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Americans are pretty awful at saving money. And 25% of Americans said they would give up showers in order to save money, so systemic issues, such as income inequality, are likely more to blame than individual habits. But don’t let that be your excuse. Even when you are nearly broke, you can still find ways to save here and there. You can cut out unnecessary expenses, eat your meals at home, and stick to a strict budget.
Are you getting bored yet?
It seems for some people, no matter how many articles they read or advisers they meet with, today’s wants simply outweigh tomorrow’s needs. That’s not to say there aren’t people who have money troubles for no fault of their own. But if your steady income is accompanied by a history of poor money management, unpaid debts, and bad financial choices, chances are good you’re just a terrible saver.
To help you understand why you can’t seem to put any of your paycheck aside, we’ve outlined some of the reasons people are so inept at saving. If you can understand where you’ve gone wrong, it will help you finally turn things around. Here are the major missteps of the savings-challenged.
1. You keep upgrading your lifestyle
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June 22, 2017
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No matter how much we make, sometimes it’s hard to save money. | iStock.com
Americans are pretty awful at saving money. And 25% of Americans said they would give up showers in order to save money, so systemic issues, such as income inequality, are likely more to blame than individual habits. But don’t let that be your excuse. Even when you are nearly broke, you can still find ways to save here and there. You can cut out unnecessary expenses, eat your meals at home, and stick to a strict budget.
Are you getting bored yet?
It seems for some people, no matter how many articles they read or advisers they meet with, today’s wants simply outweigh tomorrow’s needs. That’s not to say there aren’t people who have money troubles for no fault of their own. But if your steady income is accompanied by a history of poor money management, unpaid debts, and bad financial choices, chances are good you’re just a terrible saver.
To help you understand why you can’t seem to put any of your paycheck aside, we’ve outlined some of the reasons people are so inept at saving. If you can understand where you’ve gone wrong, it will help you finally turn things around. Here are the major missteps of the savings-challenged.
1. You keep upgrading your lifestyle
Aston Martin car
Are you taking a fancy ride to the poor house? | Aston Martin
When you get a tax refund or bonus at work, is your first thought to go out and splurge on a luxury? Impulse buying is one of the most dangerous habits consumers can develop, and it can be made even easier by sudden windfalls. This is how people get into the dangerous cycle of unnecessarily living paycheck to paycheck. What happens is you justify each purchase by telling yourself you still have money “left over.”
You might think of increased wealth as a chance to seek status symbols or lifestyle upgrades. Instead, use your newly acquired wealth to break free from old habits. If you resist the temptation to spend your entire paycheck, you’ll find a little security will give you much more freedom than a lifestyle upgrade.
2. You procrastinate
here’s a reason why “pay yourself first” is a golden rule of personal finance. It’s because if people don’t set aside money right away, most won’t do it at all. The general idea is this: Take a certain percentage of your paycheck, and allocate it to savings. And the remainder is what you’ll be left with to use for bills and other expenses.
Bad savers are often procrastinators, so they continuously tell themselves they’ll save later. To take the pressure off, these kinds of consumers can benefit from setting up automatic withdrawals each month. This gives you no choice but to save, so you can stop making excuses to put it off again and again.
3. You think saving is lame
Bad savers sometimes claim they like to “live in the now,” rather than prepare for the future. Do you ever feel like you are stuck in the present? It’s often a lot less glamorous and exciting than it sounds. You can’t have much fun living in the present moment if your present always feels like you are running out of money.
Savers are actually better equipped to take the occasional spontaneous trip or adventure because they don’t have to wait for their next paycheck every time they want to do something fun. Instead of focusing on what you want in the here and now — and being disappointed when you can’t afford it — start thinking about what you really want. If you can see past your immediate desires, your bigger goals will start to motivate you. Then, you’ll see saving isn’t a chore at all. It’s your ticket to financial freedom.
4. You’re afraid of money
A lot of people are afraid of not having enough money, but there are some who have the opposite problem. If you’re afraid of amassing too much wealth, it will be important for you to dig deep and find out why. Meeting with a therapist can help you uncover why you have a fear of obtaining financial success. One way this fear of money can manifest is through underearning. Financial educator Barbara Stanny addresses this issue in her book Overcoming Underearning.
5. You’re too nice
Do you freely lend money to anyone who asks? If you’re the family ATM, this behavior needs to stop. It will be difficult to save money if you don’t keep some of it in your bank account. Work to get over your fear of being seen as the bad guy, and practice saying “no” every now and then. Don’t agree to lend money if it would put your financial future at risk.
Also, remember your relationships could be at risk if the loan isn’t repaid (which is likely). A money etiquette survey revealed 57% of people said they have witnessed the breakdown of a friendship or some other close relationship because one person didn’t pay back the other.
6. You have bad habits
Your habits determine the quality of your life. This applies not only to your professional life but your personal life, as well. The ability to save money doesn’t just happen overnight. It’s a habit that must be developed over time. Until you learn how to consistently save money each pay day, you’ll continue to struggle. One great way to get started is to automate your savings.
7. You don’t have support
If you spend time with people who aren’t good at money management, their bad habits could eventually rub off on you. And if you’re a saver and you happen to marry a spender, you’re in for a lot of marital conflict down the road. Make an effort to keep company with friends and family members who respect money. Also, consider appointing someone to become an accountability partner. This way, when you’re tempted to overspend, you can give him or her a quick call.
8. You compare yourself
Comparing yourself to your neighbors or acquaintances is normal, but frequently engaging in this behavior could lead you to make some very poor financial choices. For example, if you always see others dressed well, this could cause you to feel like you don’t look good enough. You might start spending money you don’t have on new clothes, so you can fit in and look nice. However, those credit card purchases will catch up to you, and you’ll be left with a bill you can’t pay.
