Have you ever felt like no matter how hard you try, you just can’t save money? Do you feel like, every time you try to take a step forward in your financial life, you get hit with an unexpected expense that sets you two steps back?
I’ve been there. In fact, most people I know have been there at one point or another. So, at least you’re not the only one. But that doesn’t mean you should just accept it.
Rather, if you want to finally reach a point where you are consistently depositing money into savings, you need to grab your financial life by the horns and wrestle it to the ground.
If you’re ready to do that, you have come to the right place.
For the rest of this article, I am going to identify ten of the most common reasons you can’t save money, and how you can conquer them.
1. You Lack A Good Understanding Of Personal Finance
Handling your finances properly — so that you can save money — is not a natural skill. In other words, you aren’t just going to wake up one day and suddenly start making great financial decisions. If you want to be good with your money, you need to learn how to be good with your money.
That means you need to invest time and energy into researching and educating yourself on personal finance. So, crack a book, follow some personal finance blogs (preferably this one), or take a personal finance class. Whatever you choose, just make it your business to learn the ins and outs of handling your money.
If you don’t know where to start, I highly recommend you read The Total Money Makeover by Dave Ramsey. This is the book that turned my financial situation around, and it is a great starter’s guide to getting out of debt, saving money, and building wealth.
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- The Dangers Of Not Saving Money
2. You’re Unprepared For Emergencies And Unexpected Expenses
Unexpected expenses can be one of the most defeating aspects of saving money. Like I said at the beginning of this article, it’s like getting knocked back two-steps after taking one step forward.
But truthfully, the term ‘unexpected expenses’ is a bit of a cop-out in my opinion. Why? Because unexpected expenses (i.e. medical bills, car repairs, home repairs, etc.) are a fact of life, and you should EXPECT them to pop up now and again. Moreover, you should prepare for them by saving an emergency fund.
If you never took the time to prepare for emergency expenses, you probably ended up taking on some sort of debt to pay for them. This is a reactive way to operate your finances, and paying debt for emergency expenses ties up your income and keeps you from saving money.
3. You Don’t Live On A Budget
If you can’t seem to save any money, and you aren’t living on a budget, then now is the time to start. Budgeting is an absolute necessity if you want to start, or increase the amount of money you save each month.
Budgeting is the best way to plan your financial life and track your progress. If you aren’t doing that, then how do you expect to save money?
If saving money is a priority, then go create a budget right now, and start actively managing your money.
4. You Have Credit Card Debt
Credit card debt is one of the worst things you can allow into your financial life. Between the ease of spending beyond your means, and the high interest rates that suck money from your life, credit card debt makes saving money a much more difficult task.
Additionally, credit card debt has a way of lingering in your life for a very long time. What starts out as a small, seemingly innocent, balance starts to add up, and before you know it, your minimum payments, alone, are costing you hundreds of dollars per month.
Every dollar you pay to a credit card company is a dollar that you can’t put toward savings. So, if you want to save money, stop using your credit cards and put an end to this vicious cycle.
5. You Owe Money On Your Car
Did you know that the average car payment in America is over $500 per month? And the worst part is, loan terms are getting longer and longer. Like credit card debt, if you are making monthly car payments, you are heavily restricting the amount of money you can save.
Think about it, if you are paying $500 per month on a car payment, you are sacrificing $6,000 per year in savings. That’s a significant amount of money.
You could go on two or three really nice vacations every year for that amount of cash. Or, you could throw that money into an emergency fund, and finally get ahead of some of those unexpected expenses. You could even contribute that money to your retirement, and watch it grow for the next couple decades.
Cars payments make saving money difficult. So, if you want to save money, you should pay off your car, or even consider selling it. A nice set of wheels isn’t worth sacrificing your financial security.
- Buying A High-Mileage Car: 10 Practical Tips
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- Budgeting For A Car: 10 Tips To Help You Save And Pay Cash
6. You Are “House Poor”
Most people don’t like to admit that they bought more house than they can afford. But if you are putting more than 25% of your monthly income toward a mortgage, and you can’t seem to save any money, then truthfully, your house is the main culprit.
This is often referred to as being ‘house poor’. And it is a major hindrance on your savings.
Throw a car payment and some credit card debt on top of it, and your opportunity to save money walks out the door.
Now, just to be clear, I am not telling you to sell your house. That is a very unique and personal decision. I’m just saying that if you are wondering why you can’t save any money, you should take an honest assessment of your mortgage, and determine if it is restricting your ability to save money.
7. You Confuse Wants With Needs
Wants and needs are very different things. And if you can’t seem to save any money, then you might be confusing the two. And honestly, at times, the difference can be subtle.
For example, when I was fresh out of college, I built and sold custom furniture as a side business. And in order to build furniture, you need to own a few key tools. However, I blurred the line between want and need, and used my side business as an excuse to buy just about any tool I wanted — even when I had all the necessary equipment to build furniture.
I would convince myself that I needed each new tool, because it would help me make and save more money. Yet, every dollar I earned just went toward the next tool.
What I NEEDED was to get a clue and stop spending all my money.
8. You Have Student Loan Debt
According to the Federal Reserve, the typical student loan payment is between $200 and $299 per month. (source)
And, for some people, it is much higher than that.
