Why is saving difficult, even when I really want to?

Most likely you’ve seen articles or blogs talking about how to save (like, for instance, our blog ‘Save money (without giving up your coffee!)’). And while there are many cool hacks for saving, for some people, it’s not that simple. To start saving in a sustainable way, you may need to first understand why you should save, and why you haven’t been able to save successfully so far.

Why is it important to save?

Saving is important for many reasons, including:

  • Being prepared for an emergency (think a flat tyre or new pair of glasses)
  • Fewer financial worries
  • Can improve mental health
  • Reduces the need for extra debt
  • Prevents living outside your means and relying on credit cards, and
  • Develops good personal financial habits.

But, even though we know how important it is, saving money can still be tough for lots of people, for many different reasons. We can struggle to save because we feel we don’t earn enough, we have too many expenses, or even that life’s too short to sweat the “small stuff”.

So why is saving difficult?

Most of us know the basics of how to save money: set aside a portion of the money you earn and then don’t spend it. It’s likely that you could even give tips and tricks to a friend if they asked for advice on saving money, creating a classic “do as I say, not as I do,” situation. This is because saving money is a bit like losing weight: while it can seem simple, it’s not easy.

Let’s talk psychology for a second. For anyone living paycheck to paycheck, trying to save may seem like an uphill battle. In general, humans are very fond of the “out of sight, out of mind” mentality, especially when it comes to money and it can be hard to look at our finances, especially if we’ve grown up thinking that money is scary, or taboo, or rare.

On the other hand, what if life is good, and we’ve landed that high paying job, so we feel that we don’t need to save? In this situation, some people believe that no matter what happens, they’ll always have access to money in an emergency.

Either way, people tend to open “mental accounts”, much the same as when they opened up their bank accounts with their bank. In these “mental accounts”, we think of our paycheck, and then we mentally separate the money we have into different options: for example, groceries, rent, loan repayments, petrol etc.

But the problem with “mental accounts” is that they don’t always capture the big picture. When we think of our expenses, we often don’t factor in the coffee and muffin we brought this morning, the chocolate bar we grabbed at the counter when we filled up our petrol, or the subscription payments we forgot to cancel months ago. These little things add up so it’s important that we start to focus on our real accounts, through looking at bank statements or budgeting.

So, what’s the solution?

Well, there isn’t just one solution. That’s the thing about personal finances – they’re personal. It’ll depend on your situation, and like we mentioned earlier, it can be easier said than done. The two main approaches people take to saving money are:

  1. Spend less money (become a savvy, saving superstar!)
  2. Earn more money (ask for a raise, get a new job, or start a side hustle)

It’s completely up to you, your situation and your preferences. Keen to set up a new savings account? Get in touch with us – we’re happy to help.

Please note this information is general in nature and does not take into account your personal circumstances or objectives. You should consider this before acting on any of the information contained.