Almost everyone in the United States has issues saving money. In fact, the vast majority of people have less than $1,000 saved in case of an emergency. Even worse, 25% of adults do not have any savings whatsoever. It doesn’t even matter how much money you make. You could be earning just $20,000 a year or $100,000 a year and still be living paycheck-to-paycheck. How does this happen? And what can we do to change our habits in order to save more money for a rainy day?
The answer to this question is complicated. Every person has a different situation. You could have a medical condition, maybe you lost your job, or you have children to take care of. This list is not meant to be a catch-all for every single person. You may not relate to some of the things on this list. However, there are certain things that most people do that are draining their bank accounts without them realizing it. But it truly is possible to change your financial situation as long as you understand the big picture. Here are some of the top reasons why people cannot save enough money. Take a look at our list and find out if some of these may help you save more.
30. Expensive Car Payments
In America, there is a huge car culture. People judge one another based on the type of vehicle they drive because they believe it’s a status symbol that shows how successful they are. This belief often pushes people to buy cars they cannot afford. Even if you can technically afford to pay your car payment every month, that doesn’t mean it’s the best financial decision.
According to a report from The Washington Post, seven million Americans had their car repossessed after falling behind on their payments for three months. All of these people were approved by the dealership who felt confident that they could actually afford it. If you are still in debt to student loans and credit cards, that $300 to $500 per month you are spending on a car payment will add up to $3,600 to $6,000 in one year. With that kind of money, you could go to a used car lot and buy a car in cash that could potentially last you for at least five years.
29. Not Automating Your Savings
Sometimes, saving is easier when you don’t even have a chance to touch the money. If you already have both a checking and savings account, you can go to your company’s HR department and ask them to deposit a certain amount of money into your savings account every time you get paid. You can also set up automatic withdrawals into savings with most banks.
There are also certain apps that will help you automatically save money, like Acorns. This app will take your spare change when you go shopping and automatically transfer it into a savings account. For example, if you go to a store can you buy a cup of coffee for $2.50, the remaining $0.50 will go into a savings account. Yes, this is a very small amount of money, but a lot of people find this to be very helpful. Even your spare change will add up over time and help you save for a rainy day.
We have all been a victim of “FOMO,” or “Fear of Missing Out” at one point in our lives. Most people don’t want to miss out on all of the fun things their friends and family are able to do. Certain life events like going to college, taking your kids to Disney World, and traveling to Europe are things that people are afraid to miss out on. Even if someone can’t actually afford to do these things, they will take out loans and credit cards, because they feel it’s worth getting into debt just to have those experiences.
In a lot of ways, FOMO dictates people’s financial decisions. It can make people do irrational things when they are afraid of missing something special. Back in 2017 when Bitcoin was going up to $20,000, people were dumping their money into it without fully understanding the technology and ultimately lost money. So the next time you have the urge to dump money into something, ask yourself if you really want it, or if it’s just FOMO.
27. Ask This One Question Before You Shop
Have you ever gone into Target or Walmart for one thing and left with a cart full of stuff? Stores have literally designed their layouts to make you buy more than you actually need. So the next time you commit to putting something in your cart, ask yourself, “Did I need this yesterday?” Do you genuinely want it, or are you now a victim of clever marketing?
By asking yourself this question, you can stop yourself from spending too much on things you don’t actually need. Another helpful thing to do when you go shopping is to track your spending. For example, once you see how much money you spend at Target every month, you might realize that it could be draining most of your income.
26. The Tribal Mindset
For years, human beings lived in small tribal communities. They were hunter-gatherers and only the strongest survived the harsh conditions of the Earth. The smartest humans became the leaders, and the strongest were able to mate and pass on their DNA. Even though we have evolved so much as a species, it’s only natural that we keep comparing ourselves to other human beings. It’s in our DNA to survive. So we are very literally hard-wired to “keep up with the Joneses.”
However, you should not use this as an excuse to keep spending so you look as rich as your neighbor. Instead of allowing your base instincts to get the best of you, take a step back and evaluate. Even if everything in your body is telling you that you need to buy something that your neighbors or friends have, is it really necessary? Try to curb your natural impulses before you waste money on something you don’t need.
25. Phone Payment Plans
Most major phone carriers like AT&T and Verizon offer plans for their customers to pay monthly installments on their phone and service cost. This might be around 80 to $100 a month. A lot of people think that this is all that they can afford, so they buy into these plans. As soon as the newest iPhone comes out, they rush to trade in their old phone and continue with the same plan. The problem with this is that you are basically renting your phone instead of buying. And it keeps you in this situation where you will pay for more in the long run compared to buying a phone outright.