9. You don’t have financial goals
Before you can take a step forward, you need to know where you’re going. Progressing financially will require you to set and keep money goals. If you want to reach those goals, you need to consistently remind yourself of where you want to be in the next few years. Keep your eye on the prize by creating a financial vision board. Keep the board next to your bed, so you’ll be consistently reminded of what you’ve been working so hard to achieve.
10. You’re not motivated
If life has been going smoothly, you probably don’t think much about saving cash. However, life is unpredictable. A major emergency could knock you right off your feet. All it takes is an unexpected illness, a divorce, or a sudden death to change your financial circumstances overnight. If you can’t seem to get motivated, think about what your life would be like without an extra cash cushion.
Are you having trouble getting ahead with your finances? Have you been failing miserably no matter how hard you try? If you’ve tried everything and you still can’t seem to dig yourself out of debt, you might be contributing to your money woes.
When you find yourself in this type of situation, it’s time to take a good hard look at how you’ve been managing your money (or mismanaging as the case may be). Here are 10 types of ways you could be holding yourself back from reaching your financial goals. No. 8 is one of the biggest sins in personal finance.
1. You try to keep up with your friends
The grass is always greener on the other side — or is it? You might be envious of what your friends, family, or co-workers have, but things aren’t always as they seem. Remember that even though their grass looks greener, it still has to be watered. And it might be very expensive grass to water. Your neighbors could be enjoying the fabulous life because they’re living a borrowed lifestyle. Sure, they look flawless, but if it weren’t for the magic swipe of their Discover or MasterCard credit card, they might not be able to pay for groceries or afford their mortgage. Don’t go into debt just so you can keep up appearances. Run your own financial race.
2. You let your emotions rule your spending
Our feelings can add richness and depth to our experiences. For example, feelings of joy and excitement that accompany a positive life event can make that moment sweeter. However, emotions can also have a negative impact on us, making life more difficult. This is especially true when it comes to our finances. Emotional spending can get you into a world of trouble and land you in debt that’s hard to dig yourself out of. In a survey commissioned by NerdWallet and conducted by Harris Poll, 49% of respondents said their emotions caused them to spend more money than they could afford.
3. You procrastinate
No one is going to manage your financial life for you. Until you make the decision to get your money in order, you will continue to sink deeper into debt and have very little resources when you face a financial emergency. Now is the time to clean up your financial act — not tomorrow, next week, or when you get a higher-paying job.
4. You lend money to whomever asks
You won’t get your money back, no matter how much you beg | iStock.com/Alen-D
If you decide to lend money, be prepared to never see it again. Most of the time, those who borrow money never get around to returning it. And if they do, it’s usually not the entire amount. A study conducted by the Journal of Economic Psychology found that borrowers generally treat loans as gifts. So your best bet is to make sure you can afford to part with your money before you make an agreement. Also remember that you’re not obligated to give out loans just because someone asks. Set boundaries with your cash.
5. You’re being financially unfaithful
Are you hiding purchases from your partner or covering up a destructive financial habit? Financial infidelity can prolong poor money management. For example, if you have a shopping addition or a gambling habit, keeping this from your partner could prevent you from getting the help you need. A study conducted by YouGov on behalf of life insurance agency Haven Life found that one in five Americans are hiding debt from their partners, and one in six admit to having a financial secret. If you’re in a situation like this, it’s time to come clean so you can get on the road to financial health and repair your finances.
6. You’re not prepared for a financial emergency
Not having an emergency fund is a surefire way to head straight for a financial disaster. It’s generally best to put away some money each month for emergency funds. This will help provide a cushion when a financial emergency arises. Having enough cash saved can reduce your chances of having to rely on credit to make ends meet. In addition, you should also have money set aside for incidentals.
7. You blame others for your debt
Unless you were a victim of identity theft, you are the only one responsible for your debt. A 2017 NerdWallet study found that some consumers place blame on others when it comes to high-interest debt. Roughly 36% of respondents blamed credit card companies, saying they should stop charging interest on balances. Others blamed their employers (26%) for not paying them enough or retailers (20%) for not lowering their prices.
Stop blaming others and take responsibility for your debt. Getting angry won’t pay your bills any faster. Instead of finding someone to blame for your debt, take steps to pay it off. How? Pay your bills in full and on time each month, pay more than the minimum, and regularly check your credit reports for errors.
8. You’re not saving for retirement
It’s important to think about your future well-being, not just your present financial comfort. You’ll become your own worst enemy years from now if you don’t start saving for your retirement. Don’t reason with yourself that you have time, because the later you start, the harder it becomes to catch up on savings. And don’t say you’ll just work until you die. As you age, your chances of becoming physically unable to work rise. Approximately one in four of today’s 20-year-olds will become disabled before they have a chance to retire, according to the United States Social Security Administration.
9. You don’t have a clue about personal finance
You have no excuse for not understanding personal finance basics. There are plenty of good financial books, seminars, workshops, and websites out there. Unfortunately, research gathered by the National Capability Study revealed that nearly two thirds of Americans can’t pass a basic test of financial literacy. Take the time to educate yourself about saving, budgeting, investing, and retirement planning.
10. You have no financial self-control
One of the top reasons for falling behind when it comes to financial management is a lack of self-control. If you have trouble with spending, leave the plastic at home and stick to cash. Depending on the severity of your spending habits, you may also need to talk to a financial therapist to see if you have a deeper issue with money.
This message was edited by ferari on 23-Jun-2017 @ 2:33 PM
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