Enter the term ‘Why is it so hard to save money?’ into Google and you will find you are not alone in your frustration as to why you do not have sufficient savings in the bank and that actually doing the deed and saving money is a difficult task to undertake.
One of the good articles that came up on this search is also the one that appears at the top of the list. You can see it here.
While I do not agree with everything the fellow said, I do wholeheartedly recommend you read it. I like his ideas on scarcity because if you think scarcity or if you think prosperity, either tends to appear to make you right in your thinking.
For instance, how many people do you know, and you may be one yourself, that thinks a regular savings plan is a terrible cramp on their lifestyle?
Why is it so hard to save money? Often it is simply because you do not want to.
If you do, read on. I have some ideas for you to think on myself.
How To Save Money
The idea of a budget is something most folks know they need to do. Often, budgeting our money is another thing along with saving money in a disciplined fashion that we simply do not want to do. Often because it is depressing as you try to stretch your money to meet your current outgo.
Fear of realizing just how much of a gap there is between what we clear on our paychecks and what is left to pay after your paycheck is gone makes some folks nauseous.
How to budget is not the point of this article. Franklin Covey, Quicken, etc. all have tons of tools to help you set up a budget. I myself use Quicken with Business Tools.
A budget is not necessary per se, but if your outgo is more than your income you will need to prepare one that works and you will need to do it now.
Did I say not necessary? Well, I am going to stick to that statement but a budget makes things easier.
Saving money needs to be a part of your budget, otherwise you will never accumulate significant savings.
How to save money? Take the money and stick it back and forget it. I know. Easy to say; I don’t have your bills. I did. Most likely the first time will feel good for about five minutes or five days. Then the pressure to spend it – good cause or bad cause is irrelevant- and it will be gone. No matter. Remember how good it felt to see money that had been set aside for you.
Treat Yourself As You Would Treat A Creditor
To whom should your first loyalties be? Yourself or some banker who loaned you money knowing you may never be able to pay it back?
Predatory lending is rampant today so you should not feel badly about treating yourself and your future as more important than a creditor. You loyalty should be to yourself and your savings first.
It is a fine point, but the mindset will help you to develop the attitude that not spending money is a joy and a pleasure rather than a burden, an act of denial and self-sacrifice.
I mean, think about it. Why is the idea of paying oneself a percentage of your own income every month an act of self-sacrifice? It is because we have been taught that to deny our immediate urges for immediate gratification on what we want is horrible and that we ought to be able to live on our impulses.
Greek chorus shout: “What do we want?”
Answer: “I don’t know!”
Greek chorus shout: “When do we want it?”
Answer: “Right now!”
To be fair, you do need to pay your bills, pay them on time and pay them that are debts off. Debt is an drain on future earnings that needs to be gotten rid of.
Pay yourself first as you have been paying your creditors. Yes, it may be like walking on glass starting out because you know that money is sitting in your savings account or in the coffee can or in the back of the freezer but try it just once.
Put 10% of your net into your savings and then struggle to pay your bills on 90% of your income. I suspect your struggles will not be any harder or the phone call count from creditors higher.
Look at it as though you had pay cut or had to change jobs and take less money. If either happened you will need to learn to make less do more, right? Do it own your own terms is all I am saying. After ten pay periods you will have accumulated an entire paycheck.
One way to do this is to have your savings taken out of your paycheck automatially. Your company may have a deferred compensation plan in addition to your pension or 401(k) plan.
The only way you are going to accumulate wealth is if you stop giving it away to the ones who guilt you into giving it up (family, friends, social parasites) or who deceive you into giving it up (‘sales-save 50% today only!’ or ‘buy this smell good crap and women will fall at your feet.’)
There is also what I call the nickle and dime gang.
Time, second grade for me. Place, West End, Birmingham, Alabama.
My mom had given me enough money to walk up to he corner grocer two blocks up the street and buy the toy I had been lusting after for weeks, a Dick Tracey Detective Kit. It included a snub nosed pistol, a pair of handcuffs, a two way camera watch and some other odds and ends.
The price? A whopping $1.59 for this treasure trove of childhood fun.
My cousin, who will remain unnamed forever more, was a good bit older than me. He knew my generous nature and so he asked me if he could borrow a dime. I gave it to him. Some time later, he asked me for a quarter. I gave it to him. Soon, my two dollars had shrunk to less than the $1.59 plus tax needed to by my Detective Kit.
I asked for enough money back to get it. He refused . Karma pays justly, m’man. Believe it.
Some lessons, especially the hard one’s that cost you money and make you feel stupid, are the ones that stick with you through life.
Going home, I asked my mom for more money. She asked me what happened to the money she gave me. I told her how my dear cousin had tricked me a little at a time until I could no longer afford to buy my heart’s desire.
Now, she was mad, Lord have mercy, she was mad. She was mad at the both of us, though. Him for being a sorry ass teenager that would steal from his 9 year old cousin and me for being so stupid.
She told me to consider it a lesson learned and never forget it. I never did buy that Dick Tracey Detective Kit. Even later on, when I had sufficient money to buy it, there was such a bad taste in my mouth about it that I could never let go of the money to buy it much to my mom’s amusement.
How Many Hits Can Your Future Earnings Take?
Buying things on easy credit terms does the very same thing to your future earnings. It not only obligates your future earnings for the costs of whatever crap it is you think you just have to have or you will just die, but it makes you pay for the use of that money NOW in the form of interest.
If your credit is bad and you have to pay 20%+ interest on your purchases, you have to remember that not only are you going to have to pay the money back, but you are going to have to pay interest on it. You are going to have to pay taxes to the government on those future dollars and you are going to have to deal with the ravages of inflation on those dollars which no longer will buy what they bought before.
Here is a thought: If you cannot afford to pay say $X for something, then why in the world do you think you can afford to pay $X + 20%?
Buying something on sale on credit is never to your advantage no matter the discount.
The banks used to be in a symbiotic relationship with the economy and her citizens. Today, banks are parasites who cajole and take advantage of your ignorance and gullibility and simply do not care how much trouble it causes you.
Banks have forgotten that they exist in order to help the economy and its citizens prosper; the banks are not the point.
Next time I will make a case for why keeping your savings in the banks is a bad an idea.
Note: Nothing here is to be construed as financial or investing advice of any kind. As with any issue impacting your finances you should consult with your financial advisors before making any decisions. To be explicit, we do not give investment advice. All of this is my opinion.