9 Mistakes People Make When Trying to Save Money (What To Do Instead)

You can save a lot more money by avoiding money saving mistakes like these. Saving money doesn’t have to be difficult when you follow these nine tips instead.

More people may be saving more money than ever before, but that doesn’t mean it’s easy. A lot of people make mistakes that may lower their initial savings rate. However, just because you have made a mistake doesn’t mean you have to keep making them. When you know better, you do better, and finances are just one part of your life that rings true.

We’ve gathered some common money mistakes and what you can do instead. 

Mistake #1: Not prioritizing savings goals or setting goals 

One of the biggest mistakes you can make when you are trying to save money is not having something to save for. It’s OK to want to save money but what makes wanting to save money stick is knowing what you want to do or achieve. I use the example of a road trip when I talk about setting savings goals. You need to know where you want to go to set the GPS so that you can get actionable steps to drive there. 

What You Can Do Instead: Sit down and write out a list of several things you want to accomplish with your finances. Once you have your list, decide which goals you want to achieve at this time next year, this time in three years, and this time in five years. Five-year plans are suggested, but a lot can happen in five years, so I want you to make goals that you can complete sooner than that. Setting goals lets you know how much money you need to save and gives you an amount to strive for. 

Mistake #2: Not following an actual budget 

Spending your money without a plan can be dangerous. When you don’t budget, you are setting yourself up to be reckless with your spending and fail at any money goals you set for yourself. When you aren’t budgeting correctly, you may spend money you don’t have and live paycheck to paycheck. Living paycheck to paycheck sucks, and it’s even harder to achieve any financial goals, like saving money. 

What You Can Do Instead: Learn about budgeting and decide what works best for you, then stick to it. There are several different ways to budget and manage your money. Two of the most common are zero-based budgeting and the 50-30-20 method. 

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Zero-based budgeting is when you assign every dollar a job, and everything you bring in is accounted for. For example, if I were to use this method for $1,000, it might look like this: 


    • $250 Rent 

    • $50 Phone 

    • $150 Utilities 

    • $200 Groceries

    • $100 Car Insurance 

    • $50 Gas 

    • $100 Emergency Fund 

    • $50 Car Fund

Every dollar is accounted for with a zero-based budgeting method and put towards an expense or a financial goal. 

The 50-30-20 budget method is for those who would like to budget but may need more flexibility. This method divides your money into various buckets to help you hit your goals.

An example of this would look like this: 


50% of your budget is put towards needs. Needs are items such as rent, utilities, food, minimum debt repayment, etc. 


30% of your budget should be towards your wants. So all of your vacations, concerts, anything fun would come out of this bucket.


20% of your budget goes towards your goals, like saving for an emergency fund or paying extra on your student loans. 

This budget is more flexible than the zero-based budget and allows you to have more wiggle room. At the end of the day, the m ethod you prefer will be a personal choice, but it needs to be something that will stick. 

Mistake #3: Being cheap  

To save more money, you may be tempted to spend less to hit your goal faster. One way to spend less is to buy the cheapest version of everything you can. Unfortunately, most items made cheaply do not last, so you will spend more money in the long run to replace it every time it breaks.

What You Can Do Instead: Look for ways to buy quality items at a discounted price. If you buy online, you can check various competitors for price matching and use a cash-back program like Rakuten. If you prefer to shop in person, use coupons and cash-back apps like Ibotta. Take it one step further and cut down on your carbon footprint by checking out a thrift store or Offerup. 

Mistake #4: Not knowing the different types of savings accounts

One of the worst things you can do is let cash sit around. Suppose your money is in your checking account, not making you money. In that case, it might as well be buried in your backyard waiting for the apocalypse. 

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What You Can Do Instead: Check out a high yield savings account. Some financial institutions offer up to 25% more interest than a regular savings account. It may not be a ton of money at first. Still, thanks to compound interest, a few dollars here and there will turn into hundreds and eventually thousands if you play your cards right. 

High yield savings accounts are great to house surplus funds and any cash you are using to save towards a financial goal, such as a home repair or emergency fund. Make sure whatever financial instrument you choose is backed by the FDIC. You can check for a complete list here. 

Mistake #5: Taking the easy way out

Taking the easy way out with your finances can mean many things. Still, for this article, I will assume taking the easy way out financially is when you spend money for convenience. It can look like: 


    • Paying extra for rideshare apps instead of using public transportation. 

    • Signing up for multiple streaming services instead of utilizing just one and library account. 

    • Eating out instead of making a meal plan and sticking to it. 

    • Buying items impulsively instead of waiting for sales or looking for coupons. 

What You Can Do Instead: Make a list of all the ways you spend money to make your life easier and see if there is anything you can cut out to save some extra cash. That might look like taking advantage of any of the examples listed above, or it could look different. Paying for convenience is choosing to make the least amount of effort, which could end up costing you big bucks in the long run. 

Mistake #6: No emergency fund 

It’s estimated that 63% of Americans live paycheck to paycheck. With a limited cash flow, one significant expense, such as a car repair, could wipe you out financially if you have no savings to fall back on. In addition, so many people are one paycheck away from being homeless, which makes it hard to get ahead financially.  

What You Can Do Instead: Start stashing extra money into a savings account. With the zero-based budgeting method we discussed above, you can give every dollar a job and make a point to put a dedicated amount away. Saving money can be complicated, so look into cutting back where you can.

Many people overspend on groceries, subscriptions, take-out, and shopping for fun, so make sure you are going over your expenses with a fine-toothed comb. Also, don’t get discouraged. A vast emergency fund isn’t built overnight. It’s made one dollar at a time. 

Mistake #7: Not having proper coverage on vehicles, health, etc. 

It’s easy to cut corners when trying to save money, and one way to do that is to cut back on insurance. However, it’s not the right way. I’ll use myself as a prime example. 

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My day job started to offer health insurance, and I held firm with my ACA healthcare plan from long ago. However, while my monthly premium for this plan was much lower, I didn’t have any coverage regarding any mental health care. This meant I paid hundreds of dollars per month on therapy and medication. So I decided to switch during the enrollment period this year. Although, I’ll still be paying over $100 additional to my monthly premium, all medication and therapy are now covered. With this switch, I’m going to save almost $500 a month alone. 

What You Can Do Instead: Fully go through all insurance policies to ensure you have adequate coverage in all areas of your life, and your policies are paid in full for any discounts. Don’t forget about random insurance either, such as rental and pets. Our fur babies can cost us thousands, so make sure they are covered too! 

Mistake #8: Not researching financial options and tools (re-evaluating every so often about your rates, your debt, etc.)  

You can set up some things and then forget about automatic transfers to savings and online bill pay. However, one thing you shouldn’t forget about is researching at least once every six months to ensure you are taking advantage of the best financing options for you and your family.

For example, your student loan may seem like it’s at a great interest rate. Still, suppose you took the time to research a refinancing option. In that case, you could be saving thousands of dollars in interest alone! 

What You Can Do Instead: Put time on the calendar to review financial products at least every six months. Interest rates are constantly changing, so financial institutions will offer bonuses if you sign up with them. Of course, you don’t have to change everything all the time (I’d recommend NOT to do that). Still, by checking twice a year, you can see if anything currently being offered will impact your current financial situation.  

Mistake #9: Denying yourself / no fun budget

Most diets fail for a few reasons, but two major factors are: the chosen diet was not sustainable (for example, no more carbs) and banning food backfires. The same can be said for those who start a new budget or personal finance program to cut back drastically while not allowing themselves any wiggle room or fun.

When you deny yourself anything, you will likely rage because that’s human nature, and raging can derail you from any financial progress you could potentially make. 

What You Can Do Instead: Include fun money in your budget. I’m not saying I put aside hundreds of dollars towards the next Sephora sale (it’s in November, by the way). Still, I am saying that it’s a great idea to give yourself a budget to work with. A fun budget can allow you to hang out with your friends, enjoy your hobbies or take some me time, all guilt-free. 


Saving money can seem daunting at first, and it can also be more complicated than it needs to be. However, with the steps listed above, you can feel confident that you’ll progress towards your financial goals and achieve them in no time. 

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