Avoid These Financial Pitfalls on your Savings Journey

Getting started with saving

As people, we are often advised to start saving from as early as possible. Not only will it ensure that you accumulate a considerable sum of money over the years, but it is also a way of getting into a habit of saving and teaching yourself discipline. While some people tend to save what is left of their income, if they are of working age, that is not entirely the right way of doing things. Several financial advisors suggest saving first and then spending your income. Essentially, you need to have a clear budget and financial plan so that when you receive your income, you already know what should be allocated to your savings. Whatever is left over is then what you can consider as your disposable income, which you can spend as you wish. 

There is also the option to keep your money in an interest-bearing account, which is a way to earn interest on your savings so that it is somewhat more valuable in the future. Earning interest on your savings can cushion you against factors such as inflation, which are all to be considered with the time value of money. That being said, saving can be taken a step further by you pursuing investment options once you are comfortable with what you have saved and if you are looking to make potentially lucrative returns through the likes of real estate, stock trading or forex trading, amongst other things. To make the most of your savings, forex trading may be worth exploring as a way of capitalising on currency and exchange rate fluctuations. However, making use of sophisticated forex trading platforms and reputable brokers is extremely important in such cases.  

Common financial pitfalls

On your savings journey, you may come across various hurdles and stumbling blocks which could deter and distract you if you are not cognizant of them. They tend to creep up over time and need to be quickly addressed so as to not keep you from reaching your financial and savings goals. Some of the common financial pitfalls faced by people on their savings journey, which should be avoided, include:

Impulsive spending 

A study revealed that approximately 95% of our purchase decision-making happened in the subconscious mind, therefore, you need to be mindful of acting on impulse when you see something that you have been wanting to buy. Unless you previously planned to buy something, especially big items such as furniture pieces or appliances, avoid impulsively buying it when you come across it as the shops.

Buying on credit

Some people make the mistake of thinking that their credit card/s are available for them to use as they wish, which is far from true. Once you start using your credit card for everyday purchases, you will ultimately fall into debt and may have to end up using all your savings to pay back your credit card debt. This will definitely take you a few steps back on your savings journey.

Borrowing from your savings

Much like with your credit card/s, your savings are no something you should be dipping into spontaneously. Using your savings for minor things just because you have access to them will be detrimental to your financial goals and savings journey.