If you are like many other adults today, you may have lofty goals to start saving more money, but you inevitably fail to meet your goals despite your best efforts. Saving money is correlated directly to financial security, so it is important to take a closer look at why you may not be meeting your savings goals. There are seven key reasons why many people struggle in this area, and with a closer look, you may find that you can identify these factors in your own habits and actions.
Current Financial Stress
It can be challenging to prepare for tomorrow’s expenses, such as the kids’ college expenses or retirement, when you are having a difficult time paying your bills for this month. By improving your budgeting efforts today, you can most easily overcome your current financial strains so that you can focus on your financial goals.
The Lack of a Budget
Many adults do not have a budget, and many others have prepared one but do not live by their budget. A budget essentially is a short-term financial plan. It tells you where your money from each paycheck will go, how much money you plan to save and how much money will be used for entertainment and other purposes. Without a budget, you have no idea if you can afford to take a weekend getaway or to buy a new pair of shoes, so you are ill-prepared to make even basic decisions about your finances without a budget.
Failing to Make Financial Goals
Everyone has goals in life. These may be short-term goals, such as replacing the refrigerator in the next few months. These may also be long-term goals, such as retiring in 10 or 20 years. You simply cannot expect to meet these goals if you have not defined them. Defining your goals is the first step to take to planning for them. After all, you cannot begin to determine how much money you will need for retirement if you do not set this as a financial goal.
Not Being Prepared for Emergencies
One of the reasons why some people state that they never seem to get ahead is because life’s little emergencies prevent them from doing so. It may be true that you cannot predict when you will need to pay for medical bills or auto repair bills, for example. However, the fact is that major weather events can cause damage to your home at any time, people will get sick from time to time and other events will arise that will cost you money. The only way to prevent these issues from interfering with your ability to save is by not planning for the inevitable. Creating a small emergency fund, even if it only has $500 or $1,000 in it ultimately can provide you with the extra cushion you need to prevent these issues from interfering with your financial goals.
Poor Lifestyle Habits
Likewise, some of your own lifestyle habits may be costing you money. For example, your habit of having a heavy foot while driving may result in increased speeding tickets and car accidents. This equates to more deductible payments and higher insurance rates. By taking a closer look at some of your own habits and what you can do to correct them, you may save money. For example, you could take a driving safety course from an institution like Valley Driving School (a Surrey,BC driving company) if you have bad driving habits that are costing you money. It is important to evaluate all of your lifestyle habits to see if they are causing you to spend more money than necessary.
Not Making Saving a Priority
One of the most common tips you may hear from financial experts is to make saving a priority, and the only way to do this is to include it in your budget. Without including it in your budget, you essentially are saying that you will save whatever money is left over after you have fun at the mall or over the weekend with friends. Instead, you should determine how much money you need to save to achieve your goals, and you should save that money first. You can use any leftover money for fun activities after you have saved what you need.
Not Making Saving Automatic
When you leave saving money to your own efforts, you inevitably will find that it is challenging to maintain your efforts. However, you can set up a regular auto-draft with your bank or your employer’s HR department. By doing so, you can have funds automatically transferred to your savings account from each paycheck. This gives you a no-excuses approach to saving money.
There are many reasons why individuals today fail to achieve their savings goals. You may identify with these common reasons, or you may consider what habits or activities may be holding you back. Once you have identified why you are not saving money, you can then take steps to correct the behavior so that you achieve your goals.