There are few things in life more comforting than having enough money in the bank. There’s a palpable sense of security that comes with knowing that you’ve got the financial footing needed to handle an unexpected rough patch. But just as surely as we know how important an adequate savings base is, there’s the unfortunate reality that most of us struggle to find the funds to build our savings.
A recent MMI survey asked consumers to rate the importance of a variety of different financial factors on their lives. The factor cited as the most important by respondents: having adequate savings. The same survey asked consumers what they would do if they had no unsecured debt. The most popular answer: increasing their savings.
So we’re all pretty much in agreement that setting aside money in order to build your savings is smart, but it isn’t something most people can do without reducing other areas of their budget. Instead, we’re usually looking for new ways to save money where we can. In our efforts to cut costs, though, sometimes we make mistakes and do more damage than good. What are the biggest mistakes we can make while trying to save money?
Cutting maintenance costs
Spending money on maintenance sometimes feels like fixing things that aren’t broken, so it’s an easy category to cut back on, especially with a tight budget. You don’t get your car serviced, you ignore problems with your house, you stop going to the doctor and the dentist, etc. Of course, it feels like you’re saving money because your car still works okay, your house is still standing, and that one tooth only throbs when you drink cold liquids or talk too loudly. But in truth, you end up spending way more to fix the catastrophes you’ve setting up for yourself than you ever would have spent on routine maintenance. So be smart about maintenance costs. An ounce of prevention, as they say…
Buy cheap, buy twice
Dollar stores can be a relatively safe gamble – even if what you buy doesn’t work out, you theoretically didn’t break the bank to buy it. But the dollar store mentality of buying everything at increasingly low costs can backfire. In particular, be wary of extremely cheap electronics and appliances. Paying half what you would normally pay only benefits you if you don’t have to replace the item a month later. Before making any substantial purchase – research, research, research.
Buying bulk usually saves you money, but buying bulk is also making a commitment (sometimes a long-term commitment) to a product. That’s not necessarily a bad thing – though it may take a while, you’ll probably eventually use all 100 of those rolls of toilet paper you just bought. The problem with quantity buying is two-fold. You’re committing storage space and you’re committing to use that product. All of it. So the value of bulk buying breaks down when you start making commitments to products you aren’t completely certain you’ll be using. Tastes change. Needs evolve. Think through bulk purchases and make sure you’re making a smart investment.
Don’t be a martyr to savings
The purpose of saving money is to increase your personal security and build towards future goals. It’s not to deny yourself everything you like and have a super rotten time of it. If your efforts to save money start to feel like a self-inflicted wound, you’re going to have a hard time keeping it up. Try to shift your mindset. Rather than feeling like you’re constantly denying yourself, balance those changes with things that make you happy. Saving isn’t about suffering, after all.