Now, we know what you’re thinking: I can’t afford to pay for the newest iPhone. All you really need to do is wait until a new phone is announced, and go buy the previous model. For example, when the iPhone 10 first came out, it was around $1,200. Only a year later, they came out with the iPhone XR and the iPhone 11. By the time that the iPhone 11 was announced, the iPhone XR could be purchased outright on Amazon for just $450 a month. You could choose to keep it for several years, and you could choose a different carrier that offers a cheaper phone plan. Compare that to $100 a month which ends up being $1,200.
24. Convincing Yourself You’ll Do It Later
Almost everyone has fallen into the trap of thinking that they will start saving someday in the future. They might think that they need to wait until the timing is right or until their kids are out of school. Or, they think that as soon as they get a promotion or a better job, they ‘l start saving with the extra money that they earn. There is always an excuse as to why you can’t save right now.
These milestones come and go, and people choose to take a lifestyle upgrade over saving money. They’re still not saving in the ways that they thought they were. This is a lot like excuses people make about losing weight. They might think that one day they will get that gym membership and change their life. However, all of these are just excuses.
23. Student Loans
Millennials are in more debt than any other generation that came before them. Many of us are over-educated and underemployed so we can’t find the high-paying jobs we hoped to get after graduation. Some people have such high student loan payments that it is equal to having a mortgage. So for a lot of young people, the reason why they are broke is plain as day. They have far too much student loan debt.
If you are in this situation, the only way you can potentially make it better is to have a concrete plan for paying off your debt. Calculate all of your existing debt and figure out which ones are charging the highest interest rates. Typically, private student loans and credit cards are going to be the most expensive, and you might want to pay those off as quickly as possible. You can also look into potentially refinancing your debt, as well. This could potentially free up a few hundred dollars a month that could go towards saving for your future.
22. You’re Not Scared Enough
Some of you out there want to have a positive mindset and you should live with abundance if you want to succeed. But if you want to save more money with the income you already make, you need to make yourself scared for your own future. By convincing yourself that everything is fine, one year can pass by in the blink of an eye. Before you know it, you’re close to retirement, and panicking about how you will survive on Social Security. So instead of letting that happen, get scared right now. If you haven’t done so already, do yourself a favor and watch Dave Ramsey’s video titled “How to Become a Millionaire”.
Once you understand the concept of how this works, check out this Roth IRA calculator. You can calculate your age, and how much money you can afford to put away each month. Depending on how old you are, you might see just how little time you have left to retire with a healthy nest egg. This might be enough incentive for you to start saving toward your future.
21. Credit Card Debt
Trying to pay off credit card debt is like trying to pour buckets of water overboard from a sinking ship. As long as the hole in the bottom of the boat is still there, you can never keep up with how quickly it’s pouring in. When you make the minimum payment on a credit card, only a small amount of that money is going towards the principle while the rest goes towards interest. Paying interest on credit cards is very literally like flushing money down the toilet, and most people have no idea how much they owe on each card. This ultimately wastes thousands of dollars that could be saved for your future.
A good exercise in paying off credit cards is to go through each account, and write down the interest per month on the front of the card in sharpie. The next time you even think about spending on it, you will be reminded how much extra you need to pay on top of your purchases.
20. No Savings Plan
If you want to save money, you absolutely have to write the numbers down on a piece of paper. This is not meant to insult your intelligence. Everyone can do mental math in their head about roughly what they could afford to save each month. However, it is very easy to forget certain expenses when you are just thinking about it. And it is far less likely that you will actually commit to a different budget unless you write down a plan that actually works.
For example, if you write down a monthly budget and realize that you have $3,000 of expenses and only earn $4,000 a month, that means that you have $1,000 left for entertainment and savings. It’s okay to give yourself something fun to do each month, but you need to know how much you can afford to set aside. Try to look into the future and think about your retirement.
19. Fear of Investing
Investing can seem like a very scary thing. It requires knowledge of math, and you have to learn vocabulary that you might not understand. When Hollywood depicts stories about stockbrokers, we always see a very male-dominated, testosterone-fueled environment of men screaming numbers at one another. Some people feel too intimidated to even get started. So they decide to stay away from investing. But you don’t have to be afraid. With apps like Robinhood, you can do it on your cell phone.
