Wondering why your savings plan is not working out for you? The answer may lie in the little things!
Though saving money sounds easy on the face of it, doing it requires a good amount of dedication and will power. If all your recent attempts to save have gone down the drain, don’t fret – we’ve listed below some basic mistakes you may be making. Once you identify what you’ve been doing wrong, it can only get better for you, so read on!
Setting Unrealistic Goals
For any plan to work, it should be grounded, and your savings plan is no exception. Your plan needs to be practically viable for you to successfully apply it in real life. If not, things won’t fall in place quite like you’d like them to.
For instance, let’s say you earn about Rs. 50,000 a month. Out of this amount, about Rs. 20,000 goes towards all your recurring monthly expenses. Now, this leaves you with about Rs. 30,000 for your living expenses. Now, let’s also assume you live in a big city where quality of life comes at a cost. Your ballpark estimate of monthly living expenses is Rs. 15,000. Now, with all these deductions in mind, you have a balance of about Rs. 15,000 and could consider an amount of, say, Rs.12,000 as a reasonable target savings amount every month. Anything closer to Rs. 15,000 and beyond will only put you in a fix and not work out for you. So, be realistic and formulate a goal that you can achieve.
Not Having A Fixed Plan
There are some of us who believe in the randomness of the universe and feel like we don’t need to set a rigid plan to save money. The problem with this approach is that there is no clarity about how much you can focus on saving every month. If your attempts at saving are random, then one can only assume your expense habits are too, which leaves you with a very uncertain and volatile savings plan.
Randomness and free thought has its place in art, but not in finance. If you want to save, you need to have a fixed, systematic plan in your head in order to make it successful.
Additional Reading: 10 Dead-Easy Saving Habits For You
Cheaping Out On Stuff
For many individuals, the first act of ‘saving’ is choosing locally-made affordable products over branded ones. Now, while this approach may work if the small brands you’re going in for prove to be durable, but it’s never a sure thing. By choosing a cheaper product especially when it comes to electronic goods and clothes, you may be saving money initially, but as the product wears out due to poor quality, you’ll end up having to spend more on replacements and what not.
Additional Reading: 5 Daily Habits That Make For Frivolous Spending
Remember that quality and durability come at a price, so when it comes to things like clothes and appliances, you may want to buy products from trusted brands that last a good amount of years, thus saving you from repair and replacement costs.
Not Putting Your Money Into A Fixed Deposit Account
Ok, let’s assume you’ve managed to save up some money over the past few months, but you choose to just let it stay in your bank account. While this won’t harm your savings, it won’t gather any returns. If you have a sum of money that can be shelved for a bit, consider putting it into a Fixed Deposit account. You’ll reap decent returns after a period of time, thus savings optimised!
Additional Reading: Money Management Tips For Millennials
Not Using Your Credit Card
Credit Cards get their share of bad press from many people, but what we don’t realise is that a Credit Card is just a financial tool. The user determines how good or bad it is. If you think about it, a Credit Card can give you awesome benefits like discounts on shopping, air fares, movie tickets and much more – you just gotta learn how to manage your Credit Card. By this, we mean pay bills on time and maintain a healthy credit utilisation ratio. Respect your card and you’ll see how well it can help you in your mission to save big!
Additional Reading: How Much To Save Each Month
Now go revisit your savings plan and fool-proof it to overcome the above points; you won’t regret it!