A Few Reasons Why Saving Money Can Be Difficult

There are several things that can hinder our ability to save money effectively. Financial accountability is a proactive endeavor. It is easy to become complacent and comfortable with our spending and saving habits. But the financial world never remains stagnant, so our habits cannot either. If we do not pay close enough attention to our income-to-outcome ratio, we can find ourselves dipping into our savings. It is important to narrow down the fundamental variables that may be causing our savings to decrease. Here are a few reasons why saving money can be difficult: 

Beginning with reason number 1, Spending way more than what we are currently earning. This is one of the most common reasons why we are in this kind of predicament. When we prioritize purchasing our immediate wants over paying off our debts, we can fall financially short. To solve this problem, let us look at a helpful principle for guidance. The 50/30/20 rule is a financial savings compass when it comes to finding maneuverability with your hard-earned money. This also can be used to execute and follow sound budgeting skills that can carry you for the rest of your financial and personal endeavors. The moral of the principle is as follows, allocate 50% for needs, 30% for wants, and 20% for debt and savings. The most important component of this rule is the 30%, if your wants (extremities) cost 30% or more of what you bring in for your income, consider reevaluating the money you spend on life-styling things over life-sustaining ones. 

Reason number 2, is the overwhelming amount of debt. According to Bankrate, “as of September 2022, consumer debt is at $16.5 trillion, with the average American debt among consumers at $96,371.”  Paying off our debt is the most important thing we can do to keep good credit. How do we stay on top of these payments? The key is to set up an account that is allocated for paying off debt. Following the 50/30/20 rule, we can allocate 20% of what we earn towards our debt. If your debt exceeds 20% of your income, evaluate the interest rates of your loans and determine which ones will cause more financial harm if a payment must be missed. Missed payments on debts with high-interest rates have a snowballing effect that, if not prioritized, may become un-payable. 

Reason number 3, financial priorities are not in order. We have to identify what we should financially prioritize as we move up in our personal life and career. This includes anything from pursuing higher education, purchasing a home, or investing in other high-value assets. Understandably, higher costs and future purchases are hard to save for because of changing immediate needs and out-of-your-control economic fluctuation. It may require sacrificing an amount of lifestyle spending. Ultimately, it requires a balance of patience and strategic action. Saving for your future requires learning financial intricacies and the nuances of your own financial situation. Within the rule, 20% accounts for debts and savings. Take time to analyze your personal finances to decide what percent goes toward savings and how much pays off your debt. A little goes a long way when it comes to the future - even if you can’t save as much as you would like, putting any amount of money into your savings account will get you closer to your future goals if you are flexible with their timing. 

Reason number 4, not taking retirement savings plans as seriously as we should be. Retirement plans offered by employers should be researched. Employers will often incentivize you to accept their retirement plans. It is within our best judgment to determine how we want to invest in our retirement through our employers. Consider high-risk and low-risk investment options and align them with your flexibility and your occupational timeline. If possible, max out employer matching towards your 401(k). This can create fail safety for 10-20 years down the line whenever we happen to need money for unexpected financial events or to simply retire comfortably. If you are interested in what kind of benefits are provided by having a 401(k), click here to find out more.  

Any fiscally effective plan centers on financial literacy. If you would like to become more financially literate, contact us at financiallyfitemployees.com

Here to help,

Your Financially Fit Team