PSYchology

Let’s say you want to save money for a car, a second higher education, or some kind of dream. However, the amount in the account does not grow at all. What are you doing wrong? Answers and recommendations of the expert.

Are you saving money for a rainy day? This in itself is not bad. At the same time, financial experts recommend creating a «safety cushion», which should be enough for six months. You never know what might happen, and an impressive amount in a savings account will make you feel more confident and calmer to look into the future. And most importantly, it’s not about how much we get, but how we manage money.

The accumulation process requires discipline and diligence. Even financially responsible people often make mistakes. David Blaylock, financial planner, analyzes the most common ones and gives some advice.

1. You put off what’s left.

You pay bills, buy groceries, spend a little on entertainment, and are glad you didn’t end the month with a zero balance. Gradually, the amount on the account grows, and it begins to seem to you that you basically have enough money. As you relax, you start spending a little more on pleasure and entertainment. As a result, in a couple of months, all savings are wasted.

Advice of the expert: make it a rule to immediately transfer part of the salary to another account. Some banks allow you to set up such a transfer automatically. As a result, you will have an account with an emergency reserve, and you will be able to predict savings.

2. You transfer money to another card

Let’s say you started regularly transferring part of the money to another card. But if it is available at any time, there is a risk of spending everything ahead of time on a spontaneous purchase. A friend has invited you to a sale, a vintage bag you’ve been dreaming of has been put up on an online auction, or you’ve met up with old friends and decided to have a little fun. Familiar scenarios? If it is easy to withdraw money and you do not even need to go to the bank to get it, your savings are at risk.

Advice of the expert: open a bank deposit for several months or a year without the possibility of early withdrawal. In an emergency, the amount will be available, you simply will not receive interest on the deposit. This simple trick will protect you from spontaneous shopping and other emotional decisions.

3. You keep all your savings in one bank

Firstly, I would like to hope that this is a reliable bank and nothing will happen to it. Still, don’t put all your eggs in one basket. Second, the one savings account strategy works for one purpose. For example, if you only save for holidays or education. If you have several financial goals, it is better to separate the accounts.

Advice of the expert: no need to go to extremes and start ten accounts. Enough three or four. For example, for vacation, for repairs and for a car. So you will see progress and be able to adjust plans. And you can split accounts and transfer part of the money to another bank in a couple of minutes directly from the smartphone.

4. You save a lot, but rarely.

Some save only when they receive super-profits — a bonus, a fee, winning the lottery. But the main secret of accumulating money is regularity.

Advice of the expert: Set a specific amount, however small, that you can set aside each month. If in any of the months you can increase it, great. But this does not mean that the next time the transaction can be skipped. The receipt of funds to the account must remain systematic and regular.

5. You save every penny.

Many of us live in the strictest economy mode, denying ourselves small joys, updating our wardrobe, and entertainment. But do not go too far. Saving money should not be an end in itself.

Advice of the expert: Do not dwell on savings and deny yourself pleasures. They are what make us happy. Take a sober estimate of how much you need to save to achieve a certain goal, and make it a point to reward yourself for being conscientious at least once a month.


About the Author: David Blaylock is a Principal Consultant for Financial Planning Services, Learnvest Planning Services.

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