Startling Reasons Why You Are Unable to Save Money for a Rainy Day
The stats don’t lie, saving is probably the last thing on the mind of most people. About 57% of Americans are YET to save at least $1000 in their savings account, while the remaining 39% have yet to save a penny! So if you happen to be in this unfortunate bracket, these could be some of the reasons why.
You don’t have a budget
Having a budget is one of the most fundamental components when it comes to saving money. However, a majority of households do not apply it to their lifestyle mantra. In fact, it’s estimated that only 41% of households actually develop a budget based on their monthly stipend. This means that quite a number of people are avoiding a great opportunity to monitor their spending and to discover effective ways on how to save their money.
Hence, if you’ve been unable to create a budget because you’re not sure on how to do so, here’s how you can make it simpler. Firstly, jot down all the expenses that you incur on a monthly basis, or type them in a spreadsheet if you prefer. On this list, record how much money goes to each expenditure, and then make a summation of the total cost. Lastly, compare this to the amount of money you rake in as paychecks every month.
If you notice that your earnings are way below your expenses, then it is vital that you change certain aspects of your lifestyle in order to free up some income.
Your home is too extravagant for you
Yep, this might sound as a surprise, but most people have a tendency to overreach when it comes to purchasing a home. Additionally, most people are frivolous when it comes to their household necessities compared to other expenditures. As a rule of thumb, it is advisable to keep your home spending below 30% of your income. If it’s regularly crossing this line, then it will inadvertently delay any hopes of you saving. Additionally, you could fall short on meeting other bill payments.
You are swimming in debt
Here’s another startling statistic; the average American Household has credit card debt amounting to roughly $16,000. So when other nuances such as auto financing and student loans are factored in, it becomes crystal clear why so many people are unable to save a single cent. If you happened to be saddled down with a mountain of debt, then chances are high that breaking the cycle of not saving money is looking impossible.
The smartest way to handle your current predicament is to focus on the credit card debts first. That’s because they are most likely affecting your finances compared to other loans. One way of eliminating debt is by ensuring various balances are directed to a single card that has a lower interest compared to the one that you are recently paying.
On the other hand, paying your other debts can be remedied in two ways. For starters, you can opt to free up some expenses (e.g. entertainment expenses) to direct some of your cash flow to these debts. Or if you have the time, you can take up a part-time job to work your way towards eliminating your debt.
Believing that emergencies won’t hit you
Perhaps this is the biggest reason why so many people are unable to save for a rainy day. The belief that unavoidable financial circumstances can affect them. Hence, they respond instinctively by digging deep into their pockets whenever the emergency occurs, resulting in them incurring massive amounts of debt. That being said, one should always aim at having at least some money set aside to tackle these unprecedented financial emergencies.
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