Key reasons why your savings are going backwards
ACCORDING to a new ME survey, over a third of Aussie savers have failed to ‘keep their savings on track in the past 12 months’.
Right now is the ideal time to check your savings progress, and if you’re slipping behind, you could be falling into one of the five traps recently identified by 1500 Aussie
Trap 1: You’ve been thrown a curveball Of those unable to sustain their savings momentum, the top reason cited in ME’s survey was due to an ‘unexpected event or emergency.’
Alarmingly, only half of Aussie savers (46 per cent) reported to have emergency savings in place to cover things like a job loss, unexpected medical expenses or property repairs.
“These findings are concerning as emergency funds should be one of people’s top priorities,” said ME head of Deposits and Transactional Banking, Nic Emery.
“It reduces the risk of increased debt when faced with a financial emergency and helps you maintain your savings momentum,” he said. “Get started with an emergency savings account. “Add a little to your slush fund on a regular basis, and enjoy peace of mind knowing that a surprise bill doesn’t have to be a financial shock.”
Trap 2: You set the bar too high “Aiming to save too much too fast can be a recipe for disappointment,” adds Emery.
“By this stage of the year you probably have a good idea how much you can comfortably set aside from each pay. “Use this as a 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 your 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 “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.”
UNSURE: There can be many traps that hamper savings efforts.