4 Reasons People Can’t Save Money

can't save money

Do you have a problem with saving money? Are you left wondering how to save money? The only way to overcome this difficulty is to realize and identify the problem first. And let me tell you – you’re problem isn’t that you can’t save money. The inability to save money is the result of something else. Did you catch that? It’s the RESULT and more likely, it’s your fault (but not always).

Before you beat yourself up over your inability to put money away for a rainy day, you should know that you are not alone. In fact, many people don’t know how to save money. If you look at society these days, it only makes sense – but there I go getting ahead of myself. Here are four reasons why people have difficulty saving money. If you can avoid these problems, I would venture to say that you will be able to save money pretty easily.

Why People Can’t Save Money

  1. Impulse Purchases: Are you one of those people that has to get the latest gadgets or the popular stuff so that you can fit in. Perhaps you are and you don’t even know it. Take a moment to think about what you feel like you “need.” If you answered, “I-PAD,” or “Big Screen TV” or something even faintly similar to these popular items, I would venture to say you have been tricked into believing that buying the latest and most popular will buy you happiness. Not being able to resist your spending impulses is probably the number one cause of the inability to save money.
  2. Playing Catch-Up: Another reason that prevents people from saving money is the continual need to play catch up. Most likely you are this type of person if you have massive amounts of college debt. If you have taken out a lot of school loans in order to get a higher paying job – or so you were told – you could have a difficult time trying to save money while also paying off your student loans. The worst part about this position is that it is hard to get ahead. Once you are behind, it makes it that much harder to reverse things unless you make drastic changes.
  3. High Expenses: You may be having difficult saving extra money because you have over-extended yourself. You may be able to still make ends meet, but if you live your life by living in an expensive house or always having a new car, you could find yourself with a lot of regular expenses that keeps you from saving. While some may say that this is the same thing as impulse purchases, but it isn’t necessarily the same thing. This is a result of the mentality that believes your money is yours to spend (now) and you follow this closely. If you get extra money, do you spend it on something right away or do you have to ask yourself what to do with extra money?
  4. Low Income: Another cause of the inability to save money is having a low income. It is easy for the 1% to save money when they make 6 or 7 figures, but if you earn minimum wage and living in an expensive area of the country, it may be difficult to save money no matter how frugal you are. If this is the case, instead of trying to cut corners on your spending, you might want to look into increasing your income. Whether that is finding a better job or creating a side business, it is possible.

Whether you realize it or not, learning how to save money is possible. It may not be easy, but it is possible. Spend some time identifying the cause of the problem and I think you will find that saving money is much easier to accomplish.

photocredit: Images_of_Money via Flickr

11 Responses to 4 Reasons People Can’t Save Money

  1. I would think for a lot of people the problem is lifestyle creep. You may start making more money, but then you feel you deserve to live a more expensive lifestyle. Suddenly you are going on vacations more often and dining out more. A lot of people are in the mindset that they just don’t need to save while they are young.

  2. I agree with MM .. and it certainly happened to us.. Over the last 10 years, my income has more than doubled.. But my cash flow has gone DOWN and my debt UP.. how did that happen?.. Lifestyle creep. I got a bigger house, a better car, and signed up for more and more.

    • This happens to a lot of people, and is one of the big reasons so many people are in financial trouble now.
      What would happen to you if you suddenly lost that income? Would you be able to keep up for six months or longer if needed until you could find a new job?
      It just underscores how important it is to have money put away for the proverbial “rainy day.”

  3. After a period of time not being able to save, I think some people begin to tell themselves they’re unable to, they end up defeated, so unable to shake off the mindset that they’re unable to save money. They become poor thinkers and more prone to spiralling further in the wrong direction.

  4. I’ll also echo MM – lifestyle creep and high expenses have done it to us. We’ve been doing OK at retirement savings simply because they are mandatory at our work, but as for emergency cash savings? Not well at all.

    Old habits die hard, and we have yet to successfully re-learn the new ones we need!

  5. I have a problem with spending money when it’s there, kind of an offset to lifestyle crrep. If I have $20 in my pocket, I want to spend it. But if there’s not any cash available, I can control my urge to spend. That’s why I do automatic transfers to savings on payday — If I never “see” the money, I’m not tempted to spend it.

  6. I think all of these things underlie the fact that some people are used to a lifestyle that they may not be able to have initially when they first start out. When they are willing to accept that, people go into debt to achieve it, only to realize later what the consequences of that are. Its a societal problem.

  7. Thanks for the article because it seems very appropriate. Never before in our history, the personal savings has been more important. Not because of his relationship with the investment in the country. I mean our retirement. In recent weeks, I had the occasion to read many reports on this subject and would like to share with you three very important conclusions.
    A. – The personal savings during its first ten years of work, condition 60% of the value of the pension they receive. I mean the purpose of retirement savings.
    2. – In the future, the government will have fewer resources to finance and subsidize services that we receive. The sectors that further cuts will receive are: social security, pension, health sector and the financing of education (technical studies and university).
    3. – The young live longer than their parents and rather more years than their grandparents.

    What does this mean? first, we’ll have to save more for a proper retirement. Second, these savings will have to be invested properly. We can not invest in diversified mutual funds paying 4% ending the year. But not going to help us earn 6% a year.