Why is saving money so difficult? Why is it so difficult to save money? It’s a question I often hear.
As I began to work towards a high savings rate, I asked myself the same question. This is a question I’ve seen asked a lot on the internet, so I decided to create a guide.
I was unable to save much money in my first year. However, looking back on it now, I can see that a lot of these obstacles were caused by me.
The data on American saving habits is not very encouraging.
According to the Associated Press and NORC Center for Public Affairs Research, two-thirds would find it difficult to come up with $1,000 in an urgent situation.
The average American only saves 5% of their disposable income. (LA Times)
Even those who do, save a small amount of their income. (CNBC)
Note: If this title has you wondering, it is a play off the phrase “Shot Heard ‘Round the World.” This refers to a number of historical events that have affected the world. The title is a play on the phrase “Shot heard ’round the world” which refers to several historical incidents that affected the world in some way. This post’s fun fact.
Why it’s Hard to Save Money
We’ll explain why it seems difficult to save money and give you some tips to help get on track. Saving money should become easier for you in the future!
The cost of housing, education, healthcare and childcare is on the rise
You can improve or take action in many areas on the list. This one, however, is not entirely within your control.
The cost of housing, healthcare, education and childcare is continuing to increase, but salaries are not keeping pace. This is a fact that you may disagree with or agree with.
Millennials earn less than Baby Boomers and Gen-Xers did at the beginning of their careers. (Center for Retirement Research)
Debt
Debt is a problem and a challenge in our society more than ever before. This is also a major barrier to saving money.
Saving money is often the last thing on people’s minds. With increased student loan costs, and credit card debts piling up, it’s no wonder. Saving money is not a priority, depending on how much debt you have and the interest rate.
It is possible to pay off debts and save money at the same. This could be a good choice for you. Both can help you with your finances.
The Federal Reserve reports that 43% of Americans borrow to cover the shortfall. (Federal Reserve)
Are you looking for help with your debt? Debt and Cupcakes has a great debt tracking spreadsheet. This is available for free here.
You are not generating enough income
As I have mentioned, salaries do not grow as fast as other costs of living. It is difficult to save. You can also increase your income.
It means you have to work harder in order to earn more money. You can do this by improving your career value, changing careers or starting a side business.
You won’t get rich, but you can put money in your savings to get you out of the limbo. Find out how to generate more income.
You don’t track your spending
You say “I should start tracking my money or managing my spending” but never start? I’m sure you can relate to this.
It’s boring and not glamorous. We know it’s something we should do but are reluctant to start.
If you don’t track your expenditure, it becomes difficult to save money because you won’t know where your money goes. You may find ways to cut down on your spending and certain expenses.
Once you’ve mastered your finances, you might not need to track them as frequently. I took about two years before I felt comfortable with not tracking my expenditures, but this is possible.
Social activity can hurt your pocket
Spending more money than you intended to can be a result of going out to meet up with friends. FOMO, or the fear of missing something, can be detrimental to our finances.
We want to go out and see the latest movie or eat at the newest restaurant. But over time, we tend to spend more than what we have saved.
I love to have fun and go out occasionally. I enjoy trying out new restaurants.
Finding a balance is key, as well as knowing when to stop for the day or night. While I lived paycheck-to-paycheck, I would go out with friends to socialize but rarely buy anything. I was able to socialize and have fun, while keeping my spending under control.
Prioritizing savings over saving
Why is it so hard to save money? You are simply not prioritizing it in your life. Savings can fall behind if you don’t make it a habit and a priority.
Years ago, I was puzzled as to why my savings never reached more than $1,000. I never thought to myself that my lack of saving was due to the fact that I didn’t invest enough time. I completely missed the simple idea.
I wanted to save more, but was passive in my approach. I didn’t save much.
My savings account began to grow steadily once I started paying myself first and made saving a top priority. It was slow to start, but I changed my financial situation.
Financial Ignorance
Look at the statistics that I have shared!
We don’t understand or know personal finance as well as we could. This includes not only saving money, but a broad range of financial issues.
You can’t save or invest money if you don’t understand what you’re doing.
Saving money is not difficult, but it does fall under the category of finance. If you don’t understand, debt, budgeting, credit cards, etc. Saving money can be a difficult task.
No Willingness to Learn
You will need to learn about finances if you want to improve your financial literacy.
It can also be hard to spend the time necessary on finances. Delaying the process will only lead to financial problems that may last longer than expected.
Start learning if you want to eliminate difficulties and save money. Make an effort even if you do not WANT to. You will slowly settle into a routine and your finances will benefit. Win.
Inflation in the Lifestyle
What do you do when you get a raise or a high-paying job? Seriously. You may want to ask yourself if your lifestyle is “inflationary”.
When people’s income increases, their lifestyle inflation also increases.
It is not uncommon for people who earn high salaries to have trouble saving money. They may lose their job, and then suddenly they are in debt or have to start over.
How could anyone allow that to happen? You’ll be surprised at how easy it is! It’s especially true if you haven’t been used to earning six figures and suddenly you do.
Spending more money is easy. Be careful not to spend more than you can afford. This is a trap.
Even those with high incomes may struggle to save due to lifestyle inflation. You shouldn’t spend money just because you can. Saving money is difficult if you want instant gratification or luxury.
Why is it so difficult to save money? The Question Heard Around the World
Save Money with These Simple Tips
You can control many of the things listed above, but others are out of your control. Saving money is a great way to improve your financial situation.
Saving money may seem impossible, but there are some additional tips to help you get started.
What’s this? This is not a new theory, but a simple truth. In 2014, when I was searching for wealth secrets, I faced all of these.
Here is the link:
Do something about your finances, and stop complaining! Start by getting motivated and angry. The first step, even if it is a small one, can be the most difficult. It is easier to complain than fix, but complaining will not get you anywhere.
Do not compare yourself to others. Concentrate on your own situation! Worrying about what others have may cause you to spend money, become in debt, be stressed, give up, or get frustrated. You can certainly use it to motivate yourself, but ignore it if it makes you feel bad.
Be patient. It takes time to learn how to put money aside and save. Everybody’s knowledge and income is different. Be happy with whatever progress you make. You have to start somewhere, whether you are saving $5/month or even $500/month.
You’ll save money much more easily than you thought once you recognize the problems, implement changes and create a plan.
