It’s the end of the month and you have nothing to show for it. Why is it so hard to save money? In this article, I’ll provide a comprehensive guide about the many reasons why you may have a tough time keeping your money in your savings account. Additionally, I’ll provide practical solutions on how you can go from saving nothing to saving hundreds of dollars per month. I’ve personally learned from many mistakes I’ve made and have turned my financial situation from being in debt tens of thousands of dollars to having a positive net worth higher than the average that those my age have.
Read on to learn why it’s so hard to save money and how to start doing so.
Understanding the Challenges When Asking “Why is it So Hard to Save Money?”
Why Is It So Hard to Save Money? Root Causes and Solutions
There are many reasons why you may not be saving any money. Below are the top reasons why you may be struggling with having any cash left over at the end of the month.
High Debt Payments
Debt can slow down any efforts to save money. When you owe money, you not only need to pay back the original amount, but you’ll need to pay back interest. The longer you take to pay back your credit card, the more interest you’ll owe. Speak with a financial advisor and determine a strategy on how much you should pay back and when before committing to a savings strategy.
You’re Not Tracking Your Spending
You can’t track what you don’t measure! Tracking your spending means you’ll know exactly where your hard-earned dollars are going. While you may think you’re saving a good amount of cash, it’s easy to forget small purchases here and there. Before I started tracking my spending, I realized I was spending nearly $1,000 a year on small purchases. A few snacks purchased at the convenience store, a bottle of nail polish there and a latte twice per week add up.
Lack of Savings Goal
There’s nothing more motivating than having something to work towards! If you don’t have a goal, it’s difficult to keep on track with saving. After all, throwing money in a savings account takes work. I personally set 3 primary goals for my saving: travel, retirement and emergencies and keep separate bank accounts. This way, I see how much money I’ve saved in each category and how much I still need to save to reach my goal.
If you’re just getting started on your savings journey, choose one big goal you want to save towards. Even if it’s replacing an old pair of boots with a quality pair of boots, knowing what you’re working towards will help you stay on track.
High Fixed Expenses: House or Car Poor
Housing Expenses
Housing is a major expense. Americans now need to spend up to 45% of their income to afford mortgage payments and roughly half of renters spend 30% or more of their income on rent. While you can’t skip out on the rent or mortgage payment, there are creative ways to reduce your monthly housing expenses, such as:
- Renting out a room in your home
- Renting out your entire home and house sitting or temporarily living with a family member or friend
- Negotiating a rent discount
Vehicle Expenses
In 2023, the average car payment for an American was $733. If you’re taking home approximately $2000 a month, you’re spending nearly 30% of your income on a vehicle! Instead of purchasing a brand-new vehicle, consider these cost-efficient alternatives:
- Buy a used vehicle
- Lease a car instead of buying it
- Carpool with a family member or coworker
- Take public transportation, bike or walk
- Consider switching to a partially remote or fully remote job so you reduce or eliminate commuting to work
- Cut your gym membership and work out from home so you don’t need to drive to and from the gym
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Over-Saving for Retirement
We all know how important it is to save for retirement. In fact, most Americans aren’t saving enough – and half have no savings at all. However, if you’re part of the minority that do save for retirement, it is possible to take it too far. Every choice comes with a cost. If you’re saving too much in your retirement account, you may not have enough cash to cover immediate expenses and treats. Focus on your expenses and debt first before saving for retirement. Speak with a financial advisor to determine how:
- If you’re saving too much for retirement
- If so, how much you should reduce saving by, and,
- How much you should be putting towards debt repayment and saving.
Getting Used to Just Making It Each Month
Living paycheck to paycheck is the norm. In fact, 78% of Americans do so. Millions of people cannot control their financial situation or are trapped in a cycle of poverty – for example, single moms who do not have time to upgrade their skills or a person with a disability that leaves them unable to work. However, if you are in a place where you can make positive changes to how much you save, it’s crucial to get out of the cycle of living paycheck to paycheck!
Even setting aside $50 or $100 per month really does add up over time. If you feel you don’t have enough money left to save, undertake the following steps:
1. Audit Your Non-Essential Expenses
- Take a hard look at what you spend on non-essential expenses per month and how much you spend. Do you really need to order takeout more than once per week? While there’s nothing wrong with a treat every once in a while, consider cutting down ordering takeout twice per week to once per week. Can you do at at-home spa and commit to going to the salon once a month instead of every week? Evaluate every single expense you make and determine if there’s a cheaper way to get the same experience.
2. Know Your Worth
- If you’ve been working at the same job for a couple of years and haven’t received a pay increase above an inflationary raise, it’s time to ask for one. Keep a log of all the accomplishments you’ve made at work and hard numbers. For example, have you reduced company expenses by a certain percentage or closed a certain amount of sales? If your request is denied, consider looking elsewhere for work. Alternatively, consider taking on a side job outside of your day gig. I’ve personally increased my income by over 20% simply by switching jobs and taking on side hustles.