Just like anything else in life, you can learn how to get started. Websites like Investopedia has entire pages dedicated to every single investing term you could ever need to know. Most of them also have YouTube videos included on the page. There are also books you can buy, like The Little Book of Common Sense Investing. Another great book for beginners is Rich Dad Poor Dad.
18. The American Dream
Everyone in the United States is the victim of the American Dream, whether we are conscious of it or not. It’s the idea that every single family needs to buy a house, own a car, and go on vacation every year. Even though there are so many other cultures around the world who rely on public transportation or live in multigenerational households, Americans feel like they are pushed into having more. And if they don’t have their own place to live or a car to drive, they feel like a failure.
For some people, all they need to stop themselves from going broke is to move back in with their parents for a year or two. There is absolutely no shame in doing that, especially if it means you are giving yourself a better financial footing for the future. But so many people choose to struggle financially so long as it gets them closer to the ‘American Dream.’
17. Becoming Complacent With Debt
Sometimes, debt can become so overwhelming that we need to simply cope with the reality of our problems. Eventually, complacency sets in. We accept the fact that we may never get out of debt. You might hear people saying things like, “I’ll be paying back my student loans until I’m 70,” as if it is already set in stone. It is very sad to hear people say this because it doesn’t have to be this way. There are many paths to reduce your debt at an early age.
Instead of being complacent, get empowered. Start watching YouTube videos, reading books, and listening to podcasts about money. We recommend reading The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness by Dave Ramsey. He also has a YouTube channel where he will take calls from real people and give them advice about their financial situations. Once you begin to hear stories of people who became debt-free, it might inspire you to get out of your rut and change your life.
16. The Consumer Cycle
Never heard of the consumer buying cycle? The three steps are awareness, consideration, and purchase. For example, maybe you heard about new products like The Shake Weight or Fidget Spinners from online or TV. That is awareness. Most people are not going to rush out to buy something new the first time they see it. They stop to consider it a while. And, maybe they will see it a few more times on commercials. Their friends and family will start buying Shake Weights and Fidget Spinners. Eventually, they finally decide to make the purchase.
Unfortunately, as we go through this consumer cycle, most people buy these fad items that become boring and useless only a few months later. We look back on a lot of the things we bought and realize that it was a total waste of money. Once you become aware of how the consumer cycle works, you are less likely to fall for fads. The only way to save money is to only buy the things you actually need and ignore the items marketers are trying to sell you.
15. Too Many Subscriptions
A few years ago, cord-cutting was a new trend among money-conscious people. Early adopters of Netflix realized it would be far cheaper to cancel their cable subscription in exchange for a streaming service that costs only $10 per month. But as the years have gone on, there are so many different subscription services out there to tempt us. Buyers have Hulu, Disney+, homework, HBO, Apple TV, ESPN, and other apps for entertainment. Even food and clothing have turned into subscription services with companies like Hello Fresh and Rent the Runway. Most of them are so cheap that we feel like we can justify paying for a service. But before we know it, all of our subscriptions might add up to over $100 a month. This sort of defeats the purpose of cutting the cord on cable when you are paying the same amount or even more for subscriptions.
If you already have an Amazon Prime subscription for free shipping, then you already have Prime Video. This is the best deal that you can possibly have since you are getting more with the Prime service besides video streaming. While they might not have some of the shows that you can find on Netflix and Disney+, they generally have most of what you would need to get by on a daily basis. They also have original television series and movies you can only find on the platform. Luckily for you, Netflix allows you to freeze your account so that all of your favorite shows are still there. If you are trying to save money, go through your subscriptions and try to see which ones you can do without.
14. Going Out to Eat
At the end of a long day at work, you might feel like you don’t have the time to cook anything at home and go out to eat. It is convenient because you don’t have to do any dishes afterward. Other people are waiting on you, and you don’t have to do any of the work. However, there is no denying that going out to eat is far more expensive than eating at home. The cost of a meal for just one person at a restaurant is more than enough to pay for your entire family if you were to eat at home.
If you find that you’re struggling making food at home, it might be best to meal prep. Buy some meal prep containers online and pick a day when you’re feeling rested and energetic. For some people, the best time for them to start their meal prep is on a Sunday night. They have had the entire weekend to relax and they are getting ready for the week ahead. Once you get in the habit of meal prepping, you’ll find that it is actually very easy. Instead of feeling like it is a huge chore, you might eventually start to look forward to the process.
