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Things You Shouldn’t Do When Trying to Save Money 

Are you ready to take control of your finances and become a better saver? Saving money can bring many benefits, like having a solid emergency fund, enjoying more experiences, breaking free from the paycheck-to-paycheck cycle, and preparing for a secure future. But as you embark on this savings journey, there are a few things you need to keep in mind to avoid hindering your progress. So here are six things you shouldn’t do when trying to save money.

1. Don’t pay unnecessary fees

We all know that banks have a knack for nickel-and-diming their customers. They hit you with overdraft fees, excessive withdrawal fees, lost card fees, and the list goes on. But did you know that some banks charge a fee just for holding an account with them?

These monthly maintenance or service fees can range from $5 to $25, and while it may not seem like much, it adds up over time.

Fortunately, some banks and credit unions offer ways to avoid these fees. They may waive the fee if you maintain an average minimum daily balance or if you choose a no-fee savings account.

Additionally, online banks like Discover, Marcus, and Ally are great options for finding high-rated accounts with no monthly fees. And as a bonus, these accounts often have higher interest rates – helping you keep more of your hard-earned cash.

2. Don’t settle for just $1,000 as an emergency fund

You may have heard the recommendation to save $1,000 as an emergency fund, but let’s be clear: that’s just the beginning.

While it’s a good starting point to get some cash in the bank for smaller unexpected expenses, this amount is not enough to cover significant emergencies or prolonged financial hardships.

A robust emergency fund should ideally be three to six months’ worth of living expenses or income, depending on your comfort level. So, don’t stop at $1,000. Keep saving until you have a substantial cushion that can protect you during challenging times.

Related: 100 Ways to Save Money in 2023 (bookmark this!!)

3. Don’t focus solely on saving – start investing

Saving is crucial for building an emergency fund. However, saving alone will only take you so far – especially when it comes to long-term financial goals and planning for the future. So once you have a solid emergency fund in place, it’s time to start investing some of your money.

Investing allows your money to grow and work for you, providing opportunities for greater financial returns over time. Understandably, investing might be intimidating as a newbie. But rather than avoid it because you’re nervous, broaden your financial horizons and start learning about investment options that align with your goals. Education can help curb your anxiety. 

4. Don’t save too much, be realistic

While saving money is important, it’s also crucial to be realistic about your saving capacity.

Saving too much can become counterproductive if you constantly find yourself dipping into your savings to cover your monthly expenses. Pay attention to how often you tap into your savings account for essential needs, as this might indicate that you’re saving more than you can comfortably manage.

Moreover, exceeding six withdrawals or transfers from your savings account per month can result in fees imposed by banks. So, find a balance that allows you to save and meet your needs without sacrificing your financial stability.

5. Don’t make your savings too accessible

If you struggle with impulse control, having your savings account too accessible can be a recipe for financial trouble. To counter this, consider creating a few barriers that make it more difficult for you to access your savings on a whim.

For instance, if you prefer using a local bank or credit union, choose one that’s farther away from your home or work, or one with fewer branches.

Another effective method is to use an online savings account, which often requires a one- to two-day transfer period for accessing your funds. Additionally, many online savings accounts don’t come with a debit card, further limiting immediate access to your savings.

By implementing these strategies, you can slow down impulsive withdrawals, which ensures that your savings remain intact for the intended purpose.

6. Don’t drain your savings to buy a house

Buying a house is a significant financial undertaking that requires a considerable amount of upfront cash. From the down payment to closing costs and other expenses, it’s easy for the costs to add up quickly. But while it’s tempting to empty your savings account to expedite the home-buying process, it’s important to exercise caution.

Many borrowers aren’t required to have liquid cash reserves after closing, even so, it’s wise to maintain some savings for your own protection.

Aim to keep at least a few months’ worth of mortgage payments in the bank. This way, if any unexpected issues arise after closing, you’ll have the necessary funds available.

Bottom line: Remember, saving money is a journey, and it’s essential to be patient and consistent. Stay committed to your financial goals, and soon enough, you’ll experience the freedom and peace of mind that comes with having a healthy savings account.