3. Consider Free or Low-Cost Alternatives
Instead of spending money to have fun, consider if there are cheap or free experiences. Even various simple pleasures like making a special latte and enjoying it on the front porch or buying a set of watercolor paints, brushes and a canvas and enjoying a quiet afternoon making art are low-cost ways to stay entertained.
4. Be Frugal When Grocery Shopping and Cooking
Aside from transportation and housing, groceries are an expense that can be re-evaluated. Undertake frugal practices such as grocery shopping with a list, meal planning and prepping, using items before they expire, buying in bulk and portioning meals into containers. While the process of grocery shopping and cooking takes time, I’ve personally saved nearly $1,000 per year simply by planning my meals and cooking in bulk.
Spending Money Needlessly
There are many ways to waste money that can add up over time. Even small things like forgetting to turn off the air conditioning, buying takeout coffee every day and failing to pay off your credit card in full cause you to spend more than you should. Take the time to make your own coffee at home, undertake frugal meal planning and grocery shopping practices and cut out any unnecessary subscriptions you don’t use. Small savings add up!
Planning on Saving But Not Now
“I’ll start saving next month,” you say. Time passes, and it’s been a year since you said that. Don’t sit on the thought of saving.. start now! When you not only save money but also invest it, you’ll benefit from compound interest – your money making money. The earlier you start saving, the faster you’ll be able to build good habits and benefit from compound interest.
Treating Credit Cards as Income
Credit card allowances are not income. Just because you have a $5,000 credit limit doesn’t mean you have $5,000! Credit is a tool and should be used as such. Never spend what you can’t immediately pay back. If this isn’t possible, at least avoid spending what you can’t cover with your next paycheck.
Justifying Purchases Because Others Have Debt
Just because other people have debt doesn’t mean it’s a good thing. As I mentioned before, debt means you’ll end up spending more in the long run.
Feeling Deserving of Items You Buy
“I work hard – I deserve it!”. Absolutely – to a certain degree. There’s nothing wrong with treating yourself to that new purse or set of golf clubs you’ve been eying for months. However, if you’re spending hundreds of dollars per month and justifying every non-essential purchase with this phrase, you need to curb your spending. I personally find balance by purchasing one special treat or experience per week and setting a spending limit for the week.
Lack of Financial Education
A lack of financial education is a huge reason why many don’t save or know how to manage their money at all. The good news is that it’s never too late to learn! Find a course on a platform such as Udemy like this one on the basics of financial literacy.
Financial Emergencies
There are many reasons why you should save money, but emergencies are, in my opinion, the top reason. Emergencies can prevent anyone from saving. Maybe your car unexpectedly breaks down or you need to pay for a root canal. Prevent the need to rely on a line of credit or put expenses on a credit card by setting aside 3-6 months’ worth of living expenses. I personally have never had an overdue payment on my credit card as I’ve been able to pay for emergency expenses in cash. Even setting aside a few hundred dollars per month towards building an emergency fund adds up over time!
Being Surrounded by High Spenders
Your social circle is a major determining factor in your habits. If you spend too much time around people who spend a lot of money, you’ll most likely start spending more money than you originally intended. Set boundaries by limiting how many times you go out to dinner with friends or visit the mall with them. While you don’t have to completely cut off contact with well-meaning yet high-spending friends, setting limits on how much time you spend with them will help you stay on track with saving money.
Psychological Factors
Everyone is different with their relationship to money. Emotional biases and the way you were raised have a major impact on how you feel with regards to saving money. For example, some may have grown up in a rich household and may have never felt the need to set aside money intentionally. Others may have grown up in a poor household and have a scarcity mindset which has caused them to oversave for retirement and neglect day-to-day expenses.
Understand your money personality by taking this quiz by NerdWallet.
Additional Resources
- Money Saving Hacks article by Frugal Fun Finance
- Being Frugal and Thrifty article by Frugal Fun Finance
- 27 Proven Ways to Save Money article by NerdWallet
- 4 Free Budgeting Templates & Excel Spreadsheets by NerdWallet
- 8 Simple Ways to Start Saving Money article by Bank of America
- 17 Essential Money Resources by Be More with Less
- 10 of the Best Budget Templates and Tools by Clever Girl Finance
A Final Word on Answering “Why is it So Hard to Save Money?”
There are many reasons you may be asking “Why is it so hard to save money?”. I hope this guide has been helpful in identifying the reasons why you may be struggling and has also provided you with some tangible steps you can take to start saving money including creating a budget, setting a goal and trying out different saving money hacks. Start with one or two strategies and slowly build up good habits.
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Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
