Finding extra money to save at the end of each month can be difficult. Mortgage, car payments, insurance, school loans and groceries, the list of budgeted expenses goes on. Add in unexpected expenses that are bound to pop-up and, at the end of the month, your paycheck is spoken for.
While many of us have good intentions when it comes to saving, roadblocks often impede the way to savings success. Here are six things that can derail your savings and tips to get back on track and achieve your savings goals.
Not Having a Clear Savings Plan and Budget
Without a clear vision of your financial goals and a roadmap for achieving them, its easy to slip and let spending take the place of saving. Knowing what your saving for, whether it be retirement or a vacation, and how much youll need, helps you keep your eye on the prize. Next, create a budget to help you reach these goals and work hard each month to stick to it.
Lack of an Emergency Fund
Most Americans have not saved enough to cover a $1,000 emergency. This number corresponds with the Federal Reserve’s survey findings, which show 44 percent of all respondents could not cover an unexpected $400 emergency expense or would rely on borrowing or selling something to do so.” Unexpected costs can severely impact your savings plan. An emergency fund that covers these expenses can make all the difference. To build your emergency fund on autopilot, consider placing a portion of your paycheck directly into a savings account.
Allocating Funds to Pay Off Debt
Paying off debt, such as credit card debt and student loans, isnt a bad thing. However, it can lessen your ability to save. Just like youre putting a plan and budget in place for saving, do the same for paying down your debt. Make a list of all of your debts and the interest rates associated with them. Then decide on a strategy for reducing debt. Some people work to pay off the debt with the highest interest rate first. Others choose to start with the smallest debts. As you pay off debt, funnel the money youre no longer putting toward those payments into savings.
Overspending During the Holidays
People often think of Christmas and Hanukkah when they think about the holidays. But, Valentines Day, Halloween, Mothers Day and Fathers Day also rank high for spending. With meals, special attire and gifts, spending around so many holidays adds ups quickly. To curb holiday spending, put together your list and budget, and stay disciplined in your spending. Remember, its about the memories made more than the money spent.
Buying Unneeded Items on Sale
But it was on sale. These five words can wreak havoc on your budget and savings. Dont fall prey to sale prices. If you dont need the item, it doesnt matter if its 50 percent off. Instead, put that money into savings so you can afford what you really need and want.
A want is something you wish for, a need is something you require. Its easy to get wants and needs mixed up or to rationalize a want into a need. This is especially true when it comes to spending. If youre serious about saving, analyze each purchase to determine if its something you really need and cant live without. If purchasing a wanted item will derail you from saving for the future, reconsider. You may decide your desire to achieve your financial goal supersedes the desire for the item.
Obstacles to saving will always be present. The good news is there are many ways to break through these obstacles. With priorities in place and a stick-to-it attitude, you can get your savings back on track and achieve your savings goals.
Changes in Daily Habits Can Produce Big Savings
The Rule of 72: How to Double Your Savings in 10 Years