3 common savings mistakes people make that you should avoid

It is almost impossible not to talk about money these days, so much so that it now seems like the essence of living is to build wealth. Well, that is true, building wealth is quite essential and it means more than just having money.

Stability, health, love, and so many other things come into picture when talking about wealth, notwithstanding, savings is our focus for this article so let's get right into it.

What is savings?

In simple terms, savings refers to the money set aside from your income or earnings that you don't spend immediately.

It is the act of intentionally putting money into a separate account or fund with the goal of building a financial cushion for future needs, goals, emergencies, or investments.

Savings can provide a sense of security, help you achieve your financial goals, and allow you to handle unexpected expenses without relying on credit or borrowing. It's a fundamental aspect of personal finance that contributes to long-term financial stability and well-being.

At least ChatGPT says so, you best believe that this thoroughly defines what savings is right?

I'd say it does, but many people do not take into account every bit of what is said above about savings and these leads us to the common savings mistakes people make that needs to be avoided:

Saving only to spend later

This is very common amongst many people, there's this popular phrase used to describe this and that's "saving for rainy days", it's quite comical because rain actually signifies abundance but it is way often used to describe sad events.

Saving to spend later is a very flawed approach, you'd figure that most times these so-called savings lack "predetermined" patterns or rules that are committed to or stuck with. The money just comes in randomly and goes out randomly because the primary goal has been set to "spend".

Saving money to spend later actually makes no sense, the fact is, that isn't even saving, it shouldn't be considered one just because it involves setting it aside, it really takes away the actual merits of saving.

Sticking to global standards

You know that saying that you have to save 15% of your income or 5%, well, it is bullshit and no one should ever have to take this advice literally. Why?

Saving is about personal goals, when you simply opt for these pre-set figures you ignore your own budgets, incomes and ultimately your personal finance.

The figures you save should be determined by you and you alone and this would be ascertained after careful assessment of your finances.

Not having a clear goal

Somehow I feel this should have been the first we should have pointed out, but anyways, a lot of people save without having a clear goal, remember the saving for rainy days ideology, there's absolutely no clarity in that and such saving plans often yield no net positive results.

Before taking a step to save money there should be a goal and I'd expect that investment should be a part of it because this is crucial to build wealth, thus ensuring stability and sustainability in your financial life.

Without a clear goal, you're not saving but simply keeping your money in a separate bag and laying it in wait for when you exhaust the rest.

These are all common savings mistakes people make, as basic as it sounds, it has been the reason many never get things done because a not well thought out saving strategy will lack commitment as there's really no unique end goal so you figure the person survives by consistently hanging on a thread for the lack of financial intelligence or simply the refusal to apply the known strategies.

Posted Using LeoFinance Alpha