6 Consequences of Not Saving Money Wisely

If you fail to save money, you’re going to lock yourself in a long-term prison where your short-term financial liberty becomes locked up and your goals unachievable. Now let’s take a look at some of the negative effects of not being able to save and get into the habit of saving.

By making a budget and sticking to it, you can save more money. Reduce frivolous expenditures. Use tracking apps.

1.Unexpected Expenses

Unexpected expenses can also erode savings effort entirely, which is why it’s so vital to set aside an emergency fund of three to six months of living expenses, and why it’s essential to budget and shift 20 per cent of each paycheque towards those savings goals, laying the groundwork for a continued emergency buffer each year.

You can begin by making some sort of tracking device for your spending: pencil and paper, a spreadsheet or even trying out one of the many free expense tracker apps to see what you can uncover as far as savings potential and then think a little bigger. Put in place some short-term goals that are small, achievable things like a new smartphone for the holidays or gifts for family and friends.

2.Unexpected Debt

If you fail to save money, it could lead to serious problems like debt and if you are using a credit card it will be hard to meet your short and long term goals. Budgeting is crucial for personal money management but most people don’t consider to write a budget.

An unexpected medical bill or a car repair can rack up quickly, and if you don’t have some form of emergency savings, you’ll end up paying more if you put it on a credit card or a loan with interest.

And it’s also important to keep a cushion to account for those life surprises, like a vacation, a wedding or college tuition, so that you can afford them without inducing undue stress or debt.

3.Living Paycheck to Paycheck

Being paycheck to paycheck means you don’t earn enough to cover basic bills, like housing, utilities or food. It can also prevent you from saving for nonessential expenses, paying off debt or retiring with an adequate nest egg.

Surprisingly, patients in a 2023 New Reality Check report also identified their high monthly bills, such as rent or mortgage, insurance and utility costs, as the primary reason for being cash-strapped from paycheque to paycheque, as well as rising prices or inflation. The good news is that there is hope: if you are living paycheque to paycheque, the first thing to do is examine your budget and create one if you don’t already have one; pay down debt; and look for extra hours at your job or pursue a side gig.

4.Unexpected Life Events

A lack of budgeting can lead to a constant state of financial disarray, where a person is unable to pay bills or cover unexpected expenses, and is not in a position to take advantage of financial opportunities, such saving for a home or setting aside money for retirement.

Life is humid as an orchid, it alters shape and direction, that is its chief virtue: in the middle of the sentence, the world falls out.Events you never anticipated can transform your world into a crazy golf course in the blink of an eye. A sudden redundancy. An earthquake. A parent’s death. That is why it is essential to keep saving so that whatever happens, you will be able to deal with it.

5.Unexpected Retirement

Even the best laid plans to save for retirement can be threatened by a change in employment status, illness, or other unforeseen circumstances – so it’s important to have contingency plans for these events.

Similarly, it makes sense to build an emergency savings fund that could cover you for six months or so, but also to maintain a healthy savings habit for those rainy days that could interfere with your finances. Moreover, it makes sense to regularly review your goals and budgets so that you can make changes as needed.

It is never easy to learn how to put aside money, but it is very rewarding. Building wealth is something that everyone should do for the future.

sonal gupta

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