In the United States, we have to pay a lot for healthcare. Whether it is through our health insurance premiums every month or in the form of hefty medical bills, most of us have had some kind of unfortunate run-in with paying for healthcare. And unfortunately, it is the number one cause of bankruptcy in our country. If you are lucky enough to be in a position where you do not have any issues with your healthcare costs, make sure that you have insurance.
The government allows us to skip out on our insurance so long as we pay a fee when we are doing our taxes. But the tremendous cost that you would pay if you actually ended up in a hospital is too much to risk. If you don’t want to be broke for the rest of your life, make sure you are covered when it comes to healthcare in America. Apply online at Healthcare.gov.
12. Impulse Buying
The biggest drains of money is impulse purchasing. We’ve all done it at some point in our lives. Maybe you walked into a Walmart only planning to buy a gallon of milk but you end up leaving the store with an entire cart full of items. Depending on where you live, there might not be a lot in the town for you to do. Shopping at places like Walmart could become a form of entertainment on a weekend. Unfortunately, getting into the habit of impulse buying is going to keep you broke.
Next time you go into a store like Walmart or Target, remind yourself that you have to keep on task with what you came in for. You almost need to have blinders up in order to avoid all of the interesting and shiny things that you will see in front of you. If you struggle with sticking to a budget, try out Walmart grocery pick-up. They’ll bring out groceries to your car for free as long as you spend a minimum of $30. This can help you stick to buying the things you actually need instead of grabbing things off the shelf.
11. Lack of Accountability
One of the biggest obstacles in the way of saving money is a lack of accountability. If you are the only one who is checking in on yourself, you are going to be more likely to slack off. Just like achieving any other goal in life, it might be easier to have your partner to hold you accountable when it comes to saving money. When you have an accountability partner, you can check in on one another to see how much money you have saved.
It may even be fun for you and a friend to create a challenge together. If one person fails to save a certain amount of money during the month, they must pay their friend a certain amount of money. By building in this incentive, it gives both people a reason to keep up with it. If they are struggling, they also have someone to talk to who understands what they are going through.
10. Keeping Credit Card Information Saved
Nowadays, almost every shopping app and website wants you to save your payment information. Google Chrome even has a feature that will allow you to keep your card numbers saved in case you can’t find your wallet. And Amazon has one-click shopping too. While this all seems very convenient, it makes it far too easy to accidentally spend more than we should.
If you remove your credit card information from the Internet, it forces you to take that extra step. As silly as this sounds, that little bit of extra time might help you to avoid spending the money altogether. You’ll only search for your card if you really want the item.
In today’s world, women are struggling with the fact that they want to have it all. They want to have a full-time career, get married, have children, buy a house, and basically figure out how it’s possible to transform ourselves into Wonder Woman. Unless you work from home, you’ll have to find some sort of child care. In most states, child care is so expensive, that you may actually be breaking even with what you make at your day job. Instead of automatically assuming that this is the only way you can keep your career, sit down with your partner and have a conversation about your options. Ask your boss if you could possibly work from home if you have not done so already.
If you can reduce your hours to part-time and save hundreds of dollars, it may be worth doing that temporarily until your kids are old enough to go to school. Some women decide to give up their jobs entirely because they realize that child care costs more than what they earn. There is no shame in giving up your job to raise children. In fact, being a mother is one of the most difficult yet rewarding jobs there is. It doesn’t make sense to go broke working a job when it would make more financial sense to stay home and avoid child care expenses.
8. Feeling Richer Than You Are
When you were a student, you most likely had to learn how to live on a very strict budget. Life was filled with finding opportunities to get free food. Once you get your first full-time job as an adult, you suddenly feel like a rich person. For the first time in your life, you can actually afford all the things that you wanted. You might feel rich in comparison to your old self. However, if you had continued to live the life that you were living as a student, you could have saved the rest.
One of the best ways to save money is to pretend you are poor. Always spend less than you actually make. If you are making $50,000 a year, try to imagine that you are only making $20,000. How would your life be different if you made for less money? Once you start living below your means, you can actually start setting money aside for Investments.
7. Skipping Your Retirement Plan
If you work full-time, you may be lucky enough to have an employer who offers a retirement plan. Some people choose not to withdrawal from their paycheck into their IRA, especially if they are young. However, if you are choosing to skip out on the retirement planned, you are seriously making a mistake. Most employment retirement plans will match your contributions to your IRA. This means that whatever you decide to save for your future is magically doubled. It is very literally like getting free money handed to your future self.
