The endless items that require money are just part of
adulting. Mortgage or rent, roof repairs, surgery for your dog, and the list
goes on (these are some of my own recent budget line items). With all that
going on, it can become easy to make excuses as to why you’re not saving.
But saving is crucial—for an emergency fund, education, and
retirement. Here are five common roadblocks to saving money we learned about
from a few financial experts along with their tips to get over the hump and
just start saving now:
Excuse #1: I Know I
Should Be Saving. I Just Don’t Know How to Get Started.
How to Get Past It: “Kickstarting your savings is
surprisingly simple,” shares Madeline Daniels, communications director for
America Saves and Consumer Federation of America. “Savers with a plan are twice
as likely to make good progress meeting their savings needs for things like
rainy days and retirement.”
“Savers with a plan are twice as likely to make good
progress meeting their savings needs for things like rainy days and
retirement.” – Madeline Daniels, America Saves and Consumer Federation of
America
What’s a great first step? Daniels says it’s “creating a
simple savings plan by setting a goal such as saving for your education, then
writing down how much you’re going to save each month and how long you’re going
to save for.”
America Saves provides tools to create your savings plan
with the America Saves Pledge.
Bonus Tip: Once you have your plan, Daniels notes
that the easiest way to save is automatically. If you have an employer that
uses direct deposit, have a portion put into a separate savings account. If you
don’t have the option for direct deposit or are self-employed, just set up
automatic monthly transfers into your saving account through your bank or
credit union.
Excuse #2: Why Bother
Saving Money When You Can Just Lose It in the Market?
How to Get Past It: The stock
market has been a little crazy lately, no doubt. But that’s no reason
to bail on investing, or savings in general. Michael Dinich, a financial
advisor in Sayre, PA who runs YourMoneyGeek.com, says, “I think a lot of
financial advisors forget that the Great Recession and financial crises left a
lot of scars. Many young people either personally suffered during the worst of
it or saw their parents lose money.” And that’s hard to get over.
Dinich compares getting started with investing to kicking
off a new diet or exercise routine: “It sounds totally backwards from what many
advisors in the industry do, but I like to start young people off with safe
investments like indexed annuities or Modified Endowment contracts.”
He says this helps set up new savers to have good experiences
early on because a negative experience may turn them off from investing or
saving. It’s the easier cardio and the small diet change version of saving.
Excuse #3: With
Interest Rates so Low, It’s Not Going to Benefit Me or Make an Impact.
How to Get Past It: Eric Nisall, creator of the course Bookkeeping
for Bloggers, reminds his clients that “it’s not just about getting rich. It’s
also about having another tool in your ‘financial toolbox’ for security and
peace of mind that you’ll have something in case of emergency.”
“Regardless of the interest rate you may be getting on your
savings anything is better than zero as a rate of return,” says
Nisall. That said, it doesn’t hurt to research the interest rates, fees and
fine print anytime you’re putting your money into something new. Check
legitimacy before transferring or depositing any money as well and be weary of
anything that offers returns that seem too good to be true. This will help
you avoid
scams.
Excuse #4: I Don’t
Understand Savings and Don’t Know Who to Trust.
How to Get Past It: If you’re looking for a financial
advisor, ask trusted family and friends for referrals. You can also check out a
potential advisor with FINRA—the Financial Industry Regulatory Authority—via
their Broker Check tool. Even with a financial
advisor, that person can’t be with you every day. Winnie Sun, a financial
advisor nicknamed “The Wealth Whisperer,” has a few tips for saving more and spending less,
including using financial apps to help you.
“The apps act as a personal trainer for your finances and
give you a visual representation of your budget at a glance and on the go. They
can really boost your self-control, too,” says Sun. There are a growing number
of easy to use, secure options when it comes to saving
online or with an app.
Sun adds, “Many people equate budgeting with deprivation,
and this only fuels them to spend more. Instead, try to think of it as a tool
for being able to afford the life you want.”
If you’re spending more than you should, you likely are
racking up credit card debt and that is costing you more money in interest. If
that’s the case make a plan to cut down your debt by paying off more of your
balances or checking out other options like a debt
consolidation loan or balance
transfer credit card that might save you additional money on interest.
Excuse #5: No
Worries, I’m Already Saving. (But Are You… Really?)
How to Get Past It: “Some people think they already
are saving, only they aren’t,” shares Neal Frankle, CFP. “What they do is save
what’s left over at the end of the month, rather than make saving a priority.
By only saving what’s left over, they end up usually only saving a fraction of
what they otherwise could.”
So what should you be doing to combat that? We mentioned it
before—automate. Direct deposit, automatic 401(K)
contributions, or a transfer every month will help you stash away money on
a regular basis.
It’s never too early or too late to start saving and making
the most of your money, so you have it for a rainy day and to secure your
future.
This article originally appeared on the Experian Blog.
Ellen Sirull is senior manager of
content at Experian Consumer Services, a division of Experian, the nation's
largest credit bureau. In her role, she helps consumers learn about credit,
personal finance and identity theft protection.
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