Ditch these habits that keep you from saving and replace them with new ones to build savings.

3 minute read

Have you tried to save at least 3 to 6 months’ worth of living expenses in an emergency savings account for years without success? If so, you’re not alone. Nearly 1 in 4 Americans said they would need to borrow money to cover an unexpected bill for $1,000, according to a survey by personal finance site Bankrate. Around 16% said they’d have to charge the bill to a credit card.

Even people who had a sizable emergency savings at the beginning of 2020 have seen their savings dwindle due to the COVID-19 pandemic, according to another Bankrate survey. Only 16% of Americans told Bankrate they are very comfortable with their emergency savings.

Don’t give up, though. It’s never too late to come up with a better saving strategy, and you can start by booting out of the habits that keep you from meeting your emergency savings goals.

Below are six habits that keep you from building emergency savings.

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1. You don’t have a plan

If your strategy for building emergency savings is “Whenever I have extra money, I’ll deposit it in my savings account,” it’s no wonder that your emergency savings has never exceeded a few hundred bucks. Plenty of people don’t have enough money to pay monthly bills right now, let alone extra funds they don’t know what to do with.

If you want to build emergency savings, it’s time to make a plan to regularly deposit money in savings each month. Set an achievable savings goal – $1,000, for example – as the initial amount you’d like to reach. Don’t make your initial savings goal so ambitious you get frustrated along the way. You can always adjust once you meet your first goal.

2. You have no budget

Without a clear idea of where your money is going, you won’t get far when it comes to designating a monthly amount for emergency savings. Creating a budget may seem intimidating, but you’ll be pleasantly surprised at how easy – and even fun – creating a monthly budget can be with all the online tools out there.

For example, you may want to use one of the many budgeting apps available to create a budget and track where your money goes. For example, Mint is a free budgeting app that also links to your bank and credit card accounts to track spending.

3. You’re not taking advantage of automatic payroll deductions

Just think how painless it would be to deposit money into an emergency savings if you didn’t have to do it yourself. Chances are, you’d barely miss $50, $100 (or even more if you can afford it) from each paycheck.

If you haven’t signed up with your employer for automatic withdrawals into your savings account, do it now. You’ll reach your savings goal much faster.

4. Dining out too much

We all enjoy the convenience of takeout or a night at a restaurant but if you dine out several times a week, you’re probably blowing through anywhere between $400 to $1,000 a month, depending on how fancy or frequent you like your dining experience.

Try going on a dining-out fast for a month while cooking at home and deposit the money you’d have spent going out to eat in emergency savings instead. At the end of the month, you may be so impressed with how much you saved that cutting back on dining out becomes a regular habit.

5. Paying fees

You may not pay attention to all those ATM fees, cash advance fees and maybe occasional credit card late fees, but they add up fast. If you need to withdraw cash, visit the ATM at your bank to avoid a fee. As for cash advances, it’s a good idea to avoid those altogether, since those transactions carry an array of fees and higher interest rates than regular credit card purchases.

6. Hanging out with big spenders

If you’re running around with people who love to charge meals at expensive restaurants, get cash advances from ATMs and bounce from club to club every night, you’re going to spend a fortune right along with them.

No one is saying you have to ditch your good-time friends. But while trying to save money, it’s a good idea to cut back on the time you spend on entertainment and dining out and sock that money away in emergency savings instead.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC