3 Steps to Building a Successful Savings Plan and Start Saving Money
You already know saving is important. But just because something is important doesn’t mean it’s easy. There are countless tips and tricks out there that can help you save money: skip the morning coffee, bring your own lunch to work and open a savings account, to name a few.
However, the best intentions can be easily thrown off track with some simple mistakes. If your savings are lagging, take a look at these common mistakes people make:
1. Not Having A Plan
When you think about retirement, do you have a crystal clear picture of what you want in mind? If you’re at the beginning or middle of your career, the concept of retirement might seem like a far-off, vague idea that’s hard to picture. As such, it’s hard to know how much you really need to be saving for your golden years. But, as Forbes contributor Arielle O’Shea pointed out, diving into retirement without a clear image of what you’re in for isn’t the smartest way to approach such a major life change.
“It’s hard to know how much you really need to be saving for retirement.”
O’Shea suggested turning to a retirement calculator that gives you a monthly savings goal rather than the total amount of money you’ll need to save before you leave the workforce. Once you have this number, calculate it into your monthly budget. Your future self will be glad you did.
2. Borrowing or Overpaying for Something That’ll Lose Its Value
Most things will lose their value over time. That’s why buying second-hand is so economical. But if you’re putting money into something that is or soon will rapidly lose value, reconsider your investment. Money Talks News explained that borrowing money to buy something that will become less valuable will bring little benefit but will increase the loss.
One excellent example of this is a new car. As soon as you drive it off the lot, the vehicle depreciates significantly, but you’ll be paying the loan as if it still had its former value. Instead, opt for a high-quality used car. These will retain their value for much longer, plus are a bargain compared to the latest models.
3. Not Trying to Get a Better Deal
Whenever you’re doing anything that will affect your finances, it’s important that you try to protect your bank account as best you can. That might mean negotiating when you’re making a big-ticket purchase, like a car, house or major appliance. In these cases, it’s a good idea–and even encouraged–to try to bring the price down.
This could also apply to your salary at work. Your income certainly affects your finances, just in a different way than making a large purchase. Whether you are accepting a new job or have been at the same one for a while, be sure you’re asking for fair compensation. Most employers expect you to try to negotiate your salary, and often times, you’ll find that asking a simple question will pay off in a big way.
Saving money takes long-term strategy, and it’s not always easy to see the costly mistakes you’re making in the moment. By looking at the big picture and clearly defining what you want from your savings, you’ll have a better chance at being a successful saver.
“It’s hard to know how much you really need to be saving for retirement.” I’m now thinking of having a life insurance. Is this secure enough for my retirement? I know I’ll be saving some of my money every month for this. I just wanted to know if it is an effective way of saving. When I talk to agents, they just sound too convincing that saying ‘yes’ is the only thing that’s missing. But when I go home, I would have second thoughts.