Saving money is a serious issue for Americans as fewer people have emergency funds. According to a report from NeighborWorks America, a nonprofit that supports local communities, there are roughly 72 million or about a third of people in the nation with no emergency nest egg to fall back on.
Paul Weech, CEO and president of the group NeighborWorks America, explained the results from the more than 1,000 adults surveyed are seriously troubling since only 47 percent of respondents said they had enough money to cover living expenses for 90 days.
"We're concerned because our survey shows that many people are still digging themselves out of the hole that they found themselves in during the Great Recession.," Weech added.
However, the good news is there are plenty of great ways to save money for a rainy day. The bad part is that some money saving tips are not beneficial at all. Here are three you should avoid:
1. Cutting costs with everything
A major issue with those who give money saving advice is that some things are simply not good for the long term. One tip you should stay away from is buying cheap or cutting costs with everything you purchase. For example, you'll find that because you spent such a little amount on a new pair of shoes, they don't last as long, so you're simply buying shoes more than you need to.
According to The Street, even though buying cheap is a good way to save money in certain aspects, it doesn't work all the time. You have to learn how to buy the best value instead of what's the most immediately affordable solution. Look for items with warranties or lifetime guarantees. Simply put, it's better to pay double for something you will know will last decades instead of an item that will break in a few years.
"Make sure you have goals in your budget, but also ones you can achieve."
2. Creating impractical budgets
When you create an unreasonable budget, you ultimately will force yourself to spend less but give yourself no room to do anything else. It's still good to have a social aspect in your life, and with a strict budget, you could easily focus too much of your attention on saving money. According to personal finance site Get Rich Slowly, overcomplicating your budget is one of the easiest and worst mistakes to make. Make sure you have achievable goals in your budget.
3. Paying with only cash
Another common piece of advice is to pay with only cash so you know where your budget stands with your checking account. However, doing this could make you miss out on the advantages of credit cards that could help you in an emergency and ultimately benefit your savings account, Bankrate reported. Additionally, most people tend to spend their cash more frequently when they carry it.
"If you stay disciplined, the interest earned (on low-interest-paying checking or debit accounts) is easily surpassed by the points earned on a good credit card," said Adam Koos, president of Libertas Wealth Management Group Inc., according to the source.
For more information about smart ways to manage your finances, contact Landmark Bank.
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