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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 March 29, 2021

Life Insurance: A Secure Way To Protect Your Future.

Life Insurance: A Secure Way To Protect Your Future.

Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

Importance of getting a life insurance

No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

Choosing the right insurance plan

If you’re about to select an insurance plan, you should consider some important factors:

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  • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
  • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
  • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

Differences between life insurance plans

Here’s a short brief of some plan categories you can choose according to your needs:

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  • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
  • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
  • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
  • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
  • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

So what are you waiting for? Plan for your future and live a happier and carefree life today.

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Featured photo credit: aryehsampson.com via aryehsampson.com

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