Every year you make a resolution to save more. But it has never really worked out that well. We reveal why it didn’t work and which mistakes you should definitely avoid when saving.
First and foremost, you should answer the following five questions to define your goals:
Now let’s talk about the saving mistakes and how to avoid them:
Without a concrete idea about savings goals, this topic will just trickle away month after month. As a result, you will not come up with a green branch for years.
Rough future planning ensures that mistakes when saving are avoided. After all, it has proven to be sensible to adapt savings plans to their purpose and not to forget later retirement.
If you have not already done so, it is best to build up a so-called nest egg first.
And: You can access this account if necessary and prepare yourself for unforeseen events. It makes sense to have a reserve of two to three net monthly salaries. How to finance a new washing machine or use it to pay for an unexpected car repair. In the worst case, you can bridge the cost of living if you lose your job.
In addition, think about what other issues are coming up in the next three to five years. Many people plan their annual vacation or know that there is a high probability that they will need a new car.
Over a longer period of time, you may have the dream of owning your own home and, last but not least, retirement provision, for which you want to keep your standard of living as good as possible.
Now your personal income and expenditure situation comes into focus. You first concentrate on the classic calculation and subtract the expenses from the income.
They focus on all automatic exits. Do you still use the subscription for a magazine or for the gym? Or did you just forget to unsubscribe?
In the best case, the calculation results in a plus, which of course depends on your income. This eliminates the mistake of simply never having the right overview when saving.
Modern financial managers on the Internet, via app or via the bank advisor support you in your project.
“Don’t put off until tomorrow what you can do today”. This makes many people make a big mistake when it comes to saving.
If you put off canceling your subscription from month to month, never do it. Think to yourself: Tomorrow I’ll get advice from my bank or conclude a savings contract online. You also like to postpone that for years because many other things in life are more important.
The only good time to start saving is today. Because the later you start, the more you have to put aside every month in order to fulfill your wish.
And if you assume 100 euros per month, that quickly adds up to 1,200 euros over a year. After ten years, you would have saved 12,000 euros in pure savings.
Once you have drawn up your household bill and there is a realistic amount left over, choose this result for your monthly savings.
There is no greater mistake in saving than then investing a significantly smaller amount. For example, if you have 500 euros available, do not set up a savings plan for just 100 euros. This costs 4,800 euros over the year and 48,000 euros over 10 years, which means you could invest less equity in your own property, for example.
On the other hand, if you opt for a higher savings contribution than you are able to raise, you will not reach your goal either. As a result, you need the money after all and book it off the investment account again every month.
Good resolutions only last for a short time, even the best savings plan is useless. Therefore, when saving, don’t make the mistake of buying non-essential new things.
If you have a well-functioning smartphone, purchasing a new one can wait a while.
A practical tip: Visualize your savings goal. It is up to you whether you set up a background image for the dream car on your mobile phone or hang up beautiful pictures of your dream vacation in your apartment. The permanent reminder of your goal helps in the realization of savings plans.
In times of low interest rates, the classic savings book does not bring any returns. You know the money is safely invested, but without a reasonable interest rate, it will not increase significantly.
Because with an average inflation of currently 7.9% in Germany, the purchasing power of money is even reduced. To avoid this mistake when saving, find out about various investment options yourself on the Internet or from your bank advisor.
As a rule, you can expect a wide range of share and fund savings, options with building society savings and insurance.
Never forget: A global, diversified portfolio is important to minimize risk and achieve stable and continuous profits.
This article was written by Alisha Ogidan
The original of this article “Why saving has never worked for you so far” comes from Kleingeldhelden.