Why Do We Fail To Save Money
Firstly, people simply like to spend. Getting over that hump is the most important issue.
They use a few major excuses:
- I don't make enough money so there is nothing left over to save.
- There is a great sale on and I just have to get one of those.
- My neighbours just got the newest gadget. I need to get one of those.
What are traits of poor savers
- They have very poor resolve and simply say that they don't have enough left over to save anything.
- They overspend due to poor spending habits.
- They don't budget which would indicate where they overspend.
- They are binge buyers. They can't say no to a sale or how tempting something looks.
- Debt, they don't see debt, they are partially blind to it or they think everyone has it so why shouldn't I.
- They don't mind using credit cards, a leading culprit in our bad spending habits. Some think that getting points from a credit card offsets the loss of savings. It does, if the budget is used correctly. It doesn't if you're aren't saving properly.
- Marketing people know that the general populace has a weakness for spending. It is their job to find those weakness and exploit them. That is what a sale is. They also have other tricks up their sleeves and the 'shopper' in people fall for them.
- Marketing people don't worry about your debt and they love credit cards. It feeds the business cycle and helps a totally separate industry. Credit cards companies and loan companies are the start of a major business group that feeds off of peoples bad spending habits. All of this debt helps these companies but it doesn't help you, the average person.
Credit cards and loan companies have their place for sure. Credit cards are excellent, if you can control your spending and pay back the bills at the end of the month. Loans are great, if you can afford to pay the monthly bills or they are used to help create more money. If you can't pay them off properly though, then they are a real drag on your budget.
People simply have to understand that it is a failure of theirs to save. It is not due to all of the excuses.
It is their failure to see the problem fully and act to solve the problem. Putting a bit of money aside will prove to them that savings can happen. Putting the right amount of savings aside will prove to them that a budget will give them much better control over their finances.
After all of the excuses the real fact is that they just have to start a savings program.
Most people had some lessons in school and of course they were usually told they can't have everything they want from their parents. They were learning some lessons about budgeting. Unfortunately, those lessons seem to get lost when people get a job and get a paycheque. They seem to have to make up for lost time. Now they can spend.
Solution: Budgeting and Prioritizing
Unfortunately, our society doesn't always have near enough sense about saving money, yet have a great sense for spending money. What is needed is a much greater sense of understanding simple or basic finances. The simplest way to do that is to start with a budget. It will at least help organize your thoughts and your costs. From there, questions will arise and plans will start forming. That is the beginning of a good learning curve.
By setting up a budget and putting savings ahead of spending, things start to happen. Of course, all fixed costs have to be paid off first. The discretionary items though are the problem. They simply must be put under control. There are always important discretionary items that can only be pared back a bit, but there are others that can be pared back a lot. By putting Savings first, then working on the discretionary costs, Savings can get a foothold in the budget. If Savings are left to the end, then they pushed out of the picture.
When using a budget with real information, the sense of real organization and financial responsibility can start to work. When they actually start saving, they have to do it is such a way that the savings happen first. The bank will set up an automatic savings. The funds will be put away. Sort of 'out of sight - out of mind'.
By setting up a budget and special savings account you are prioritizing. By prioritizing you are helping get control of your budget and thusly getting control of some savings. Set up some short-term small goals and save a bit every month. It is a great start.
Setting up a budget will create a clearer picture of what you are saving for. This usually gives more sense of purpose. As you save you will then get a sense of control. Once you've saved enough for one item then there will be a sense of gratification.
People have to improve their savings. Savings have proven to provide better wealth and happiness over uncontrolled spending and paying off debt.
Most people think in terms of “Earn, Spend, Save”.
Real success is “Earn, Save, Spend”.