A Quick Guide To Being More Money Savvy!
Saving for a big expense or an emergency is a wise financial decision. Making your money grow through interest is even better—it helps you grow your balance faster and reach your goals sooner.
However, many Bits make mistakes that limit their potential savings and miss out on possible interest earnings. The good news is that these mistakes are easy to fix. By slightly improving your financial literacy and developing budgeting skills, you will be able to take much greater steps towards your goal each time.
One of the biggest mistakes adults make is not creating a budget. Without one, it’s easy to overspend, accumulate debt, and stray from your financial goals.
To fix this, start by tracking your income and expenses. Allocate money towards essentials like rent and groceries, savings goals, and discretionary spending. Budgeting apps or spreadsheets can help you stay organised and accountable.
Need help getting started? Check out our free course on the basics of money management, where we guide you through creating your first budget.
2 Don't Look at Your Card Statements Often
It is necessary to monitor your expenses. This information can either sober you up or encourage you. It is also necessary to monitor your expenses because this way, you will be able to notice earlier if unexpected expenses appear. This could be a card hack, an unexpected charge for a subscription to a service, or an unpredictable large purchase by someone in the household.
If necessary, register an email or use digital faxing to receive account statements regularly. If you have the FAX from iPhone: Fax App installed, you will receive your fax number. You can receive and send documents via fax app.
3 You Keep Money Just On The Card
Your checking account is the easiest place to hold money, but it’s also the least lucrative. Most checking accounts pay no interest, and the ones that do often offer very low rates compared to high-yield savings accounts.
Solution: Move your surplus cash to a savings account. Keep only what you need in your checking account for bills and withdrawals, plus a small cushion. Regularly transfer extra funds to a high-yield savings account to build your emergency fund.
If you don’t have a savings account, open one today. While having a savings account at the same bank as your checking account is convenient, consider opening one at another bank for better interest rates. Don't let your money sit idle in your bank account, earning nothing.
4 Thinking You're Too Young to Save
It might seem tempting to delay saving until later in life, but starting young is crucial. Many teens and young adults struggle with saving due to major expenses like rent, food, and entertainment. However, the benefits of starting early are significant.
Consider this example: at 20, if you save £1,000 and deposit it in a savings account with a 5% APY, adding £100 monthly, you'll have over £225,000 by age 66. If you start at 40, you'll only have around £67,724.
To start saving early, open a savings account with a well-respected bank. Whether you're saving for an emergency fund, a downpayment, or a holiday, choose an account with a competitive APR. Start today and watch your savings grow!
5 You Don't Know The Exact Income And Expenses
Many people don't. Without knowing your rate, you can't tell if you're getting a good deal.
Also, watch out for fees that can eat into your balance. Monthly charges may apply if your balance falls below a certain amount or if you haven’t opted for electronic statements. Even a high-interest account isn't helpful if fees consume your earnings.
Log into your bank account to find the annual percentage yield (APY). If it's not available online, check your statements or call your bank. Review recent withdrawals for any fees. If you find any, contact customer service to understand and possibly waive them.
6 Impulsive Big Purchases
Have you recovered from your holiday spending yet? The festive season often leaves us with empty wallets, thanks to travel and gifts. Summer holidays can do the same, especially if you take one big trip or several smaller ones.
The solution is simple: Open separate savings accounts for holiday spending and travel. Automate a portion of your paycheck to go into each account. You don’t need to have every detail of your summer camping trip planned months in advance, but having a few hundred pounds set aside will ease the financial burden when the time comes and help keep your budget in check.
Conclusion
Saving is also an art, with many traps along the way. Their sources are different: ignorance, pride, lack of self-discipline, naivety, etc. But if you want to save for something more than an iPhone, then you need to develop in this direction. It is not so important how much you earn, what is more important is how much of it you keep.