Saving money allows you to pay for unexpected life events without having to pull out your credit card to pay for it. You simply put money aside so you can have it when you need it. Sounds simple, right?
It’s an idea that most people believe in, yet so few actually accomplish. According to a study from cardhub.com, the average credit card debt per household for the first quarter of 2016 was $7,597. They are also projecting that for the first time ever, we will end 2016 with $1 trillion in outstanding balances. That means that the amount owed by the average indebted household would be more than $8,500.
I don’t want to bore you with statistics but they paint a pretty scary picture. People just aren’t saving enough.
I know from personal experience that it’s easy to make up excuses for not saving enough. Here are some excuses that might be holding you back from reaching your saving goals and steps you can take to overcome them.
I Don’t Make Enough to Save
It’s true that saving money is a lot harder to do when you don’t make much money. If you have a job, a place to call home, and food on the table, then you probably do have the ability to save.
There is one thing you can do to overcome this mindset. JUST START. Even if you only save $5/month, it won’t take long before you start seeing progress. Developing the habit of saving, even if it’s small, is the most important thing you can do.
If the size of your income is holding you back from saving, then I have a challenge for you. Today, I want you to put $5 into your savings account. Do this for 2-3 months and then I want you to increase that amount to $10/month. Repeat this process until you reach your ideal saving amount.
I Have Too Much Debt
There is a common misconception about saving money when you are trying to pay off debt. Most people think that if they have debt, all available financial resources should be going toward tackling debt. Even though paying off the debt is important, especially high-interest debt, you should still be saving money while you are doing it.
I paid off $7,500 in credit card debt and still managed to increase our savings while I was doing it. How? I created a debt payoff plan and then budgeted $50/month that automatically got put into my savings account every payday.
Paying off debt is important but so is being able to pay for emergencies without going into more debt. It turns into a vicious cycle when you don’t have money set aside to pay for unexpected life events. You would pay down debt only to add more debt because you have no savings to pay for unexpected issues. See the problem?
Paying off debt will probably be one of the hardest things you will tackle in your life. So make sure that you also set yourself up for success after the journey is over by having a proper emergency fund.
Have you ever heard of the golden rule of finance of “paying yourself first?” There is a reason why it’s so important to set money aside FIRST before paying for your expenses. If you don’t set money aside for saving first, then there is a greater chance that you won’t do it at all.
The basic idea of the “golden rule” is to take a certain percentage of your paycheck to use towards saving, and the remainder of your paycheck is what you have leftover to pay for bills and other expenses.
People who struggle to save money are usually procrastinators. They tell themselves that they will just save later. To overcome this mindset, the best thing you can do it set up an automatic withdrawal from your checking account into your savings account every month.
I have my automatic withdrawals set up for every payday since I budget paycheck to paycheck. No matter how you decide to do it, save you from your yourself and make sure to set up automatic saving deposits.
It’s so easy to get sucked into comparing our lifestyle to others. In fact, this was one the leading causes on why I managed to dig myself into a heaping pile of debt.
This idea of “keeping up with the Joneses” has a powerful effect on people. But it’s so important to realize that what you see on the outside might not be as glamorous as you think. You might see the shiny new cars in the driveway, hear about the expensive trips, or see the beautiful name brand clothes that they are wearing, but it’s what you don’t see that’s important.
It’s the quality of life that matters not the “stuff.” Today, I want you to change your perspective. Look at this way, compared to some people, you are Mr. or Ms. Jones. It’s all about how you look at it.
You can find more budgeting help below, too!