We all have our financial goals. Perhaps, you are aiming to save a certain amount in the bank once a particular year or length of time is reached. This is why each month, you put in some money to add to your savings, so you can grow your funds over time. Little by little is all it takes to notice you have more than enough in your bank account. But then again, there are times when you may find yourself not being able to save as much as you want. There are instances that you stretch your budget a bit, buy some items not exactly in your list, or simply splurge more than you should while eating out or shopping. Now, this is where the problem starts. If you keep on getting into debts or using your credit card more, you run the risk of dipping into your savings account to pay these off. The more you keep doing this, the higher the chances of not having sufficient amounts in your emergency fund.
Now, this whole habit of spending more and saving less can only lead to further problems in the future. Once unexpected expenses arise, you may end up having to worry where to get the money to pay for these things whether it is a credit card bills, hospitalization expenses, or car repair costs. This is why some people take out personal loan or borrow money from their family, friends, a bank, or a money lender. But of course, there are risks to think about such as the interest rates, penalties for late payment, fees, and all other things that come with it.
With all these things in mind, it makes perfect sense to grow your funds and address common financial mistakes people make. By doing so, you can increase your savings, pay for any immediate expenses that need to be settled, and save yourself from stress along the way. The following are among the impractical and impulsive money decisions that some people tend to make, which limit their chances of improving their financial situation.
1. Being too relax about not having an emergency fund
You may be doing great today in terms of finances, but you can never tell what tomorrow might bring. Sometimes, life just throws in some surprises our way, and it is best to be prepared for them no matter what. This is why having an emergency fund is ideal as it allows you to have a quick source of cash whenever the need arises. If you suddenly need to pay for hospitalization or medication, or there are utility bills to be paid, you do not have to stress out anymore since there is more than enough in the bank to cover your needs. Unfortunately, some people do not pay much attention to the importance of having emergency savings. When the paycheck arrives, they tend to shop, wine, and dine, until there is not much left to carry them over to the next days. So, how can it even be possible for them to save for the rainy days, now that their paycheck is completely gone?
Thus, be sure to prioritize your emergency fund aside from your basic needs that your paycheck covers. If you can, put in a certain percentage of income in the bank the moment you receive your monthly salary. This should prevent you from having to spend it on unnecessary items before it even reaches the bank. You may want to start by aiming to save at least $400 a month, which you can slowly increase as time goes by. Alternatively, you can always apply for payday loan to alleviate the situation you are facing at that point in time.
2. Spending too much on restaurants
It sure is nice to eat out sometimes. There are indeed moments when you just want to sit and have your food prepared and served to you – plus, there is no need to do the dishes. It gives you so much comfort and ease to dine at a restaurant and forget about the usual routine of preparing and cooking your meals and doing the dishes afterwards. With so many restaurant options in Singapore, it is not surprising that locals and foreigners in the country love to dine! But the thing is, you will have to spend a certain amount just to feed yourself or even the whole family when you are out at some restaurant. It costs much more to eat out than to make your own meals, without a doubt. This is the reason why some individuals have a hard time saving and growing their emergency funds.
So, what’s the solution? Better to skip dining out and go for home-cooked meals and packed lunches instead. Not only can you have a limitless amount of food this way, but your savings won’t have to suffer in the long run, too.
3. Buying things you don’t really need
Whenever you are out in the mall, there is always the urge to buy. Sometimes, you may not feel satisfied to leave the store unless you walk out holding a paper bag full of new items. If you are out with the kids, it is typical that these little munchkins will want you to buy them toys, clothes, and what-nots, which may not even be part of the plan!
With the convenience that a credit card offers, this causes us to want to shop and not worry about the price tag anymore. But once the credit card statement comes, you are always up for some surprise upon seeing the massive expense you have made from those several trips to the mall. Even if you bought items that were on sale, the total cost still can amount to more than what you were aiming to pay if there are plenty of trinkets and non-essential things bought. If you really have been eyeing that designer bag for a while now, it may be a good idea to save up for it instead of loaning money to purchase it immediately. You may even want to wait until the item goes on sale, so you can pay for it at half a price. The goal is to create a balance between your savings and all your debts.
4. Skipping your retirement funds
Do you have a particular idea in your head when you want to retire? There are people who are serious about walking away from their office at age 60, while others want to enjoy their life as early as in their 40s. The earlier you want to retire, the better – and you really have to do something to make this happen. This is why you should consider growing your retirement savings as early as in your 30s or even late 20s, as this would allow you to have plenty of funds that could prepare your future well.
While you are still employed, make it a point to save a chunk of your salary and put this for your retirement. In case the time comes that you no longer make money, there is still nothing to worry about because you have more than enough to support all your financial needs. Build an efficient and effective retirement plan that works for your situation, and you will have no regrets once the time comes for you to leave the office. This should even allow you to enjoy your life while you are still young and vibrant.
See, it is not that hard to build your emergency funds. It only takes some discipline, knowledge, and a smart plan on how to make it happen. You may either consult a financial advisor, do your own research, or interview family members or friends whom you believe are great role models when it comes to financial literacy and independence.