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7 Money Mistakes Even Good Savers Don’t Know They’re Making

7 Money Mistakes Even Good Savers Don’t Know They’re Making

Saving money can be tough, even if you’re not known to be a spender. It seems that there is always someone, somewhere who is trying to keep us and our money far apart. Sometimes, it’s even the bank we’re keeping our money in that’s actually keeping us from saving more.

Obviously, having a little money saved can be helpful for the proverbial rainy day. Having a lot of money saved is even better — particularly if you lose your job or have an unexpected emergency expense. Whether you have a lot of money saved or just a little, you might be surprised at some common mistakes even the best budgeters make.

Here are seven of the most commonly made money-saving mistakes and what you can do about them:

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1. Saving what’s leftover

It’s Friday and you just got paid. You head to the grocery store and maybe pay a few bills. Perhaps you had your eye on a new pair of shoes or the kids need to have karate classes paid for. After spending what you need to, you save the rest. Believe it or not, saving what’s leftover is actually a big mistake. It can lull you into a false feeling of security and make you think you have more to spend than you do.

Instead, pay yourself first. It’s important to budget out each of your paychecks and determine a percentage or amount that can go into savings first. Taking that money right off the top means you can spend what’s left.

2. Linking your checking to your savings account

This may seem like such a smart idea because you can easily transfer money from your checking to your savings account. But what happens if you accidently overdraw your checking account and your bank dips into your savings for you — making you think you have more money than you have? Or how often is it just easier to grab the cash out of savings to keep the checking account up to date. It happens more often than many of us would like.

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Instead, keep your savings account completely separate from your checking out. If you’re serious about saving, don’t even get an ATM card for that account. Make it more difficult to access that money. So, if you need it, you’ll have to go into the bank and fill out a withdrawl form — giving you the time to consider just how important withdrawing that money is.

3. Putting your savings in one pot

It’s fun to watch your savings grow as you put into one account. But is it really doing you the most good in one pot? Probably not. In fact, putting all of your savings in one account can be deceiving because you might think you have more money available to you for extra purchases than you really do.

Instead, go over the different things you are saving for. Make separate accounts for your emergency fund, down payment for your new house or car, vacation savings and new appliance saving. This way, you can prioritize where your money goes and watch each account grow separately. That doesn’t mean you should make up 40 different accounts for different things. Be specific, but not too specific and make a miscellaneous account if that helps with you with those smaller, extra purchases.

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4. Saving the windfalls

If you only save big chunks of money, then you might have no problem at all borrowing it all back. It’s important to save some of a large windfall, but it’s also important to save day to day cash too.

When you get a large amount of money, budget it in just as you would your paycheck. Save a percentage of all of your income and use the rest to pay down debts, bills or other expenses.

5. Save as much cash as possible

Do you feel like it’s important to have as much cash on hand as you can? You’re not alone. But remember, if you only save the cash, you won’t be able to take advantage of compounding interest in the form of CDs, bonds, savings accounts or whatever other form you prefer.

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Instead, keep some cash on hand, safely, but diversify and get your savings working for you.

6. Not keeping track of money leaks

Once you get comfortable with how much cash you have on hand and have coming in, we often feel better about spending a little here and there — giving our kid $20 for a movie, buying a few drinks at the convenience store on our way out of town, donating to this fundraiser or than charity event. These are good things. But not if that means you suddenly have no idea where the money is going.

Start keeping a little notebook in your pocket or in your car. If you have a smartphone, create a note and use that. Start writing down everything you spend money on — including the library book fines and the change for the newspaper at the gas station. Keeping track of where your money goes will illustrate to you what’s important and what you should be budgeting for.

7. Not checking credit reports

You have a perfect credit. You know it. You have a perfect score and are never denied anything. Or so you hope. On the flipside, maybe your credit is so bad that you don’t even care anymore because you never apply for any credit anyway. It doesn’t matter. Either way, not checking your credit on a regular basis is a mistake. In this day and age of smart phone purchases and identity theft, it’s imperative to check your credit report and the score at least once a month. Make a note of anything you don’t recognize or don’t understand and make the calls necessary to understand or fix it. Even small things can become big when it’s time to apply for a home loan or sometimes even get a job.

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Michelle Kennedy Hogan

Michelle is an explorer, editor, author of 15 books, and mom of eight.

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

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