For many people, having a savings account is a must for their good financial health. Nobody wants to see their savings account balance decrease. If you’re wondering why your money isn’t increasing, you may be doing something incorrectly. The good news is that growing your savings account doesn’t have to be complicated, and there is a slew of easy fixes to the challenges you might be facing.
Avoid saving errors listed below if you want to make sure you’re saving the right way and getting the most of your hard-earned cash.
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You are getting low interest on your savings account
You may be managing your savings account correctly. You set up regular, automated deposits and don’t mess with the account in any other way. However, since the interest rate is so low, your savings account is not growing at all.
In the early stages of your savings, it’s generally wise to keep putting your hard-earned money in your savings account. However, if your savings account has grown over time and you’re tired of receiving little interest payments, you may want to consider moving your funds to a money market.
Funds that invest in short-term debt are known as money market funds. The money is invested in different market products and aims to provide excellent returns over a year while keeping high liquidity. Investing in these funds often yields higher returns for investors who have idle cash in their savings account. These funds are suggested for investors with short-term cash surpluses, which they won’t be needing right away.
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Making regular withdrawals from a savings account
You may ruin all your saving efforts in a hurry if you take money from the account. Whatever the reason, the end result is always the same: you have low savings account balance because you keep withdrawing money from your savings account all the time.
As a solution, restrict easy accessibility to your savings account. When your savings account is hidden from view, you won’t think about it. Open a separate savings account at a bank other than your primary checking account. Finally, make sure that when you get your salary, a certain amount is deposited into each of your bank accounts. The temptation to spend is greater when all of your money is in one location. However, you’ll be less likely to blow your funds if you don’t have easy access to them.
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Poor budgeting of money
If you don’t have a sound financial strategy, you shouldn’t hope your money will increase just like that.
Instead of spending money on items that aren’t urgent, you make a list of your specific responsibilities and prioritise them instead. While it may be difficult in the beginning to reduce expenditures and create budgets, concentrating on essential items that need your commitment, such as paying off debt, may help you save more money over time.
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Not setting the right goals
It’s hard to feel excited about your savings if you don’t have a particular goal in mind. A savings account with money equal to three to six months of basic expenses may sound good enough, but it may start to seem like an extra checking account when there is no clear plan for how you want to use the money.
When you set financial objectives, you have something to aim for and may use that as motivation to keep working toward it. If your aim is to save Rs. 6 lakhs over the next 4 years, you must know exactly how much cash you need to save. As a result, you can plan your finances and look for investment opportunities that will help you reach your objective within the period you’ve chosen. If you put in the effort and are disciplined, you have a good chance of exceeding your goals.
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Inconsistent with deposits
You transfer money into your account whenever you are able, but this usually only happens once every couple of months when you are finally able to pull ahead of your debts and expenses. Even if you’re able to put money into your savings account, the sums are always little. It’s almost as if it isn’t worth it to send the money at this point.
- You can have automatic transfers done from your checking account to savings every time you are paid. You won’t spend money you don’t have since you can’t see it in your bank account.
- Allow your paycheck to be put straight into your savings account, and then transfer the money needed for your monthly budget into your checking account. It may provide you with the mental boost of seeing your savings account’s numbers rise rapidly, which may help you avoid thoughtless and impulsive buying.
- If you struggle to keep a minimum balance in your savings account, or only earn enough to cover your basic needs and wants, you might want to consider opening a zero balance savings account. Several banking institutions provide a decent interest return on your balance where you may establish a zero balance savings account.
Your savings account has earned the right to expand and flourish. All your saving goals are within your reach if you are willing to put in the effort and rethink how you manage your savings account.
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