One of the best things you can do in your adult life, to give yourself security and peace of mind is to have savings. Savings give you a financial buffer if things go wrong, and they also allow you to buy the things you want and need to have the kind of lifestyle you deserve.
Without savings, it can feel like you’re living hand to mouth and if one small thing goes wrong (such as a broken down appliance, car or unexpected bill) it can put you in a lot of financial trouble. Here are some of the mistakes people can make when they’re saving up.
Pitfall #1: Not Setting Goals
It’s always worth having goals in mind. For example, you could have one account that’s your ‘rainy day fund’- only ever to be touched in genuine emergencies. Another account could be a long term savings goal such as saving for a house deposit, and another could be more short term such as saving for a holiday, a new tv or something else you like the look of. Having an idea of what amount you want to put into each account and what amount you’re aiming for is useful, as it helps you to feel productive and it’s satisfying seeing the balance creep up to your goal.
Pitfall #2: Life ‘Getting in the Way’
The nature of life means that some months are easier than others. For example, one month you might have car issues and have to spend the money you were going to save. But if you save what you have whenever you can, it soon mounts up. The same applies to things like loose change, just saving up the shrapnel from your pockets ca add up to a significant amount without it even being missed. Whether it’s a little or a lot, put it in the savings pot and it will all accumulate. Sometimes life can get in the way in an even bigger way, for example, if you’re victim in an accident and can’t work then you could be left without an income for several months while you recover. In this case, finding a highly recommended personal injury lawyer is the best thing to do, that way they can fight to get you the compensation you’re entitled to. And your savings won’t take too much of a hit as you will have money to live off until you go back to work.
Pitfall #3: Not Choosing the Right Savings Account
A savings account with a high-interest rate is your best bet when you’re saving for anything. Some savings accounts might have limits on the number of withdrawals you can make in a year. While this seems like a bad thing, it can actually prevent you from dipping back into it so for me it’s a positive! Speak to your bank, or use a comparison site to find the best savings account for you.
What are the biggest pitfalls you come up against when you’re saving money?