Best of all, it’s taken out of your paycheck before you ever see it. So there is no temptation to spend it on things that you do not actually need. If you originally said no to IRA contributions when you were first hired, it’s not too late. Set up an appointment with your Human Resources Department and ask how to start withdrawing from your paycheck into your IRA.
6. A Lack of a Budget
Okay, we know there will be some groans and eye-rolling at this one. Every single finance article out there tells you to make a budget because it truly is so valuable to get your life in order. Some people are afraid to make a budget because they are terrified to see the numbers that might tell them just how broke they really are. They would rather continue on living their life without worrying so much about it. But if you refuse to make a budget, you’ll always be broke. The only way to fix a problem is to face it head-on.
There are a lot of apps out there that will help you make a budget. But all you need is a good old-fashioned pen and paper. You can also use free tools like Google Docs and Google Sheets, which can be accessed from all of your devices. Still feeling intimidated? Check out books likeHow to Manage Your Money When You Don’t Have Any. This will make you feel more comfortable with getting in control of your finances no matter how much you make.
5. Income Too Low?
This may sound obvious to a lot of people, but if you can’t save money, you just might not be making enough. Easier said than done, right? If you have already written out a budget, and there is almost nothing left once you have paid all of your bills, then you really might need to look for a new source of income. No matter who you are, you deserve to live a happy and comfortable life. You deserve to earn a living wage. So if you are not making enough to take care of yourself, something needs to change.
Sometimes, it takes a long time to find a new job. You will probably have to create a resume on LinkedIn and begin sending it out on websites like indeed. Imagine yourself working in a job that you love making a good amount of money. Whether you believe in spirituality or not, manifestation is a powerful tool in raising your confidence.
4. Amazon Makes Shopping Too Easy
If you have an Amazon Prime account, you already know how it completely changes your life. Instead of searching through multiple stores for the things that you want, it is as easy as doing a quick search and having something delivered to your door within two days. Since this is such an easy process, we all buy more things then we may need.
Instead of putting items in your cart and buying them immediately, start putting the things that you want on a wish list. Amazon allows you to make as many wishlists as you want, so you can always create separate categories. Give yourself at least 24 hours before you actually commit to the purchase. Some people like to wait an entire week to see if the urge to buy gets out of their system. If you go back and look at your wishlist once a week, you’ll realize that a lot of the things you thought you wanted desperately are actually not worth the money.
3. Peer Pressure
If you thought peer pressure ended in high school, think again. Even adults can experience peer pressure from their friends, family, and co-workers. Think about all of the times you didn’t exactly want to do something, but you went along with it anyway, for the sake of maintaining your friendships. Activities like going out to eat, gambling, and drinking are fun, but they are a drain on your bank account. Or you might feel pressure to buy a new suit, watch, or car to keep up with your co-workers.
True friends will understand if you have to say “no” to peer pressure every once in a while. Inform them that you ran the numbers, and you have given yourself a strict budget each month. It will still be possible for you to spend time with them, but you just need to do things that don’t cost as much money. Once you take responsibility for your own finances, it might inspire your friends to do the same.
2. Lifestyle Inflation
A lot of people live with the assumption that if they were to ever make more money someday, they’d start saving. In reality, most people do something called “lifestyle inflation.” As soon as they start making more money, they buy things that they could not afford before. Maybe they want to upgrade their old car and get a newer vehicle. It is completely understandable to want better things for yourself, but many people go overboard.
Lifestyle inflation is one of the number one reasons why people stay broke. If you spend everything you make, it is impossible to save. At some point, the “honeymoon period” of having a higher-paying job stops and you need to continue to live below your means. Remind yourself of how long you survived at a lower wage, and how it’s possible to go back to being frugal. Only this time, the extra money can be saved as a safety net.
A lot of people work very hard for their money, and they feel that they deserve to get the things that they want. Unlike overeating, you cannot see the physical manifestations of overspending on your body when you look in the mirror. You truly do deserve to treat yourself for your hard work, but it is also looking at things the wrong way. By saving, you’re still investing in yourself. It is just investing in your future self years down the line. Try to imagine how grateful you will be knowing that your past self was thinking about the future. At the end of the day, saving is still spending money on yourself. Once you learn to enjoy it, investing can change your life.