Building savings is an essential financial habit that can help achieve financial stability and long-term goals. However, financial literacy and savings can often pose challenges – people frequently make common mistakes that hinder successful savings. Whether the money is invested in stock funds or used in a fixed-term deposit, avoiding the most common mistakes can make saving effective and successful.

The five most common saving mistakes:

Unclear Goals

One of the most frequently made mistakes when saving is having undefined or unclear goals. If there's no clear goal, saving can seem aimless, leading to a loss of motivation over time. A precisely defined goal ensures focus, helps stay on track, and allows for effective progress evaluation.

To avoid this mistake, goals should adhere to the SMART system:

●       Specific – clearly defined goal indicating the purpose of the savings, for example, a vacation or a down payment;

●       Achievable – the goal should be realistically attainable based on income and expenses;

●       Relevant – ensure the goal aligns with individual financial priorities and lifestyle;

●       Time-bound – a set deadline for achieving the goal, for example, 12 months.

Lack of an Emergency Fund

One must not forget about emergency savings, which are available for situations that cannot be planned or predicted. Otherwise, one might need to use loans or funds intended for other purposes, making it harder to achieve goals.

Ineffective Budget

One of the main reasons people struggle to save is the absence of a structured budget. Without a clear understanding of income and expenses, saving becomes much harder. A well-structured budget serves as a financial guide, helping to prioritize, avoid unnecessary spending, and ensure financial goals are achieved.

If possible, follow the 50/30/20 principle when creating your monthly budget.

●       50% of income is allocated to bills (housing, transport, utilities, food);

●       30% of income is allocated to other daily expenses, such as entertainment and clothing;