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Why saving can be difficult?

    Why saving can be difficult (and how to overcome challenges)?

    Saving money can be one of the most difficult financial goals to achieve. Whether it’s because of unexpected expenses, lack of financial literacy, or simply not having enough money to begin with, saving can be a challenge. 

    In our latest blog post, we talked about three strategies to saving and we gave you a step-by-step guide that you can follow. Still, there are some factors that might get in the way of achieving your saving goals. So, let’s look at some of the top reasons why people find saving challenging. 

    Lack of expense management

    It’s trivial and it requires some discipline, but it is important. Unless you know where your money is going on a regular basis, it will be very difficult to establish your saving habits as well. You need to have a good transparency of your budget, so that you can analyze and optimize it. And this comes with a disciplined tracking of expenses – either manual or automated. 

    How to overcome?

    You can use a simple spreadsheet or an app such as ViziWealth to start recording your expenses. Already at the end of the first month you will have a much better overview of what is your actual spending, what are the main expense drivers, and you can even start thinking about optimizations.

    Hint: ViziWealth offers direct integration with your bank account through open banking. Soon, you will be able to see all your transactions and categorize them, so that you don’t have to fill in any boring spreadsheets or record expenses manually. Stay tuned for what’s coming. In the meantime, you can start tracking your expenses manually. Check out how in this short video.

    Overwhelming debt

    If you’re already in debt, it can be hard to find the extra money to save. High interest rates and the ever-increasing cost of living can make it difficult to pay down what you owe, let alone make room for saving. 

    How to overcome?

    You might decide to focus on repaying your debt first, before saving for anything else (the so-called “avalance” approach). WIth a good overview of your expenses, you can analyze your costs and see where you can squeeze into a slightly smaller budget. Then start repaying your debt with the remaining savings faster. You can use ViziWealth to visualize your liabilities and see how the picture changes if you increase the repayment even with a small amount. Getting out of the debt earlier will open new opportunities for you to invest in yourself and your family’s future.

    Emotional spending

    We’ve all been guilty of emotional spending from time to time. Whether you’re treating yourself to something special or buying something to make yourself feel better, emotional spending can quickly add up and make it hard to save. 

    How to overcome?

    One way to combat this issue, it’s a good idea to give yourself a set budget and stick to it. Just do a small budgeting exercise at the beginning of the month. Define buckets for each key expense category that you have, and then monitor your expenses, so that you don’t go above your target. Additionally, you can practice a more aware type of shopping. For example, if you are shopping online, you might decide to bookmark that dress you emotionally decided you really want to buy. Then go back, think for an hour or two, or even for a day, is it something you really need? How often do you think you’ll wear it? Do you already have something similar in your wardrobe? And if yes, can you maybe sell it to replace it with the new one? Then make the decision to buy or not to buy, once you have allowed your rational mind to work a bit 🙂 By the way, if you are practicing the habit of manual expense recording, it can be of great help here. Just think that you will have to enter this expense in your spreadsheet or app later, and if it was a purely emotional purchase, you will probably feel guilty. Is it really worth the bad feeling? 🙂

    Inflating cost of living

    The cost of living is constantly on the rise and this can make it difficult to set aside money for savings. It often goes unnoticed overtime. Therefore it is important to have some history of your spending overtime, and be able to compare.

    How to overcome?

    Keeping track of your expenses, and looking at them by categories is an excellent way to build awareness of the creeping inflation over time. If you already have some historic data at hand, you can look at it and see what are the major differences. Then you can look for alternatives – for examples, change a brand of clothes that you are not very attached to with a less expensive alternative. Or buy groceries from a local producer that might sell good quality food at a lower price than the big supermarket.

    Lack of financial literacy

    Another common cause of saving difficulty is a lack of financial literacy. If you don’t understand the basics of budgeting, saving, and investing, it can be hard to make the right decisions with your money.

    How to overcome?

    Invest in your knowledge – you can take a short training, for example, or read a book on the topic of personal finance management. Or you can talk to a financial advisor to get started on the topic. With ViziWealth, you can request a session with an advisor, and we’ll connect you to one. We work with a pool of trusted partners who are certified independent financial advisors.

    At ViziWealth, we understand the challenges that come with saving money and we want to help. If you are curious to try the app, and start improving your financial habits, register today for free.

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