When the going gets tough, the tough make mistakes. At least, they do when it comes to saving money.
Inflation has caused price increases among a countless number of items and services over the past few years. Because of how fast these prices are rising, people are becoming more and more desperate to save money. In theory, that sounds like a good thing; however, they keep making mistakes that costs them more down the road.
Here are the five biggest money mistakes people make.
Mistake #1: Not spending at all
Cutting spending seems like the most obvious way to save money. Unfortunately, some people take it too far. As much as you hate doing it, some spending is necessary. Particularly, upkeep and maintenance.
What if your car needed an oil change, and you tried to put it off for as long as possible to save money? Then your car runs out of oil, and you ruin your engine. A $25 maintenance charge becomes thousands in repair, or more in a new car.
Mistake #2: Ignoring value and buying cheap
People who are trying to save money are often attracted to the lowest prices. But you need to look at value, not just price. If you’re buying an object, Ask yourself:
- How effective is the product?
- How long will it last before it needs to be replaced?
- How much will it cost to maintain?
If you have to choose between buying a used car for $1,500 that will last you a year, and a newer car for $5,000 that will last you ten years, which one is the better deal? And, considering older cars often need more repairs done, you could be spending a lot more than you bargain for in that one year.
Mistake #3: Looking for a quick fix
There is no quick-fix when it comes to saving money. Simple as that.
Often, people need to save money because of an ongoing list of problems with their finances. Cutting one thing out of your budget isn’t going to instantly fix the problem; it requires a bigger lifestyle change.
You may have to relocate to a less-expensive area, or find ways to save on insurance. Or it could be a buildup of smaller things, like having the willpower to say no to an impulse buy, or dropping your Netflix subscription. Just remember; it will take some time before you see a change, so don’t give up on it early.
Mistake #4: Putting it off
People sometimes delay saving, because they feel like it will cause them to give up some of the things they love. Maybe bowling with your friends every Saturday is too much of a pleasure to give up. Maybe you feel you still need to satisfy your sweet tooth every time you go grocery shopping. Whatever it is, everyone has something they don’t want to give up.
But the thing is, you don’t have to give it up at all. There are ways to save without losing those things entirely. Maybe play one fewer game of bowling, or find a cheaper activity to do with your friends. Maybe find out how to make sweets yourself, instead of buying the expensive brand.
Whatever it is, there is always something you can do. You control your budget; your budget does not control the things you love.
Mistake #5: Neglecting to make fundamental changes
Despite the fact that you can keep the things you love, saving money requires lifestyle changes. It’s much like dieting; if you do it for a month, then stop, then the problem will keep coming back.
Any change you make needs to be permanent; temporary solutions will not do. If you switch credit cards, and the new card has a lower introductory rate than the first, that’s great; but after the first 18-month period, when the interest rate goes up, are you still saving?
You must also avoid spending your savings on new impulsive decisions. The problem with saving is, when we have more, we’re inclined to spend more. It’s the reason why lottery winners and billionaires try to save money too, just like the rest of us; our spendings tend to match our assets.
To avoid this, you’ll have to put some money away in a savings account, and forget about it. Only deposit, do not withdraw. Only then can you truly see how much you really save.