In other words, student loan debt is a crushing blow to your ability to save money. Similar to a car payment, it can consume a massive portion of your monthly income. And the longer you let that debt stick around, the longer you will struggle to save money.
Student loans could be restricting your ability to save by upwards of $3,600 per year.
9. You Are Paying Too Much Rent
I can attest that the cost of rent is pretty ridiculous right now. And it just keeps getting worse. Like paying too much for a mortgage, it can seriously hinder your ability to save money.
As a general rule of thumb, you should only be spending 25% to 30% of your take home income on rent each month. So, if your rent is higher than that, and you can’t afford to save money, then you might want to consider finding a new place to rent.
This is also where the concept of confusing wants and needs comes into play. For example, you don’t need granite countertops in your apartment if it is going to cost you $100 extra per month. You don’t need a garage if it increases your rent by $125. There are many upgrades and amenities that are nice to have when you are renting, but if they come at the cost of your savings account, they aren’t worth it.
10. You Are Dining Out Too Often
If you are wondering where your money is going each month, and why you can’t save any of it, then you might be dining out too often.
For example, when my wife and I are really diligent about grocery shopping and meal-planning, we will spend a total of about $500 per month on food. Whereas, if we were to get lazy, and dine out more than we should, we wouldn’t have any problem blowing our monthly food budget.
Dining out is tasty, fun and easy, but if you aren’t careful, it can be a major blow to your savings.
How To Start Saving Money
Ok, at this point, we have identified a bunch of different reasons why you might be struggling to save money. Now, let’s talk about how to turn things around.
In this next section, I am going to cover a few tips to help you fix your financial struggles, and finally start saving money.
I’ll warn you though, when it comes to personal finance, there is no such thing as an easy fix. Conquering your inability to save money takes work, sacrifice, perseverance, and discipline. If anybody else tells you differently, they are lying to you.
That said, if you are willing to do the work and fight to improve your financial life, the rewards are worth the effort.
Stop Playing Financial Defense
If I’m being honest with you, I tend to be a little impatient when it comes to personal finance. When my wife and I set a financial goal, I would rather work twice as hard in order to achieve it in half the time, than stick to a slow timeline. In other words, I hate playing financial defense. I like to attack.
And, if you want to turn your financial situation around, you need to adopt an offensive — attack-style — mindset.
That means committing and sticking to your financial responsibilities like budgeting, paying bills, earning an income, and paying off debt. It means charging full-speed ahead, and taking daily steps to improve your financial situation. And above all, it means persevering through difficulty.
When you decide to attack your financial goals, you will be amazed at the results you can achieve.
Get Your Spending Under Control
Hopefully this goes without saying, but if you can’t save money, you need to get your spending under control. It doesn’t do you any good to go through life complaining about how you can’t save money, if you aren’t willing to change your financial habits.
At the bare minimum, in order to get your spending under control, you need to get on a budget, track your spending every single day, and cut your expenses to the bone. And I’m not talking about dropping a couple small subscriptions and turning off lights more often so that you can lower your electric bill. I’m talking about cutting every unnecessary expense from your budget until you are out of debt and prepared with a six-month emergency fund.
Destroy Your Debt (For Good)
If you have any kind of debt, pay it off as quickly as you can. Every dollar that goes toward debt is just another missed opportunity to save money and better your financial situation.
And if you aren’t able to save any money, then you need to do whatever it takes to add a little financial margin in your life. I’m talking shock and awe.
If you are drowning in credit card debt, shred those money-sucking pieces of plastic and get to work paying them off.
If you can’t save any money because you are spending hundreds of dollars on a car loan, then sell the car and buy a cheap, used car instead. You don’t need a navigation system and a backup camera. What you need is an emergency fund, and a growing net worth.
Get aggressive with your budget, and pay off your student loans. Your college education was supposed to increase your earning potential, not bury you in monthly payments for a decade of your life.
Any debt you have is hurting your financial future, so get rid of it as fast as possible.
Save Money First
If you want to save money, then make it the highest priority on your financial list. In other words, the moment you get a paycheck, decide how much of it you want to save, and move the money into your savings account. Then, live off of the remaining money.
Don’t let the amount of money you save each month be determined by how much you spent. Rather, let your savings determine how much you are able to spend.
Make More Money (Seriously)
Sometimes the best solution when you can’t seem to save any money, is to make more money.
This is especially helpful if you need to pay off debt, but don’t have any room in your budget to pay extra.
If you want to make extra money, you basically have two options. You can either go get a second job, or start a side hustle of your own. The first option might not seem very glamorous, but a second job can add upwards of $1,000 to your monthly income, which can help you pay off debt pretty darn quick.
Starting a side business is less of a sure thing, but in many situations it can turn into a thriving full-time gig. So, if you have something you are passionate about, and you can make money doing it, don’t put it off any longer.
Just be sure you don’t start a side business that costs you a bunch of money to get going. The whole purpose is to make more money so that you can finally save money. Once your are in a better financial situation, you can entertain the idea of a business that requires some upfront costs.
There are all sorts of things that can keep you from saving money. But, if you take the time to identify why you can’t save money, and figure out how to conquer those obstacles, you will be well on your way to a better financial situation.
I hope this article will help you do just that!