There are many myths online about saving money that simply don’t work in real life – and with 18% of the American population not saving any money at all, it’s important to avoid these myths. Are you unknowingly preventing yourself from saving money? Check out some of the most common misconceptions on saving money.
You should only save when you want to buy something special
You can’t predict when you’ll get sick or when your drainage system will spring a leak. Saving money helps you fix these surprise problems without needing to borrow money. Don’t end up in the position of losing your holiday fund because you didn’t put anything else aside for unexpected emergencies. Separate your savings and keep your dreams alive.
You need to be super organized when saving
Many people think that saving money involves tracking purchases, dividing cash flow into specific categories and creating charts on how to spend money – which it does! But you can also save money in a less organized fashion: hide £10 bills in your wardrobe or stash it somewhere you rarely visit. In the end, you could wind up an extra bit of cash from a slightly haphazard saving system!
Saving means lowering your living standards
If you think that save some cash means you’ll have to lower your living standards, there would be no motivation to save! Think of ways to make extra money outside of your regular income. For instance, you can try freelance writing, affiliate marketing or forex trading. Saving money is all about maintaining your living standards while setting aside some cash.
Only paying with cash means you’ll spend less
Always paying with cash to help you prevent overspending seems to work for a few people, but for many it doesn’t make sense. There are a lot of things you miss out on when you pay for things in cash. Paying for your expenses through a credit card makes it easy to track how you spend money. When you lose a debit or credit card, you can contact your bank to get a replacement, but when you misplace cash, it is gone. Furthermore, when you pay using a credit card, you earn points for perks like travel and get cash back on your purchases. If you’re financially responsible there is no reason not to use your credit card on your next big-ticket purchase and take advantage of those often ignored membership benefits.
Buy things in bulk
The idea of buying in bulk or exploiting deals such as buy one get one free can be very tempting. However, you should avoid purchasing perishable items because more often than not, they spoil before you can use all of them. The best saving strategy is to buy non-perishable items in bulk, such as cleaning supplies and toiletries. If you don’t, you could end up paying more per unit for something super-sized that will expire before you even finish half of it.
You can’t save unless you’re earning a certain amount
When you start your career and begin earning a salary, it is easier to start thinking about saving money for the future. However, adopting the habit of saving is important regardless of how insignificant or small your monthly cash flow may be. Learning to spread the cost of payments for utilities, your car and your home is good budgeting practice, and will help you forecast how much you could be putting away each month. Taking out private medical or dental cover could also help save you money and are often cheaper than you’d expect – the average policy for a 45 year old man is around £36 per month, however, some are as low as £7.75 per month. Investing in to prevent your bank account taking a big hit if you have an accident or become unwell.
There’s no reason why you shouldn’t save. Some of the money-saving myths that you often come across have some truth to them, but they are often exaggerated and should be avoided.