Avoid These 4 Mistakes If You’re Trying To Increase Your Savings

You may be making mistakes that could limit your ability to save more money.

Key points

• By changing your financial habits, you can set yourself up to reach your personal financial goals sooner.
• Not following a budget and other mistakes can keep you from reaching your savings goals.

Having extra money on hand can be beneficial. Life is complex and financial challenges can arise at any time. If your savings account balance is small, it can seem impossible to handle unexpected bills that come your way. If you’re hoping to save more, make sure you’re making the right moves to set yourself up for success. Find out what mistakes to avoid if you’re trying to increase your savings:

1. Ignore the need to budget

If you don’t monitor how you spend your money and set spending limits, you’re likely to overspend. It may also be easier to push the purchase without a budget to guide you. The more you overspend, the harder it is to save money.

If you’re not already following a budget, that could be one of the reasons you’re not hitting your savings goals. A budget will help you stay accountable and help you better plan where your money goes. People in all kinds of financial situations budget their money.

Don’t let being new to budgeting scare you. Budgeting apps can make the process easier.

2. Not automating your savings

While automating your savings isn’t a must, it can be very beneficial. Why? Once you set up an automatic savings plan, there are no more excuses to make, and no more forgetting to save your money.

If you’re having trouble saving, now is a great time to set up automatic transfers through your bank. It only takes a few minutes to set this up. Over time, your regular savings will add up.

3. Take on new debt

If saving more money is a big financial goal, make sure you don’t keep going into debt. If you’re mindlessly charging credit cards or taking on other debt, you’ll have less income to put toward your savings.

If you have existing debt, it’s a good practice to focus on paying off your debt before you start saving. Why? Interest charges add up, and if you have high-interest debt that you’re ignoring, your balance will only grow larger.

The good news is that it is possible to pay off debt with a commitment and a plan.

4. Save your money in a bank account

Another mistake that could be keeping you from reaching your savings goals is putting all your money in one bank account. You may think it’s a good solution, but it can be tempting to spend your entire balance.

If you’re committed to saving, it’s worth opening a separate savings account to keep money you don’t spend separate. You can also earn interest with a savings account, which means your balance will increase if you continue to let your money sit.

By changing your behaviors to establish new habits, you can avoid the mistakes above and be more successful in your savings efforts. As you create new spending and saving habits, your entire financial situation can improve.

If you’re struggling to manage your money and reach your financial goals, you’re not alone. Take a look at these personal finance resources for additional tips.