If your savings are looking a little lean lately, you could be caught in one of five money traps. ME Bank explains…
Check your savings progress, and if you’re falling behind, you could be falling into one of the five traps reported by over 2,000 Aussie savers.
Trap 1: You’ve been thrown a curveball
An unexpected event is the single biggest reason we lose savings momentum. The solution is to grow emergency savings. Add a little to your slush fund regularly so that surprise bills don’t become financial shocks.
Trap 2: You set the bar too high
Aiming to save too much too fast can be a recipe for disappointment. By this stage of the year you probably have a good idea how much you can comfortably set aside from each pay packet. Use this as your savings guide, and work towards a realistic goal.
Trap 3: Reality caught up with your budget
If overspending on budgeted items is holding you back from your savings target, review your spending looking for ways to save. Plenty of apps are available to help track spending.
Trap 4: You’re giving in to ‘restraint bias’
Restraint bias describes the situation when someone wants to save but gives in to temptation when they see, say, a brilliant new outfit on sale. We all have limited willpower and the easiest way to curb restraint bias is to automate your savings by setting up a transfer of funds each pay day.
Trap 5: You’ve lost your saving mojo
By now, the savings goals you set in January may be losing their lustre. Reignite your savings mojo by breaking down longer term goals into short term targets. If savings burnout is becoming a real possibility, take a short break, revitalise and hit the ground running with your saving goals refreshed.
This article was provided by ME Bank, a bank that is 100% owned by industry super funds, including Vision Super.
Members Equity Bank Limited ABN 56 070 887 679.