How To Stop Sabotaging Your Savings
“I can’t seem to save enough”, “I don’t know how to save”, “I do save, but I keep pulling money from my savings”.
These are all similar statements I have heard from many individuals whose goal is to work on building their savings, but seem to have some struggles. Your ability to save depends on various factors such as your income, current expenses, defined goals and your overall ability to budget.
Many times, individuals are not truly assessing how much they can afford to save based on some of the above factors, hence, they find themselves pulling money from their savings constantly.
Here are some things to consider when you are trying to save more:
1. Assess your Lifestyle Gap: If you have never heard of the concept “Lifestyle Gap”, it's the difference between your monthly income source minus your monthly bills and expenses. Your lifestyle gap can help you to see the big picture if you do have additional money to put towards things outside of bills and other monthly expenses.
Read more about How to Calculate Your Lifestyle Gap here.
This is a critical step in your savings journey because instead of guessing about how much you can afford to save, you will have a better understanding of your financial numbers, to choose a more feasible number that works!
2. Consider Automation: Although you may have a big goal in mind, it is important to also start saving with smaller increments and then increase it gradually. This allows you to begin being comfortable with saving at a specific pace without depriving yourself. As you begin to get used to the automatic savings amount, you can then continue to increase it.
The mistake many people make is they begin saving too aggressively without factoring in wiggle room for possible “mishaps'' or other expenses. This is why Step 1 is so critical.
You can utilize your payroll/HR department to set up automation through your paycheck by sending money directly to a savings account. You can also try utilizing your banking apps to set up automatic transfers.
3. Define the “Why”: Why are you saving? What is it for? One of the most overlooked things when individuals are trying to save more is, they never consider the goal and define exactly the amounts, timeline and contribution details.
You have to consider setting solid goals around your savings based on completing the work in Steps 1 and 2. Once you have a defined “Why”, it will be easier to stop sabotaging your savings goals. Having a separate savings account is also an important step, to allow you to clearly earmark what your savings are for.
Be practical about your savings goals and start where you can! It is important to understand that you may be unable to save large sums of money in the beginning, but that doesn’t mean you should not save.
Here's some additional savings blog posts:
The Choice: Should You Save or Pay Off Debt?
https://www.itsfinanciallywinning.com/blog/savinganddebtpayoff
YOUR EMERGENCY FUND SAVES YOU!
