At the end of every month, are you asking yourself “Why Can’t I Save”?
Do you have little or zero savings and can’t figure out what the issue is?
You are not alone.
According to Bankrate’s 2023 Annual Emergency Savings report, 22% of U.S. adults have no emergency savings at all.
You’re looking to make a change and that’s fantastic!
Let me help you find a solution to your problem. We are going to take a look at a variety of reasons why this could be happening so you’re able to identify the problem and make a change.
Your Budget Isn’t Exactly Accurate
If you haven’t created a budget yet, step one is doing that.
Once you have a budget, you have to go backwards and look at a month’s worth of spending to make sure that the budget is realistic.
Maybe you budget $500 per month for going out to eat. However, when you look back at last month, you spent $780 on going out to eat. Now you have two options.
- Keep your budget at $500 and stick to it. This may require you saying no when you’re asked to go out to eat or when you have “nothing to eat at home”.
- Change your budget to a realistic number that you can manage and stick to the new number. This may require you to lower some of your other expenses. Is going out to eat a priority to you?
Your budget has to be realistic. The only way to determine if it is realistic is to audit your spending.
Unexpected Expenses Are Constantly Popping Up
There are definitely unexpected expenses in our lives. This has to be included in your budget.
I am not going to say that you knew your car was about to die. You definitely didn’t know your roof was going to have a major leak.
We have to budget for these unexpected items and include them in the monthly plan. An emergency savings is needed for things like a car breaking down or a roof leak.
Saving for a new(ish) car should be a line item on your budget as well. A budget should not only include the receipts you have for the previous month.
You are going to want to go on vacation at some point. You will need to visit the doctor at some point or require new glasses or contacts. Nobody knows you better than you do. Budget for large purchases. Look at the big picture when creating your budget.
You Want The Best Of Everything
We all have the items that are most important to us. This can’t be everything. We have to choose the things that we are willing to spend more on and set a realistic expense for these items that fits into our budget every month.
When that amount is spent, it’s spent. Wanting more than you can afford will destroy your budget.
This may be a deeper issue. Do you have a shopping addiction? Think about this for a moment.
I would suggest seeking help if you feel as though this could be a possibility. Knowing that you are not able to contribute to savings may unlock some deeper issues that you have in relation to money.
Your Set Expenses Are Too High
Perhaps you have a mortgage that is right at the recommended maximum of 30%. You still have 70% of your income leftover, so you should be fine… right?
Wrong if you have other fixed expenses eating away at your income. Do you have a larger car note than you can afford? Do you have multiple reasons why you have to have this certain car and no one can tell you otherwise?
Perhaps you have a student loan or some other type of personal loan eating away at the remaining take home pay.
Take a step back and look at your expenses in detail. If you are not paying off your credit cards in full every month, you could be paying hundreds of dollars in interest and that is taking away a huge chunk of your money.
If this is the reason why you can’t save every month, consider taking on a second job (or increasing your current pay) to get your set expenses back in line.
Additionally, do not rule out drastic changes like selling a vehicle for a lower (or zero) monthly payment.
You Do Not Earn Enough
After you include all of your expenses in your budget, is there money leftover?
Have you already exhausted all of the funds? Do you not have any major debt?
Some people do not earn enough. You have options. I would not suggest taking on a second job, since this is not a short term problem like having high expenses.
If you are happy in your career and at your place of employment, then I would first suggest asking for a pay increase. Know what others in the same position make at your current employer. Additionally, know what employees earn at similar positions with different employers. Go to your boss with the facts.
I would consider a second job if it meant you could have some extra funds to invest in yourself. Could you earn more if you had a degree or a certain certification? By all means, make sure you are using any funds offered by your employer to advance your education.
Your Partner Spends Too Much
Let’s not try to push the blame on someone else, but we are trying to get to the root of the problem here.
If you are combining your income with your partner, you have to know how much your partner is spending as well. Do you already know that your partner is spending too much?
Regardless if this is the first time you’re realizing it or you’ve known for months, something needs to happen. I would suggest putting all your facts and figures down on paper and having a serious money talk with your partner.
Ways To Save
Now that we’ve gone through a list of possible issues, let’s look at a few baby steps you could take to start saving.
Are You Saving In Your Employer’s 401(k)
The nice thing about an employer sponsored retirement account is that it comes straight out of your paycheck. You can’t spend what you don’t see.
Although I do not suggest using your retirement account as a savings account, if you have zero savings, this is the easiest way to get the ball rolling.
Start with something small like 2%. If you don’t know what your employer will match to your contributions, find out that number and see if you can put in the minimum to receive all that free money.
It will certainly help you with your drive to save if you see your account growing drastically with matching contributions from your employer.
Start Small By Paying Yourself First
$10 per week is $520 per year without any interest added.
Pay yourself first. The smartest thing I ever did was start paying my debt first. After I paid my debt off, I paid myself first.
When creating your budget, put the amount you want to save first before figuring in any other expense. You have to make what you want a priority. If you are unable to create a savings, it is because you are not setting it as a priority.
Takeaways
A budget that is correct is the key to everything. Make the time to analyze your budget and your spending to identify the problem.
Sometimes, your set expenses are too high and difficult changes need to be made.
If you believe you are not earning enough, it is within your power to make a change.
There could be multiple reasons why you are not saving month after month – don’t focus on only one issue.
Finally, making saving a priority and paying yourself first is critical.
Good luck making a change – Believe in your abilities!
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