5 Signs You’re Not Saving the Right Way

Photo (cc) by kenteegardin

I once went on a date with a friend of a friend. Before appetizers, he asked what I did. I told him I was a personal finance writer, and he told me he didn’t believe in all that “hooey.” In fact — I kid you not — he said he kept his money hidden in his kitchen.

We didn’t have a second date.

When it comes to saving money, not every way is the right way. And keeping large amounts of cash stashed around your house isn’t the only wrong way to save. Here are a few other indicators you’re doing it wrong.

1. Being loyal

If you’ve had the same bank for years, you might be missing out on free money. Another bank may have higher interest rates on savings, lower fees or any number of bonus programs not offered by your current bank.

At least once every two years, compare the rates and deals at several banks to make sure you’re earning the most on your savings, or at least paying the least possible amount in fees. If you’re not, give your bank a chance to compete. If they’re not interested, switch. Check out our interest rate search to look for better rates.

And while you’re at it, make a day of it: Compare prices on auto insurance, cellphone plans, Internet service and anything else you’re paying for. If you’re not getting the best deal, switch or call your current provider and ask them to meet the rate. You might be pleasantly surprised.

2. Sticking with brick-and-mortar

If you’ve been wary of Internet-based banks, reconsider. Legitimate online banks are backed by the FDIC, so your money is safe, and since they have lower overhead, they often have higher interest rates than brick-and mortar banks. For example:

Current rate on brick-and-mortar savings accounts:

Current rate for online savings accounts:

Moving your savings to an online bank is simple: In most cases you can link your new online account to your checking account for same-day transfers.

3. Not tracking your spending

The best financial move I’ve ever made was tracking my spending for a month. If you’d asked me before I kept track, I would have told you that I was the queen of frugality, saving money at every turn. But after 30 days of diligent tracking, I realized I wasted a lot of money.

If you’re not keeping track of your spending, start. Free services like those offered by our partner, PowerWallet, will do most of the work for you. You might be surprised about what you learn and how much you can put aside simply by seeing what you’re doing now.

4. Buying on sale because, well, it’s a sale

A lot of us are guilty of this: buying clothes, shoes, accessories or even groceries just because they were on sale. At best, you end up with some stuff you could use but didn’t really need in the first place. At worst, it ends up in the trash bin or donation pile.

Resist the urge to shop sales. Instead, decide what you really need, then wait for it to go on sale.

5. Saving solely for needs

A lot of financial advice suggests saving for needs – emergencies, college educations, or maybe a car. And while that’s obviously smart, experience has taught me that saving only for the things you have to buy kind of makes you hate the whole process.

Instead, set aside some of your savings for fun stuff – a dream vacation, a huge flat-screen TV, the new PlayStation 4 — whatever you find exciting. You earned your money, so you should get to spend (some of) it on what you want.

Do you have other examples of the wrong way to save? If so, share them on our Facebook page.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

These Are the 9 Best Benefits of Amazon Prime
These Are the 9 Best Benefits of Amazon Prime

These top-notch perks of an Amazon Prime membership won’t cost you a dime extra.

This Grocery Store Is Cheaper Than Even Walmart
This Grocery Store Is Cheaper Than Even Walmart

One grocery chain is likely to save you more money than any other.

14 Uses for WD-40 That Save Money, Time or Headaches
14 Uses for WD-40 That Save Money, Time or Headaches

WD-40 is handy in a lot more situations than you likely realize.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.