Most people find it hard to save. You may think that people who have a larger disposable income have an easier time setting saving money for future use. This could not be any further from the truth. A study conducted by personal finance website GoBanking rates found out that people across all income levels had a hard time saving.
According to the LA times, 5% of Americans don’t save at all. CNBC also notes that 20% pf all Americans don’t set aside any money at all.
Why is it Difficult to Save Money?
Here are a few reasons people find it difficult to save
1. Rising Housing, Education, Healthcare, and Childcare costs
Costs of essential items such as housing, education, healthcare, and childcare continue to rise, which are all pointers to a growing economy but the salaries remain the same.
Studies have shown that millennial salaries are lower compared to what generation X used to receive as well as the median salary.
Debt is one of the greatest hindrances to saving. With Increased student loans and rising credit card costs, it’s not easy to save. However, if you’re able to offset your loan and save simultaneously, it will have a positive impact on your finances.
According to the Federal Reserve, 43% of Americans spend above and beyond their means thanks to the availability of credit cards which means they have zero money to save.
3. Inadequate Income
The gap between the rich and poor continues to widen each day. The cost of essential goods and services grows steadily which surpasses the rate at which the salaries grow. The only way to increase your income is making a deliberate effort to look for viable business opportunities which don’t have to be capital intensive.
The business idea isn’t necessarily a get rich quick solution but a way to ensure you have some money that you allocate for savings monthly.
4. Not Tracking Your Spending
It’s easier said than done especially if you’re used to splurging money on unnecessary items or habits. It will take discipline to control how you use the money at your disposal.
If you don’t track your spending, you won’t be able to account for where your money is going and money is going to control you instead of the other way round.
5. Social Activity
Going out is enjoyable but it may end up putting a huge dent on your finances. Fear of missing out is one of the things that makes people not save because they end up using money they had not budgeted for.
We are not saying that you shouldn’t go out and have fun. The trick is in striking the right balance between having fun and putting some money aside for the future.
6. Not Prioritizing Saving
It’s never easy to save but the primary reason why you’re not saving is because you’ve not made it your priority. If you make saving a habit, then you’ll find it easier to do because it becomes a part of your routine.
7. Lifestyle Inflation
With a salary increase comes lifestyle inflation which is very dangerous. This means that your spending increases with your salary.
Many people are victims of salary inflation which means that when their salary increases, so does their spending. This leaves them with little or no money to save.
What happens if you’re demoted or lose your job? You’ll be reduced to begging.
Top Saving Money Tips you Should Know
Here are the top tips that will make saving easier
1. Set Your Saving Goals
Saving is a deliberate effort and if you don’t have something you’re saving towards, it will be difficult to do. Having a saving goal puts you on track even when you find it difficult to set aside some money for future use.
Come up with a percentage you have to set aside each month towards your savings come rain or shine.
2. Open a Different Account for Your Savings
Learn to separate your finances. This way, you won’t find yourself eating into your savings. The primary reason for opening a savings account is to save only and should not be used for recurrent expenditure.
One good approach to a savings account is setting up automatic payments from your main account to ensure a certain percentage goes to your savings without fail. The more difficult it’s going to be to withdraw the funds, the better.
3. Have a Reason for Your Savings
It’s not enough to save. You should have a reason why you’re saving. What do you want to do with the money in say, five years?
When you have a particular goal in mind, saving will become easier and you are likely to stick to it even if it’s not easy.
4. Allocate a Percentage of Your Money to Reward Savings
We’re not talking about setting aside to spend on buying things that don’t add value but rather setting aside money for unforeseeable emergencies. This ensures that in case of an emergency, you know how much money you have at your disposal.
You may also be interested in reading Pandemic Personal Savings: 10 Ways to Start Saving Now