You probably know you should be saving (or saving more than you already are). Yet sometimes, as they say, life happens. You might have the best intentions to start saving one month, and then surprise: The dishwasher breaks or you need to see a specialist and there goes the cash you intended to save. To help nudge you in the saving direction, below are some common roadblocks to saving that might be in your way. Understanding them and acknowledging them should help you overcome them.
You Don’t Use a Budget
As much as we harp on the benefits of a budget, the reality is only 40 percent of people claim to use this valuable tool. Don’t be one of those people who choose not to use a budget. If you want to save, you need to know how much money is coming in versus how much money is going out. If your living expenses swallow up all of your income, it’s time to make some changes and cut back. Then use that extra money each month to pad your savings.
No one thinks an emergency will happen to them, until it does. If you don’t think you need an emergency fund — typically enough to cover three to six months worth of expenses — you’re sadly mistaken. Make sure you’re padding your emergency fund so that when something unexpected (and expensive) happens, you won’t be caught off-guard. And if not being able to put together a full three-to-six months is what’s holding you back, don’t let it. Start with $100 to $200 a paycheck and build from there.
Your Home is Too Fancy
Most Americans’ greatest expense is the cost of housing. Still, if your rent or mortgage payments exceed 30 percent of your take-home pay, it’s a problem. As CNNMoney reports, you should keep your living expenses below that 30 percent mark. Do whatever you can to make that happen, then guess what? You’ll have some money to use for savings.