Saving money is easier said than done. And for most people, it is extremely difficult to save money. However, there are steps to take to overcome these hurdles. Here are five common reasons you’re no saving money, and how to fix it.
1. You have ‘too little’ money to save.
One of the main reasons you’re not saving money is because you feel that you don’t have enough money to save. But I am here to tell yo that it’s never “too little” to save money. The secret to saving money really is to smart small and save regularly. For example, saving $25 a week will get you $1300 at the end of the year.
So if you feel that you have little money to save, your options are not limited. Try Digit. Digit, one of the best apps for saving money, finds extra money in your budget and save that money for you automatically.
2. You don’t know where to save money.
Another reason some of us don’t save money is that we just don’t know where to put our money.
One of the safest places to park your hard earned cash would be an online savings account. Online savings accounts offer a higher interest rate, which then compounds on the interest. For example, CIT Bank now offers 2.45 % interest, which is 25 times better than what a traditional savings accounts are offering. Find out more about CIT Bank Savings Account.
3. You don’t know how to save money.
If you just don’t know how to save money, there are several ways you can overcome that.
a) Participate in your employer’s 401k plan. Participating in your employer’s 401k plan is one of the easiest ways to save money for retirement. This is simple because you don’t have to do anything. You just agree to contribute some of your paycheck, as little as 3%, to the plan. Another great thing about this type of retirement saving is that sometimes an employer offers matching. So if your employer offers a match, yo should definitely participate. Find out if your job has a 401k plan.
b) Open a Roth IRA account. Similarly, you can open a Roth IRA with Vanguard for example and contribute up to $6000 a year (the contribution limit in 2019).
c) Try Acorns. Let Acorns do the heavy lifting for you. Some investing apps, like Acorns, rounds up your spending to the nearest dollar every time you make a credit card purchase and invest the difference in index fund and ETFs. For example, if you buy a cup of coffee for $3.50, your account will be debited with $4 and Acorns will save and invest the 50 cents for you. This is one of the best money saving tips as far as making savings and investing almost painless for you.
4. You have a lot of debt.
Nowadays, it’s almost impossible not to have some kind of debt, like student loan, a car loan, or a mortgage. Now throw in things like credit card debt. If you have all of this debt, it is extremely hard to save any money at the end of the month.
Your plan of action then should be to tackle your credit card debts first as they tend to carry the highest interest rates. Indeed, tackling your credit card debts have several benefits. One is that as you’re paying off your credit card debt, your credit score is also improving.
Related: How To Raise Your Credit Score to 850.
A good credit score will likely get you approved for a mortgage loan. Once you have a good credit score, you can apply for a personal loan to pay off most if not all of your loans.
As for the other debts, you should try to cut back on expenses. Also, try to spend less so you can have some cash left at the end of the month. Or see if you can have a side hustle to bring some extra cash.
Of note, while paying off debt is a must, you should not forget to save a little money every month. Also, try not to take on more debt.
5. You don’t believe in emergencies.
A final reason you’re no saving money is that you don’t believe in emergencies. And therefore, you have no emergency fund. The problem with not having an emergency fund is that the minute an emergency happens, like losing your job, your car needs a major repair, you run into personal loans. And that might lead you to more costly debts.
Contrary to what you may think, emergencies happen to anyone. That’s why it’s important to have a emergency savings account with at least six months of living expenses socked away in an online, high yield savings account. This is important because life has its ups and downs. You never know when you might lose your job, fall sick, etc. So it’s important to always be prepared.
In conclusion, if you related to any of these 5 reasons why you’re not saving money, take the financial steps mentioned above to fix it.
2 Essential Tips to Grow Your Savings
1. Open a high yield savings account. Having an online, high yield savings account allows you to save money and earn over 15 times the national average in interest. Check out CIT Bank online savings account, which has a 2.45% APY. Learn more.
Save money with the right Financial Advisor
You can talk to a financial advisor who can review your finances and help you reach your saving goals Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.