Is saving money easy? Or is it hard? Well, there’s no one word answer to it. It depends on two things; who is saving and under what condition.
In this article, I’ll discuss the key challenges people face when they save. The introduction is a reminder that one must look inward to overcome the challenges, not outward.
Temptation to buy
Most cannot resist the temptation to buy when they see a flashy item on the shelf. It takes a fair bit of wisdom and life experiences to be able to suppress the temptation. Compulsive buying is not demography-agnostic. Young people are less prone to saving whereas aged people understand the importance of saving and rarely cave in to the temptation.
It’s mostly those in their early-20s who cannot resist the itch to buy expensive stuff that they don’t need, often to impress people they don’t like, and more often than not, with money they don’t have by maxing out their credit cards. It’s a huge challenge that they need to overcome if they are serious about saving.
Make saving productive
The reason people don’t find any incentive in saving is because they don’t know how to turn saving into a productive endeavor. When they think of saving, what comes in their mind is stashing money in the bank.
The truth, however, is that there are many dimensions to save money, which, once discovered, can radically change their perspective on saving.
The demarcation line between saving and investment can be blurred. Mutual funds and similar schemes allow people to save money that grow exponentially past the policy’s maturation date. Such schemes are part saving and part investment. Investing in such schemes is what I call productive saving.
Pay bills on time
A big reason people cannot save is that they don’t pay their bills on time. They miss the billing cycle, and a penalty gets added to the billed amount, ultimately eating away their savings.
Bills must be paid on time, if possible, before the deadline. Use reminders to make this a habit. Not only is it good for savings, but it also improves your credit score. The importance of a high credit score cannot be overstated.
Another strategy you can adopt is having a fund solely to pay your bills. If the fund ever runs short of money, you know what to do. This way, you can cut the connection between your monthly bills and your main source of earning.
Not looking for alternatives
The expensive iPhone you bought last week, there was an Android phone with the same features and functionalities on the shelf next to it, which you could’ve purchased at half the price.
America’s consumer debt is on the rise because people have a tendency to purchase flashy stuff, even if they don’t need it. It may be hard for one to resist buying expensive products, and instead looking for their affordable alternatives, but doing that could save them a lot of money.
So, next time, when you go to the mall or the supermarket, be frugal and search for products that don’t cost an arm and a leg, but can do the job fine.
Maxing out credit cards
Responsible use of credit cards is essential when you are serious about saving money. Many people max out their cards, and it costs them dearly.
It’s a huge challenge to saving and must be addressed as such. The best way to overcome this challenge is to make a weekly checklist of things that you are gonna buy. You must make a prior decision in the beginning of a week of the things you’ll be purchasing through that week. Making prior plans beforehand and sticking to those plans can help you use credit cards less often.
Another trick you can use is using cash instead of a card. We might be heading towards a cashless society, but cash isn’t phased out completely yet. Gas stations, convenience stores, pawn shops across the country still accept cash. Some large retailers do too. Because cash is tangible, people use it more frugally compared to credit cards.
Untracked expenses are a big reason many households find it tough to save a certain amount of money every month. The best way to track monthly expenses is to use technology. There are quite a few mobile apps out there. Using those apps, you can streamline your expenses, even bring them under specific categories.
Studies have found that stopping miscellaneous expenses is difficult, unless big lifestyle changes are introduced and maintained. So, if you are unkempt and lazy, be serious about your savings.
As stated in the beginning of the article, saving is difficult, but not necessarily because of external factors. The internal factors can play a much bigger role. The tips shared here can help you identify those factors and work on them.