you do this you could end up having to withdraw some of your savings right away, which could leave you feeling downhearted and might even have a financial cost for you in terms of bank charges. Instead, what you need to do is spend some time working out exactly how much you can afford to save each month and then stick to it. Setting up a regular automatic transfer from your main account to your savings is the best way of getting into a routine with this.

Not Getting the Level of Access Right

When you open up a savings account you will have a few different options regarding the access you have to the money. Some accounts will give you instant access with a card while others might make you wait a certain period before making a transfer back to your main account. Getting this just right is important because you might need the money in an emergency at some point. Having said that, you might not want the access to be too quick and easy if you don’t trust yourself not to spend your savings. Sometimes all it takes to help you avoid spending money is to have to think about it for a few minutes and consider whether it is worth the hassle of moving money around.

Cutting Back on Expenses Too Much

It might seem obvious that buying cheaper stuff and cutting out the expenses you see as not essential will help you save more easily. However, the problem with doing this is that it can cost you money in the long run. This is especially obvious when it comes to things like the maintenance of your home and car. If you let a long period pass without spending on these things it can lead to you needing repairs which cost more than you would have spent on the maintenance in the first place. Another issue to bear in mind here is that of spending too little on things like clothes and household goods. Poor quality items have a nasty habit of breaking or otherwise letting you down frequently. If you have to replace something before too long then it is going to cost you more in the long run to buy cheap stuff.

 

Not Changing Bad Habits

If you want to save up more money more quickly then you will also need to think about whatever bad habits have held you back in the past. We all have things which we spend too much money on and which we could cut back on if we tried. This might be eating too many expensive take away meals, not being smart enough with the monthly household bills or doing something else which eats into the amount you should be saving each month. Try and fix these bad habits and you will set yourself up for a much easier task when it comes to saving for the future.

Not Monitoring Your Accounts

For people who have a few different bank accounts it can also be helpful to track your savings to ensure that you are getting the best returns and that you are making the progress that you expect. Services such as Personal Capital can allow you to track all of your accounts in one place so that you can quickly spot where changes to your savings strategy might need to be made.

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8 Responses to The Mistakes That Stop Your Savings Account from Building Up

  1. When it comes to savings, moderation and consistency comes to mind. Don’t save too much that its unsustainable and forces you to withdraw often, I think it would be easier to start small and keep consistently increasing the amount.
    Simon @ Modest Money recently posted…Car Finance: A GuideMy Profile

  2. Usiere says:

    You can actually wake up and find your savings has grown overnight! It is call standing order or direct debit. It is still your money of course. You are right Robert, we need do need to form the habit to support the goal – doing it consistently.

    One needs to find out what works best for one, and then do it until it becomes automatic – you don’t even think about it, like reaching for your seat belt when you enter a vehicle.
    Usiere recently posted…Happy Independence Day and a toast to your financial independenceMy Profile

  3. When I first started to save, I was too aggressive with it. I would save put a few hundred dollars in my savings account from each paycheck. When the end of the month came, I wound up having to take money out of my savings account because I didn’t budget correctly. It wasn’t that I was overspending, I just didn’t budget correctly. Once I fixed my budget and saved the right amount, things changed.
    Jon @ MoneySmartGuides recently posted…How PayAnywhere is Revolutionizing Paying for Goods and ServicesMy Profile

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