You might be putting away savings every month and think you’re on the right track for your future. But do you feel like you’re getting the expected returns for the amount of effort you’re putting in, or do you feel like you could be more efficient? If you feel like you are not where you want to be financially, you might be making these saving mistakes:
1. Treating additional income as regular income
There’s nothing wrong with buying yourself a new phone if you really need it- but it might be a bad decision to spend your entire bonus on it as that could impact your savings. Instead, by opting for an EMI and paying it off over a few months, you will still be able to build your savings and get what you want!
2. Cutting small expenses but forgetting larger ones
You might haggle with your vegetable seller to get the best value for your vegetables- but that’s not enough to save money. It’s important to look at the larger expenses you might make (even 2-3 times a month) that could add up over time. For example, going out to an expensive restaurant a few times every month can cost you much more than the small amounts you save on a daily basis.
3. Saving up for goals one after the other
Savings aren’t meant to achieve one goal at a time but multiple goals at the same time. Plus, the longer you save (even if it’s a small amount) in high-interest instruments, the more you will have accumulated later.
Even if you’re currently saving up for a mid-term goal (such as a car or a down payment for your house), make sure you set aside some money every month towards your emergency and retirement fund.
4. Not investing in insurance
First, the older you get, the more chances you have of falling ill or needing to make an insurance claim. Thus, your insurance premium increases as you get older. Secondly, without insurance, all the savings you are making can get wiped out almost overnight if you suddenly have to spend it on a medical emergency or to get your car repaired in case of an accident. Insurance protects not just your health and property, but also your savings as your out-of-pocket expenses will be greatly reduced. To understand more, read our article on how you can protect your family by opting for life insurance.
5. Spending more because of deals/ offers
You might think that you’re getting a good deal just because your favourite item is at 70% off. However, that still doesn’t mean that you can afford it at that time. While you might think about it as saving 70%, think of it this way- if you had not bought the dress at all, you would have saved the money instead.
6. Buying more than necessary in bulk
While buying in bulk is not necessarily a bad thing, buying items that spoil fast means that you will have to use them faster. Here are some items you should avoid purchasing in bulk:
- Fruits and vegetables
- Items that generally take months to get over
- An unfamiliar brand
7. Having too many subscriptions
You might think that you are only paying a small amount for each channel, but these costs could add up to a lot every month. Why subscribe to 1-2 streaming platforms that have all the shows you love, or pause your subscriptions when you are not using them, or lend them to a friend for the months you are not using them? You can even add friends or family to your account to reduce your costs further!
Take our quiz to understand if you’re managing your finances well or if you need help now.
Like any good habit, it takes some effort and discipline to start saving. The first step is for you to reflect and recognise behaviours that might prevent you from doing that, and then taking a conscious decision to change your saving and spending habits by creating or modifying your budget. Without savings, you will be living on the edge – one wrong move and you might find yourself having to borrow from friends or family or take up a second job.