Saving is always one of the main goals for every family. For future projects, buying a house, buying a car, going to college, for unexpected expenses… The list can honestly be quite long. In any case, there are several common mistakes families make that can be avoided, such as living beyond their means or not having an emergency fund.
Living above their income is often one of the most common mistakes
Therefore, according to experts, there are ten common habits that keep many middle-class families trapped in debt and unable to save. Changing certain routines can make a significant difference, which families can see after just a couple of months. Living above their income is often one of the most common mistakes. Instead of saving extra money, many families choose to upgrade their car, hire more services, or travel more often. This lifestyle reduces their ability to save and makes people increasingly dependent on the next paycheck, as expenses rise even when income doesn’t.
Along these lines, it’s clearly a mistake to live above your income. Spending more than you earn, even by a little, leads to a vicious cycle of debt. What begins as an occasional indulgence can turn into a habitual financial imbalance, such as eating out every weekend or doing one thing with friends that becomes routine and involves spending extra money you hadn’t planned for.
Shopping to relieve stress or boredom is a habit that provides momentary satisfaction but is not good at long term
For example, it’s recommended to save at the beginning of the month, as soon as you get paid. In other words, saving should become a priority. Don’t save at the end of the month with whatever’s left over, but rather before you spend it, as another common mistake is what’s known as emotional spending. Shopping to relieve stress or boredom is a habit that provides momentary satisfaction, but generates regret and debt in the long term. So, if we save that extra money we spend on a treat at the beginning of the month, we won’t have it available for future purchases that end up being unnecessary.
Another common mistake we can mention is not having a budget for monthly expenses, for example. Avoiding a budget gives a false sense of freedom, but in reality, it leaves people without control over their money. It’s not that what we don’t see doesn’t exist; quite the opposite. Without minimal planning, it’s easy to overspend and never know exactly where the money went. Money that, in most cases, will be needed for an emergency.
Experts recommend not to save a sum of money, but rather a percentage of total income
Envy, competing with neighbors, or believing we deserve those expensive sneakers also become problems that affect our financial situation. Therefore, it’s important to keep all of this in mind to avoid headaches. Another expert recommendation is to automate savings. Just as we have direct debit bills, we can do it the other way around, but in the form of savings. There’s also talk of not saving a sum of money, but rather a percentage of total income. This way, savings will keep pace with income.
Finally, avoiding debt and what are known as “small expenses” are also essential tricks. Small expenses are those expenses that may seem insignificant but, when combined, add up to a significant helping hand at the end of the month. Finally, and as mentioned above, having an emergency fund is key. This could be one of the first goals when having a monthly income. A good cushion for unexpected events should cover between three and six months of fixed expenses. Creating this foundation can provide a lot of peace of mind, since, if any problem arises that we weren’t expecting, we won’t be left holding our pockets and not knowing what to do.
