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Saving Philosophies That Result in More Expenses Than Wealth

When we realize that our biggest goal in life is to be wealthy, we’d decide to save money, which we tend to begin by stopping spending. To some, that could mean turning down dinner invitations, putting up with old clothes, and canceling unnecessary subscriptions. But some eager savers go to the extremes; they’d skip insurances and meals, or endure a leaking roof or a sweltering home during summer.

These two types of savers, however, usually have one thing in common: putting all their eggs in one basket. For the longest time, we’ve been taught to put our earnings into a savings account, because it will earn interest in time. That’s absolutely true, but if you look at your passbooks, do you ever see an astonishing interest earning?

You just shook your head, didn’t you? Now that we’ve awakened¬†you to reality, here are the outdated money-saving philosophies that you need to break now:

1. Stopping Spending

When people want to save, their instinct is often to stop spending. It’s the most obvious way to save money, after all. But this approach isn’t just unrealistic, it also results in costly consequences if done without foresight.

For example, if you skip a dental appointment now to have your toothache checked, you could be paying for an expensive produce a few months down the road. Similarly, if you don’t address a growing health problem today, then you might be forced to pay thousands of dollars for an operation in a few years.

Of course, saving money requires controlling your expenditure. But it doesn’t mean that you should neglect your needs. Instead, its nonessential purchases that you should avoid, such as the latest iPhone, designer shoes, or high-end appliances. If you’re doing well without those, then you have no reason to buy them. Paying for home repairs is definitely more important than those, not to mention urgent.

2. Having Only a Savings Account and Nothing Else

But isn’t the purpose of a savings account for saving money exactly? True, but if you put all your eggs in one basket, you’re missing an amazing opportunity that may grow your wealth tenfold.

Opening a savings account should only be the first step to saving money. If you want to earn generous interest income, then it’s investing that you should go for.

Many people confuse saving and investing as the same thing, since depositing money in a savings account is also a form of investment. But those two terms mean differently. Savings are funds put aside for emergencies, while investments are a systematic approach to create wealth. Unlike savings, investments offer rates of return.

Therefore, consider looking into insurances, stocks, bonds, treasury bills, and other money-market and investment products. With your money in any of these assets, your outlay will appreciate, earning you profit. Note, however, that there are risks in every investment, so you must consult a financial adviser before investing.

3. Not Repaying Debts Before Saving

Some people would let their credit card debts blow up first before finally paying them off. They’d only make minimum payments, under the impression that they’re spending less and saving more. What they don’t realize is that they’re subjecting themselves to hefty interest, and hence pay more than what they should.

No matter how big your debts are, always prioritize paying them off first before growing your savings. Good credit is highly crucial when applying for a new loan, and mortgage companies would give you a favorable plan if your repayment history is exemplary.

4. Buying Cheap

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Sadly, many people fall for the philosophy that quantity is better than quality. They’d settle for substandard goods and services, confident that they’re doing the right thing budget-wise. But poor-quality products and services are typically designed to last a short while only. Give it a year or two, and you’ll pay for new ones again.

On the other hand, if your purchases are done with value in mind, you’ll own long-lasting products and enjoy faultless services. Your initial outlay may be a lot, but you’re not repeatedly spending for unsatisfactory purchases, at least.

5. Focusing Only on Short-term Solutions

Many savers think that immediate solutions can result in long-term effects. For example, if they cut back their electricity bills now, they’d surely earn a million dollars by next year.

Of course, that was an exaggeration, but the absurdity of such a mindset is clear all the same. To be rich, you have to make significant changes, and not just focus on your current habits. It will involve unlearning deep-rooted philosophies, but that’s part of the sacrifice.

Saving money isn’t supposed to be comfortable, but it doesn’t have to be miserable, either. Depending on your financial goals, you may have to take huge risks.

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