Staying on top of our finances is something most of us could stand to improve. Whether it's budgeting better, actually sticking to said budget, or reducing our spending, saving money comes down, in large part, to the mindset that drives our behavior. Taking a hard look at why the savings aren't adding up can help us trade impulses for thinking patterns that keep more money in our pockets. Here are some reasons you might be finding it hard to save and some suggestions for addressing them.
You're living beyond your means
If your rent is too high or you're driving a brand new car that you really can't afford, you'll never be able to save money. One way to decide how much you should spend on a car is the 20/4/10 rule, which says you should make a 20 percent down payment, have a loan that's for no longer than four years, and make sure that your total monthly car payment plus insurance doesn't exceed 10 percent of your gross income.
For housing, the general rule is not to spend more than 25 percent of your income on rent or about 25 to 30 percent on a mortgage (again, including insurance and property taxes). What Rent Can You Really Afford? Budgeting for Extra Monthly Costs has some additional tips.
Making sure that the payments on housing and vehicles are within your pay bracket might mean having to downgrade. But what you trade in outward niceties you'll more than make up for in the peace of mind you'll gain by not having to stretch to make ends meet. Furthermore, you'll enjoy the security and freedom that comes with actually being able to save.
You have FOMO
Maybe it's going out with your friends every weekend or going on that fancy vacation just like everyone else seems to. Or, maybe it's buying the latest "it" gadget. But if you're blowing hundreds or thousands because you don't want to miss out, take a step back and practice saying no, to others, but (mostly) to yourself.
Think of alternatives that save you money and that are just as fun when it comes to the essence of activities you enjoy, such as time with people you care about. You could host a potluck game night at your place and content yourself with a more simple getaway — and watch those extra dollars add up in your grown-up piggy bank, your savings account. Check out these 6 Easy Ways to Save $100 This Week for more ideas.
You're budgeting wrong
Too many people think that budgeting is looking at where you've spent your money. But this kind of backwards glance won't do you much good with the money you have right now. Successful budgeting involves deciding where your money will go, spending and not spending accordingly, and being able to adjust when life happens. YNAB, which stands for You Need a Budget, is an exceptional forward-thinking budget tool. They recently re-vamped their app, so you can budget straight from the palm of your hand.
You aren't saving for big expenses
Any budget will get de-railed by emergencies or un-planned-for large expenses. For instance, you could be doing a grand old job of budgeting for your rent, car payment, groceries, and monthly bills and then wham-o, your washing machine dies or you're due for a major car repair. A good budget builds in monthly savings for large expenses, both expected and unforeseen ones. This way, the savings you manage to accumulate won't be repeatedly drained to pay for out-of-the ordinary expenses.
You're too open to suggestion when you're on social media
If you're looking for FOMO, there's no better place to get it than Instagram. Without an active mindset of viewing others' lives, expenditures, and things they're outright selling from a distance, it's almost impossible not to stoke the flames of want, want, want. Be mindful and spend your time wisely, remembering that if you don't know it exists, it's impossible to spend your money on it.
You fall for the "saving money" trap
Have you ever gone to Target for "just one thing," only to end up with a basket full of items that are on sale? The thought that you're saving money by buying it now (and buying a lot of it) is a powerful motivator — and guess who's making money through those kinds of promotions (it's not you). If buying three packs of dish washing detergent to get one free is in your budget, go for it. If not, step awaaaaaay from the sale.
You don't make lists before you go shopping
Making lists is another way of setting boundaries, and it applies to all kinds of necessary shopping. If you hit the mall with a vague notion of needing more clothes, you'll likely spend much more than if you go armed with a list of: black flats, lounge pants, two cool weather work shirts. In addition, with a list, you'll end up with no more and no less than you need. This especially applies to grocery shopping, where buying too much can lead to having to throw away food and too little can result in an expensive habit of eating out too frequently.
You're saddled with debt
Chiseling away at debt isn't exactly fun. Spending and even saving are much more exciting. You know it's foolish to save when you're paying interest on debt, but what's not so clear is that not paying down your debt as quickly as possible is putting off your saving power, possibly for years. Get crazy with getting rid of that debt. By the time it's paid off, you should be used to living without that chunk of money that was going toward paying it down. Now put that amount in savings. It'll add up in no time.
You aren't using real money when you buy things
Many people who are serious about saving money advocate a cash envelope system. This makes spending money visceral because you're literally giving someone your cold, hard cash. It's also very easy to see when you've over spent in a budget category because the money is quite clearly gone. If you use credit cards, consider that maybe you need to make spending money more "painful" and try out using cash or at least a debit card.
You're trying to fill a hole
We all know that "money doesn't make us happy," but sometimes we act as if that new handbag or even the $4 Starbucks will buy us a little bit of happiness, even if temporarily. It's important to budget for some deliberately chosen indulgences. But if we find ourselves in a pattern of shopping when we're down or habitually spending money to make ourselves feel better, it might be an indication of an unhealthy self-care strategy that ultimately isn't doing you any favors. Recognizing such a tendency is the first step. Replacing spending with another feel-better activity is the next. Eventually, your growing savings will at least play a part in feeling good. Before long, saving money could become your new "addiction."
How do you overcome your obstacles to saving money?