If you’ve ever tried to stick to a new budget or build up your savings account, you know that it’s not always easy. Saving is hard – even for folks with steady jobs and regular paychecks.
But why is saving so hard? What is it about saving that can trip up even the most responsible, rational among us? We tell ourselves that it’s just too hard to save money. We tell ourselves that we’ll start saving when we get a raise or get a better-paying job. We blame our parents for not teaching us about money, or we blame our friends for encouraging us to live beyond our means.
I won’t argue that a higher salary might make saving a little easier. And I won’t deny that friends can be powerful influences when it comes to spending money. On the other hand, though, I think that people can be a little too quick to blame money woes on external factors.
If you’re having a hard time finding your financial footing, you might want to take a look in the mirror. Chances are good that you’re making one (or more!) of these common financial missteps:
1. You let your emotions rule your wallet. Do you celebrate good news with fancy restaurant dinners or with pricy store-bought gifts? Are you the type to head to the mall for “retail therapy” after a stressful day? Emotional spending can be hazardous to your savings. When you’re feeling especially happy, sad, angry, or stressed out, you’re not making good decisions and you’re much more likely to over-spend or blow your budget.
Want to celebrate? Have a nice dinner at home. Light some candles, put out the fine china. You’ll spend way less money. Feeling stressed? Try going on a walk, taking a hot bath, or calling a friend to vent. You’ll feel better, and it won’t cost you a dime.
2. You’re an impulse buyer. If you read this blog regularly, you know I’m a firm believer in mindful spending. In general, I think that, if you really want something – and if you can pay cash for it and stay within your monthly budget – there’s nothing wrong with buying it. Impulse buying, on the other hand, is the exact opposite of mindful spending. Impulse buying is all about instant gratification, and impulse buyers rarely think about how the purchase fits into their budget.
And impulse purchases don’t have to be large: Even little stuff like magazines, coffee drinks, or unnecessary grocery items can add up and wreak havoc on your finances. Make an effort to curb your impulse buying. Avoid places where you’re tempted to blow money. Or, if you really love those small purchases, budget for them: Set aside a specific dollar amount for impulse buys. When the money’s gone, it’s gone.
3. You put your paycheck in the wrong account. If you’re depositing your hard-earned dollars in your checking account instead of your savings account, you’re setting yourself up for future financial problems. Put your paychecks in savings, so it’s not as easy to spend. Contact your employer’s HR department and arrange for a direct deposit, or use online banking to set up an automated transfer.
4. You’re a sucker for coupons and sneaky sales tactics. Most stores are designed to get you to spend as much money as possible. Big-box retailers offer 15 or 20 percent discounts for opening store credit. Your favorite specialty shops send you coupons – lots of ‘em – in an effort to get you in the door, wallet in hand (and you usually have to spend a certain dollar amount before you get the savings). These “discounts” aren’t really discounts – you either end up racking up high-interest debt or spending too much money. The best strategy here is to ignore these so-called “deals.”
5. You’re paying the minimum payments on your credit cards. I’ve written about this topic countless times, but it’s worth repeating. If you only pay the minimum payment on your credit cards, you will end up paying hundreds (or even thousands!) more in interest and fees. If you’ve got debt, your goal should be to pay it down as quickly as possible.
Need a good debt repayment strategy? One of my favorite methods is the snowball method, where you tackle the card with the highest interest rate first.
6. You don’t have any savings goals. Saving is much easier when you have something that you’re saving for. If you don’t’ have any financial goals, it’s time that you came up with a few: Sit down with your spouse and do some brainstorming. What do you want to do with your money? Do you want to save up for a down payment on a house? A vacation? College funds for the kids? Retirement?
And don’t forget about short-term goals: They’re easier to attain, and they help you stay motivated.
7. You let small setbacks get you down. When it comes to budgets, there’s no such thing as “perfect”: A few setbacks are to be expected, whether they come in the form of unexpected home repairs or a moment of weakness at your favorite department store. All too often, people make one budget mistake and give up on the whole thing. Instead, treat it as a learning experience, reevaluate your budget, and stick with it.
If you’re like most people, you related to at least one or two of these items – and that’s okay. We’re human, and budgeting takes work and practice. The best thing to do is recognize your weaknesses and be aware of them as you move forward with your new, financially responsible life.
Happy saving!