This article is brought to you by ME.
We share some common gaffes that could be holding you back from growing savings.
If you’re struggling to find spare cash to grow savings, chances are you’re falling prey to a few money mishaps. We highlight the pitfalls to watch out for.
The two’fer trap
We all love a bargain, but those eye-catching “buy two, get one free” deals are just one of many strategies retailers use to get us to part with our money.
Sure, it feels good to snare a discount from the bargain bin. But don’t let a “reduced” sticker shift your focus from how much you’re spending to how much you’re saving. A bargain is only good value if you really need the item.
YOLO spending
Those “you only live once” (YOLO) purchases can be lots of fun. But almost one in two YOLO spenders put their last YOLO buy on a credit card1, and that sort of “spend today, worry about it tomorrow” approach can make it easy to blow your budget.
Worse still, research in the UK found six out of ten impulse buyers later regret their purchases2. So any joy at the check-out is likely to be short-lived.
Yes, you only live once. So treat yourself from time to time – just be sure to plan for it.
If impulse buys are your weak spot, aim to stick with a shopping list and understand the danger zones – like boredom shopping. Make a habit of giving yourself breathing space before going ahead with an impulse buy. Chances are, a self-imposed cooling-off period could see you walk away from the item altogether.
Forgetting the “stitch in time” rule
Remember when grandma used to say “a stitch in time saves nine”? It probably wasn’t entirely clear what she meant. But, as is often the case, gran knew best.
Addressing minor issues today can help you avoid a far bigger expense later on. As a guide, don’t just turn up the volume on the radio when the car starts making random noises. Have it checked out today, and avoid the risk of a far bigger cost, like the motor blowing, further down the track.
Not paying yourself first
“Paying yourself first” is a no-fuss strategy that involves giving savings priority over spending.
Work out how much you can afford to set aside in savings each week, fortnight or month, then arrange an automatic transfer of this amount into your high-interest savings account. Time the transfers to coincide with pay days, then sit back and watch your savings grow.
Understanding your own habits around spending and saving can be a valuable eye-opener to see how you can get back on track − and stay on track − to achieve your savings goals.
1 https://www.mebank.com.au/media-articles/the-yolo-bug-sucks-in-self-indulgent-spenders
2 https://www.moneyandmentalhealth.org/in-control-release
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