5 Things That Are Causing You To Avoid Meeting Your Savings Potential
We all want to bolster out savings accounts, especially since COVID-19 has shown us that none of us are prepared for a full-blown disaster. With millions of Americans out of work and an uncertain future looming ahead, it’s now more important than ever to get your finances under control.
If you’ve been saving money in recent months, you’re probably hitting a wall somewhere. You’re not reaching your savings goals, and you simply can’t figure out what’s holding you back. It could be any of these five things, which is why we put together this short guide.
Wait a minute, your smoking habit isn’t actually affecting your savings account, is it? It couldn’t be…
Do you know how much you spend on cigarettes each week? Each month? Each year? If not, we highly encourage you to track your tobacco spending for a month and see what you come up with. For many smokers, the number is in the hundreds of dollars. Smoking isn’t cheap, and with the average cost of a pack of cigarettes around $6/$7 dollars depending on your state, you’re essentially throwing money at something that offers no real benefits.
Investing and spending money is all about an exchange of currency for goods or services that make your life better. How do cigarettes make your life better? Not only are they highly dangerous, linked to cancer and disease, and can put everyone around you in danger, they’re also unhygienic and incredibly expensive. Imagine the medical bills you’ll have to pay should you develop lung cancer. You certainly won’t be saving money then.
2. Not Saving Enough
Most people simply don’t save enough. Why? It’s not often because of the inability to put money aside, but rather because of the need to spend it on comfort items. Consumerism has convinced us that we must have the latest gadgets, the fanciest clothes, the most expensive cars; status is everything, and if you’re not in the club, you’re missing out.
This is, of course, preposterous, as the things you own do not determine how valuable you are. Unfortunately, however, the retailers, banks, and other institutions have convinced us otherwise, and so, even the poorest among us aspire to own a nicer car, a bigger house, and more stuff.
At the end of the day, owning more stuff actually makes you poorer. Think about it; all of your extra money goes to things that don’t hold value over time, so you’re essentially throwing money at something that will become obsolete. That’s hardly a good investment.
Consumer debt in America is well in the trillions of dollars, with the average household holding close to $100,000 in consumer debt. That’s credit cards, personal loans, etc. And what do we use credit cards for? Stuff.
Debt can be a massive obstacle in the way of meeting savings goals. You should never leave a debt unpaid, as it can seriously affect your credit score and incur late fees, collection fees, and more. Before you know it, the interest and fees has more than doubled the original amount of debt, and now you’re stuck; unable to save, unable to pay off the debt.
If you had any kind of savings when COVID-19 began and you found yourself out of work, there’s a good chance it’s been depleted. Aside from global pandemics, emergencies can occur in many forms at any given time; a car breaks down, a house catches fire, you get into an accident and can’t work. Having a safety net in place is the best way to protect both your savings and your way of life in the event of an emergency.
Experts recommend that the average person save up 3-6 months’ worth of expenses (yes, everything) before actually starting to save or invest. This is a safety net for when things go sideways, so you’re not dipping into your main savings account.
5. Not Following A Budget
A budget can turn your entire financial status around. Following a budget can ensure you’re not overspending, impulse-buying, or making poor financial decisions with your money. A budget helps provide strict guidelines about what you can buy and how much you can spend on it. Anything left can go straight into savings!
Even the most wealthy people use a budget to ensure they’re reinvesting their wealth in places where it can grow. Sure, they’ve got toys and extra-large houses and such, but to think they’re not managing their money is foolish. Managing money well is probably what made them wealthier to begin with!