3 Ways You’ve Been Saving Money Wrong
Money – the number one thing that everyone in the world is worrying about. Saving as much money as possible is probably the ultimate goal for everyone because well more is always better. The more money you have saved up the more you have to spend on things you want to buy. The more things you buy, the happier you will be and you will have a better life because of that. However, for many people saving money is a tough task because not everyone in today’s world has a lot of money to really save. You can maybe save up a couple of dollars one day, but the next day you may really need to use double the money you saved up so it is really tough.
Saving money can be tough, but there are also things that we as people do to make it even harder on us to save money the way we should.
1. Not budgeting things out
Probably everyone has a New Year’s resolution to budget out their money better and therefore save money, but how many of us actually do this? Reality is that even if we budget a certain amount of money for something we always spend more than we should because we sacrifice other things and not buy them in other to buy what we really want. Then maybe a week later, we find out that we really need the things we sacrificed so we end up buying them as well and go over budget almost all the time and never save any money. As one of my finance professors used to say “Expenses always will equal the Revenues”. If you think about it, it is kind of true. Whenever you find yourself in possession of more money you always want to spend it and that’s why lottery winners always end up being broke.
You need to be able to find a balance in your budget and really not even pay attention to the things you want to buy in the moment and buy only the things you really need. If you need gas for your car, don’t go out and buy new shoes because your new shoes will not take you to work – especially if you work more than 5 miles away from your home.
2. Having more than one bank accounts
Some people think that if they have more than one bank accounts they will be able to save a lot of money because they can easily put money into that one account and never touch it. Well, it is true, but your mind doesn’t think that way. When you have 2 or more bank accounts you always know that there is extra money you could always use if something happens. For example if you run out of money in one of your accounts you always can reach into the other and grab some money when you need it.
The trick really is to have only one account because you will save a lot more money knowing that you only have a certain amount of money in your account and you will not have any more anywhere else. If you have more than one account, you need to put a freeze on the money in that account and have the money only available to you after a certain amount of days. This way you can still deposit money in the account and your account can grow, but you won’t be able to get that money out of the account if decide to be reckless and spend all your money in the main account.
3. You are not evaluating your investments
If you are trading stocks and you are only buying stocks from companies because you like their names, well you probably won’t make a lot of money and you might end up losing a lot. You should always evaluate your investments and make sure you make good business decisions, where you can sit down and project either what your profit will be if you invest your money into something or what kind of asset you will get once you invest your money. For example, it will be pointless to buy a boat that you will only use once a year when you decide to go on a small vacation for a week because there are 51 more weeks during which your money that you spend on the boat will be just sitting. If however, you decide to buy a boat that you will only use one week out of 52 and rent the boat out for the rest of the weeks, you will be making a better business decision and you will be spending your money well. However, you will never be able to reach that kind of decision unless you sit down and evaluate the money or investments that you are making.