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Stop making these mistakes to supercharge your savings efforts.

Stop making these mistakes to supercharge your savings efforts.


Stop making these mistakes to supercharge your savings efforts.


Saving money is vital – that’s no secret. Unfortunately, far too many Americans have too little savings. Often this is because we inadvertently make money mistakes that sabotage efforts to set aside the cash that’s necessary to accomplish important financial goals.

If you’re ready to get serious about saving money and want to maximize your chances at success, it’s time to stop making these five common savings mistakes.

1. Not budgeting for saving as a required expense

For most people, it’s unthinkable that they’d miss paying a bill, such as the mortgage, rent, credit card, or utility. However, missing out on saving over the course of a month doesn’t seem to be such a big deal.

While it is essential to pay your bills on time, it’s just as important to save and set aside money for retirement and other big goals. Instead of treating savings as an optional expense, it should be treated as a must-pay item on your to-do list along with the other bills due each month.

When you make your budget or allocate what you’ll do with income each month, list saving a set percentage of your income right along with rent and other must-pay bills. Then use the money for these goals first before you do anything with your cash that isn’t absolutely necessary. That way you’ll be certain to save.

2. Saving too small a percentage of your income

Too many people believe that saving 10% of their income for retirement is sufficient – and most Americans aren’t even hitting this goal. The reality is, thanks to factors such as rising health care costs, longer life spans, and projections indicating returns on investment are likely to be lower than historical averages, it’s important to try to save at least 15% of income for retirement (including any employer match).

In addition to retirement savings, you should be saving money for other things too – including an emergency fund. In fact, most financial experts recommend your total savings rate should be around 20% of your income (while 50% should go to needs and 30% to wants).

If you aren’t close to saving 20% of your income, start working up to this number by looking for ways to cut spending, increasing your savings rate a little bit each month, and banking your raises and saving the extra cash before you get used to spending it.


3. Not automating your savings

Do you have automatic contributions going to retirement accounts and other savings accounts each month? If you don’t, you’re making a big mistake. Chances are good that at least some months you’ll end up spending your money before you save it – unless you have your accounts set up so funds automatically transfer where they need to go.

By automating your savings, you can make sure your money always gets where it needs to before you have a chance to do anything else with it. You only have to be responsible one time when you set up the automated funds transfer, rather than having to make sure you make the right choice every month.

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4. Not keeping your savings in separate accounts

Are you trying to save money right in your checking account? That’s a big mistake because it’s too easy for these funds to get spent on other things.

Instead, you should have dedicated savings accounts intended for each different goal. Money saved for retirement should be in an account that provides tax breaks, such as a 401(k) or IRA. You should have separate savings accounts for other financial goals, too.

You could have an emergency fund account, a vacation fund account, a down payment account, and any other accounts you’d like that are aimed at saving for particular objectives. By having multiple accounts, you can track your progress to stay motivated – and can make automatic transfers to each different goal each month so there’s no confusion about what the funds are earmarked for.

5. Failing to set clear savings goals

Finally, it’s important to have clear, measurable objectives. Instead of just saying you want to save, you should know how much money you’re looking to set aside in total and the deadline for hitting your savings goals. You should also have a clear idea of how much money to save each month to meet those deadlines.

When you have hard numbers for savings goals – with dates in mind to achieve those objectives – you can track your efforts, ensure you’re on track, and stay excited about saving as you watch yourself get closer to achieving your goal.

Stop making these mistakes to supercharge your savings efforts

By avoiding these five big savings mistakes, you can set yourself on the path to successfully saving money. You have the ability to change course and stop making these errors right now. When you do, you’ll be well on your way to improving your savings rate in no time.

The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule. If we wouldn’t recommend an offer to a close family member, we wouldn’t recommend it on The Ascent either. Our number one goal is helping people find the best offers to improve their finances. That is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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