10 reasons why it can be hard to save money

If you’ve been watching your savings account balance languish or dreading the frugality of the days before you get paid, you might be asking yourself a common question: Why is it so hard to save money? You’re not alone in wondering; saving money is a struggle for lots of people. Despite our best intentions, it often feels like there’s never enough left over at the end of the month to put aside for the future. 

Saving money may feel hard, but you can take steps to overcome the hurdles. The first step is understanding exactly why it’s so hard to save money for your particular circumstances. There are multiple forces at play, from the economic landscape to social pressures to individual challenges. By examining what’s in the way of saving for you, you can make a plan to take control of your finances and start working toward your future financial goals. 

The cost of living keeps rising

Inflation is the rate at which the cost of goods rises over time. When the cost of living increases, it can pinch your budget, especially when you have to spend more on essentials like housing, healthcare, and education. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) has shown a steady increase in the cost of goods and services in recent years, with inflation at 3.1% in January 2024. 

Inflation erodes your purchasing power, meaning your money doesn’t go as far as it used to. This makes it harder to save, as more of your income is consumed by day-to-day expenses. In addition, the interest you earn on money you do have in a savings account often doesn’t keep pace with inflation over time. So even if you can save some money, your purchasing power might still decline. 

Wages are stagnant

The impact of inflation on your finances is compounded by stagnant or slow-growing wages, and that can significantly impact your ability to save. While the cost of living continues to rise, wage growth has not kept pace. This is especially notable when it comes to the U.S. federal minimum wage, which has not increased since 2009 and, when adjusted for inflation, was actually about 40% lower in 2023 compared to 1970. 

The impact of minimum wage levels and wage stagnation on savings is profound. When wages don’t increase, it’s challenging to set aside money for future needs. This disparity forces many to live paycheck to paycheck, making the prospect of saving seem like a distant dream. 

Debt eats into your finances

Paying down debt often takes priority over saving. High-interest debt in particular can significantly impact financial stability and savings potential. For example, carrying a balance on your credit card can make it harder to save money because you’re accruing interest on that balance. The average credit card interest rate is 27.62% as of June 2024, which is much higher than the interest rate you can earn with a savings account. So it often makes sense to pay off credit card debt before saving money. Personal loans and auto loans may also come with high interest rates. And regardless of the interest rate, making debt payments each month can make it hard to save if you have a lot of debts to deal with.

Emergency expenses keep coming up

Unexpected expenses, such as medical bills or car repairs, can derail savings plans. If you have some money put aside, a financial emergency can wipe out months of diligent saving. And with 27% of Americans having less than $1,000 in personal savings, a big unplanned expense can even make it difficult to cover basic necessities. Financial emergencies are unpredictable, so they’re hard to plan for, and it can be tough to recover from a large unplanned expenditure. A spate of bad luck could leave you unable to save money for a while, and even thrust you into debt. 

Financial education is lacking

Many of us weren’t taught financial literacy in school. We only know as much as our parents shared, and lots of families don’t have the time or resources to focus on financial education. There’s no shame in not knowing the ins and outs of money management. Nearly half of U.S. adults are not financially literate, and many aren’t familiar with common savings vehicles like high-yield savings accounts, money market accounts, and Roth IRAs. A lack of financial education leads to many common misconceptions, such as believing that saving small amounts won’t make a difference, not recognizing how interest accumulates on debt, and misjudging how much you’ll need to retire. It’s hard to save money if you don’t have the tools to understand your financial landscape and options.   

Budgeting can seem overwhelming

Creating and sticking to a budget is essential for managing finances and saving money, yet many people avoid it due to perceived complexity or time constraints. Without a budget, it’s easy to lose track of how much you’re spending and find that you’ve spent most of your paycheck before you have a chance to save any of it. Even if you’ve determined how much you should save each month, it can be a struggle to make it happen without budgeting. A budget provides a clear picture of your income and expenses, helping you identify ways to save money and make a realistic plan.

Advertising influences our behaviors 

Advertising and consumer culture can heavily influence spending habits. Marketing strategies, like limited-time offers or targeted ads, can encourage impulsive spending. For instance, seeing an ad for a sale on a product you didn’t even know you wanted can lead to unplanned purchases. It doesn’t help that we’re inundated with marketing messages in nearly every aspect of our lives: television, movies, social media, radio, streaming services, and much more. Marketing pressures can drive you to increased discretionary spending that takes away from money you could be saving. 

Peer pressure is hard to resist

Peer pressure and comparing yourself to others can impact financial decisions, leading to overspending. The desire to fit in or keep up with friends and family is natural, but it can result in unnecessary expenses. For example, attending every social event or buying the latest gadgets because everyone else has them can strain your finances and make it harder to save money. Social media can increase this pressure, surrounding you with images of aspirational lifestyles that urge you to buy things instead of saving money. 

Lifestyle creep can inflate your spending

Lifestyle creep refers to the tendency to increase your spending as your income rises. For example, if you get a raise at work, it’s easy to take the opportunity to upgrade your phone, take out a loan for a new car, or start spending more on discretionary expenses. And if you don’t adjust your budget when you start making more money, you may miss the chance to make intentional plans to save that additional income. Lifestyle creep often sneaks up on us; we start spending more as we earn more, often without noticing that it’s happening. And soon enough, it can feel like you’re running out of money.

Instant gratification can override savings plans

Our brains are wired to seek out the pleasure of immediate rewards, making it difficult to delay gratification for long-term benefits. Impulse buys may provide a quick thrill, but they often leave us with buyer’s remorse and depleted savings. The psychological reward system plays a significant role here; our brains release dopamine, the feel-good hormone, when we shop. This makes spending enjoyable but saving more challenging. 

Strategies to overcome saving challenges

Create a realistic budget

Making and sticking to a realistic budget allows you to make specific plans for how you spend and save your money. Start by accounting for all expenses, including fixed and discretionary spending. Use budgeting apps and tools to simplify the process and track spending. Reviewing and adjusting your budget regularly ensures you stay on track.

Set specific savings goals

It can be hard to save money if you don’t have a clear idea of what you’re saving for. When you set savings goals, you translate your general desire to save into specific things you want to achieve. Keeping those aims in mind can increase your motivation to stick to your saving plans.   

>> Read more: Six money saving challenges to help you reach your goals.

Automate your savings

Automating savings helps reduce the temptation to spend money that you’d planned to save.  Set up regular automatic transfers to your savings account or have your employer split your direct deposit across your savings and checking accounts. This ensures you make regular contributions to savings goals and lessen the chance that you’ll accidentally use up your paycheck before funding your savings.

Cultivate your financial literacy 

Improving your financial literacy can help you keep your savings goals top of mind. Explore books, podcasts, and online resources about personal finance topics like budgeting, investing, and debt management. Continuous learning and staying informed about financial topics can empower you with the knowledge and motivation you need to make saving less difficult.

Overcome the challenges of saving money

“Why is it so hard to save money?” is a common refrain. People from all walks of life can find saving challenging. There are many factors that influence your ability to save, and it can feel overwhelming when so many of them are outside your control. But you do have the power to take actions now that will improve your financial landscape down the road. 

Whether you’re looking for ways to save money on daily expenses, working toward a big goal like saving for a house, or planning for retirement, overcoming your personal barriers to saving can help you work toward financial well-being in the long term. Examine what makes it hard for you to save money and identify which factors are in your control to change. Even small adjustments can allow you to put a bit of money toward the future, and every little bit helps. 

Make saving and investing a habit.

Go automatic with Auto-Stash.

Get Started