5 Money Saving Mistakes People Make
NEW YORK ( TheStreet) -- Saving money isn't difficult -- but it's possible to make some big mistakes along the way if you aren't careful.
The rise in both gas and food prices has been taking a toll on people's budgets, but it appears that things will get worse before they get better. The recent floods in the Midwest are likely to increase both gas and food prices in the coming weeks.
Higher prices all around have many people looking to save money any way they can. While saving money appears to be pretty easy and straightforward on the surface, there are still a large number of people who make fundamental mistakes when they try to save money that actually hurt their finances rather than help them.
These are some of the common mistakes that people make when trying to save money:
Mistake #5: Stopping SpendingOne major mistake that people make is that they stop spending, since this seems to be the obvious way to save money. The problem is, if done without foresight, not spending money can mean additional expenses down the road. People should stop spending on nonessentials, but not stop spending on preventive maintenance and basic upkeep. You will save money today by skipping a check-up at the dentist, but if doing so leads to dental problems down the line that would have been caught early, the savings actually turns into a longer-term cost. What to do: Make sure you continue to get your regular check-ups and make repairs in a timely manner, even if this means spending a little bit of money. It's not worth pressing your luck to save a few dollars today on things that are preventable, and risk having to make a major payout later on when there are a lot of other ways to save money.
Mistake #4: Buying Cheap, Not Buying ValuePeople often think the best way to save is to go with whatever is the lowest price. While this will work some of the time, the real key to saving money is learning to buy whatever is the best value. Buying the cheapest tools that will only last a year or two, rather than paying twice as much for tools that will last a lifetime, ends up costing you more in the long run since they have to be replaced time and again. Another example: Buy a nutritional cereal that costs a little more, but will keep you healthier -- not a cheap cereal with lots of sugar and little nutrition. What to do: The key to saving money on a consistent basis is to learn how to shop for value. Price is just one factor that you need to consider when making a purchase. Other important factors include how long the item will last, what type of warranties it comes with and how often it will be used. Learning to shop value rather than price will save you a lot of money in the long run.
Mistake #3: Assuming There Is a Quick FixWhen people need to save money, they usually look for a quick fix to reduce their costs. They want to do something that will immediately solve the problem so they begin cutting out expenses one by one assuming that making each one will solve the problem. When it doesn't, they cut another hoping it will resolve the issue, which it also won't. They keep trying to make quick fixes not realizing that there is usually no quick fix when it comes to saving money. What to do: The reason most people find themselves in need of saving money is not because they made a single money mistake that can easily be corrected. It's usually ongoing issues over a long period of time. It's important to realize from the start that the process of saving money isn't going to instantly resolve itself, but will take time and effort to succeed. Once you are committed for the long haul, you will avoid getting frustrated when things don't instantly get better and have the patience needed to be successful.
Mistake #2: Assuming You Must Deny YourselfMany feel that saving money requires denying the things that are enjoyed, which makes the entire process painful. In order to avoid this pain, they wait as long as possible to take the steps they need to lower their expenses and save money. The longer they wait, the worse the problem gets meaning the harder it will be to get their finances back in order. What to do: The truth is that saving money doesn't have to be painful, although it will take a change in lifestyle related to how you purchase goods and services. You are probably paying more than you need to for a lot of the services and items you currently buy. Learning how to reduce the costs associated with them
Mistake #1: Believing There Is No Need to Make Fundamental ChangesMuch like dieting, learning to save money is more than knowing what you need to do. Many people think that they can learn to save money without making a fundamental change in the way they currently do things and approach savings as a short-term problem. When done this way, a plan for reducing costs and saving money never becomes a long-term priority, which results in not being able to save money the way they had assumed they could. What to do: You need to make fundamental changes by incorporating the money saving methods that you learn into your lifestyle. Understanding that the changes are part of the way you will deal with money from now on rather than a stop-gap for a current problem will make the likelihood of success much greater. This usually includes changes on how you spend your money and changes to reduce the current ongoing expenses you have. By learning to make changes that save money, you can help ensure that you save enough for all your financial needs in the future.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV