3 Habits That Will Destroy Your Savings

As of about a year ago, the average American had $35,366 in savings, while the median savings amount was $4,500. Now, any time you have a situation with a median that's much lower than the average, it indicates that more people have less than the average than more. In other words, $4,500 is probably a better representation of the average person's savings account balance than $35,366.

But no matter how much money you've accumulated in your savings account, you no doubt want it to last. And you surely only want to build up your savings over time, not dip in constantly. But if you practice these dangerous habits, you might go from having a decent chunk of savings to having little to no money in the bank at all.

1. Not following some sort of budget

Some people will tell you that budgeting is too boring or time-consuming to make it worth their while. But if you don't stick to some sort of budget, you might start overspending. That could create a situation where you need to keep dipping into your savings to keep up with your bills.

If you want a pretty seamless way to keep track of your finances, try a budgeting app. Many of these can be synced up with your checking account and credit card activity, so your purchases are tracked and assigned to different spending categories. 

2. Committing to recurring expenses without crunching the numbers first

You might think it's no big deal to buy a new car with a $650 monthly auto loan payment, even if your last car only had you paying $450. And you might assume you can afford to add different streaming or subscription services to your monthly bills because each one is pretty inexpensive in its own right.

But any time you take on a recurring payment, whether it's $500 a month or $15, it's important to make sure you can truly afford it. If not, you might end up raiding your savings frequently to keep up with your expenses.

3. Taking on too much house

Many people find that housing is their single largest monthly expense. But if you buy or rent too expensive a home, you might end up depleting your savings just to keep up with your costs.

More than 25% of U.S. homeowners are "house poor," spending more than 30% of their income on housing expenses, reports The New York Times. So if you're going to purchase a home, you'll really want to make sure your monthly costs don't exceed 30% of your take-home pay. 

And to be clear, that 30% shouldn't only account for your mortgage payments. It should also include ongoing, predictable housing expenses like property taxes and homeowners insurance.

That 30% limit should also apply to a home you choose to rent rather than buy. If you bring home $3,600 a month, you should keep your rent to $1,080 or less. Signing up for more could leave you raiding your savings to cover your rent or other bills. 

If you've managed to build up some savings, give yourself a pat on the back, because it's not an easy thing to do. But you also don't want all of that effort to go to waste. So aim to steer clear of these habits that could leave you with little to no savings rather than a robust bank account balance.