The current inflation status means that everything from food to gas prices are going to affect your budget. It even appears that things could take a turn for the worse, before it gets any better. The present global economic scenario further indicates that additional inflationary effects may augment our problems further.
Elevated prices mean that people from all sections of the society are looking for varied means to save money. It may be noted that even though the process of saving seems fairly simple, a lot of us still end up making critical mistakes while saving. These mistakes not only affect the saving process, but even end up hurting the short-term as well as your long-term finances.
Some of the fundamental and common mistakes that individuals commit during the process of saving are listed below:
1. Purchasing cheaper products, instead of value-for-money items
It is popularly believed that buying products which have the lowest cost is an effective saving mechanism.
However, engaging in such practices will only yield short-time saving benefits. The real deal lies in purchasing products that are ‘value for money.’ It may be noted that cheaper, substandard products will only last for a few years at the most, and then you will need to spend more money to replace it in the future. On the other hand, buying a more expensive yet quality product means that it will last a lifetime or perhaps a decade at least depending on the product and other factors. In this way you have contributed to your long term saving plans, by staving off unnecessary expenditure in the future. Similarly, buying more nutritional and costlier food items will keep you healthier and avoid medical costs in the future, as compared to cheap, sugary food items which are sure to result in future costs to one’s health and looks!
It is also important for people to detect the right item which can be termed as ‘value for money.’ The cost is just one of the factors. You will also need to look into other factors such as the kind of warranty that comes with the product, the durability of the product, and the frequency with which the item is going to be used. Thus, shopping for items that are ‘value for money,’ rather than just a temporary cost saving option, will indeed help you save money in the long run.
2. Incorrectly assuming that there is a quick fix
All of us think that the need for saving money can be quickly solved by reducing the expenditure. People will try to do things which immediately solve the issue of rising costs. The saving process commences by cutting out the expenditure, one by one, with the belief that each cut will help them save more.
If a particular cut in expenses does not resolve the problem, then we move onto another quick fix with the belief that it will definitely be the resolution to all the saving woes. This vicious cycle continues, and people don’t realize that there are no immediate solutions to saving money.
It is important to note that the need to save money primarily arises due to problems which have been going on for over a period of time. Most financial problems are usually not the result of a single monetary mistake. Thus, the process of rectifying the current financial crisis is also a prolonged one. There are no quick fixes to it. Once you realize this, you can start the process of correcting the financial mess with renewed vigor and patience, with the knowledge that saving will eventually occur in the long run.
3. Fundamental changes are essential
Most of us think that saving can be done without making any fundamental changes to the expenditure or the lifestyle. People generally approach the process of saving as a short-term goal, and hence do not make any major changes in life. In such a scenario, saving money and reducing costs only lasts for shorter duration, thereby leading to a situation wherein you have ended up not saving any money at all.
One can only save money by making fundamental changes and incorporating all the options of saving money into one’s lifestyle. People have to come to terms with the fact that saving money requires these changes in the long term, and that such changes have to become a part of your day-to-day life. After you have accepted the reduction in ongoing expenses and the major changes in the ways in which your money is spent, saving will eventually happen.
4. Do not stop spending altogether
One of the worst practices that most people engage in when trying to save money is stopping their spending activities. Most of us believe that it is the best way to save money. This is kind of like trying to lose weight by not eating which does not work and is not healthy anyhow. However and moreover, if spending activities are stopped haphazardly without any foresight, then it can result in extra expenditures in the long run.
People can stop spending on items which are not necessary. However, it is important to continue spending on the basic essentials. For example, people should not stop attending or scheduling normal health and/or dental checkups. If you do, then any dental or medical problems can compound and aggravate to a point where you will need to spend a lot more money and time than if you handled this problem before it became a serious situation. This does not even count the pain and discomfort you have probably put yourself through.
5. Incorrectly assuming that saving requires denying oneself
A lot of us incorrectly assume that the process of saving money involves denying oneself certain luxuries in life. Hence, most of us procrastinate saving and avoid cutting the expenses for as long as possible. This will however have an adverse effect on your financial health. It is important to note that the more you delay cutting off unnecessary expenses, the more likely are the chances of your current monetary problems becoming worse, and harder will it be for you to get your finances back in to shape.
Saving money does not necessarily mean that you have to end up denying yourself. It can however involve an analysis of your spending habits, wherein you may need to change certain facets of your lifestyle, but not change it drastically. Find out ways to save money without giving up on certain luxuries. You can start by checking if you are paying a lot more than needed for the luxury items and services for starters. This economy may not offer you a second chance.