According to many studies, many people worldwide are having a rough time when it comes to saving money. Some people may be having the money but don’t understand the concept of saving. This is because many of them do not embrace the ability to live within their means. Before you start saving money, you need to understand some simple money concepts.
1. Pay yourself first
Many people still don’t understand that they need to save a few coins out of every money they make. According to research, an average person saving money is just saving 15 minutes a day of their earnings instead of saving an hour. In times of an emergency, many people won’t have cash at hand to cover for it, yet they will buy a lavish phone when they see one.
People have money but they are just not saving it. It’s advisable to come up with a ‘pay yourself plan’ where you set a goal of saving a certain amount of money over a certain period, either weekly or monthly.
It’s no lie that in recent times, the cost of living has skyrocketed. Food prices are going up; basic food commodities are now going at double the original prices. Inflation is now hard-hitting and it is mostly attributed to the ever-increasing cost of house rents and electricity.
This leads to the cost of gas, electricity and water increasing at unprecedented rates. It’s better to have the idea that inflation may be here for a while. With this knowledge, you will grasp the importance of saving to battle tough times ahead.
This is a legal procedure through which people who cannot pay their debts seek relief from their debts. Nobody wishes ever to be bankrupt. It is because it can be a bit heartbreaking. After all, most people have plans for their future. No one would wish for these plans not come to fruition. Avoid bankruptcy by taking care of necessities such as food, shelter and clothing. Make sure your rent status is also current.
Making a change
With many economic challenges in our society today, you should start considering coming up with savings goals. Job losses, loan debts and other economic factors make it hard for people to save anything meaningful. However, some people can afford to save but aren’t saving. Make a change to save when you can.
Reasons why you are not Saving Enough
Here are some of the few reasons why you might find yourself not saving as much as you should or not saving at all.
- Suffering from someday syndrome: This refers to the scenario where many people, especially those who are making good money, set a goal of starting to save when they start earning a higher wage. In most cases, it doesn’t go as planned because these habits never change. To stop this habit, its good to make a savings priority as soon as you start earning.
- Having no clear plans: Many people have no idea how much they need to save. Probably they don’t take time to sit down and do the calculations themselves and save what is pocket friendly for them. Most people are afraid of being told they aren’t doing enough, so they choose to downplay the saving plan. Postponing savings will result in future financial challenges. To avoid such challenges, draft a realistic financial plan that will help you save.
- Being afraid: It’s true people are afraid of messing things up. They are afraid of investing. Therefore, they fear making mistakes, so they choose to do nothing to avoid making mistakes. The only way to face the fear is by facing it and getting over your fears. Facing these fears will help you learning about financial investment and giving you a clear path to financial freedom.
- Lack of an emergency fund: One of the reasons people don’t save enough is because they don’t set aside an emergency fund when earning. Setting up emergency funds helps people to deal with job losses or medical emergencies. Not having an emergency fund makes people get overwhelmed with surprise bills and life’s challenges. Establishing an emergency fund is key in establishing long-term financial wellness.
- Possibility of a subscription addiction: With the constant growth of technology, you find yourself subscribing to almost anything from television services to food deliveries, internet services or Uber services. You must keep track of your subscriptions and take note if you are paying for services that you don’t need. If you can cut some subscriptions and channel the money into savings, you will be better off.
- Your savings are not automated: Some money formulas and strategies can help you have a savings goal. The best among them is automating your income. Having automatic bank transfers helps you meet your savings goal first, forcing you to plan yourself on what’s left.
In conclusion, living within your means will enable you to develop a suitable savings plan. Learn to live without things that you desire and this will help you avoid debts and have a lot more money to save without straining.