Can they really not afford to save? I suppose there are some people who barely scrape by…and it’s understandable that some people would be unable to save given their situation. Still, I believe most Americans bring in enough income to be able to save some of their money. Can’t we all agree on that?
So, if we can save, then why aren’t we? Is it because we’re lazy? Unmotivated? Undisciplined? I say…none of the above. Here are two key reasons people aren’t saving enough money, even if they really want to:
1. They Aren’t Making Savings Automatic
Make saving money automatic. This is my number one tip for saving more money. Not to try *really* hard, think positive, or wait till I make more. Those are failed mantras.
The best way to truly save more of your money is to setup a direct deposit from your paycheck directly into different savings accounts. One for retirement and another for short-term goals.
Don’t know how to do the direct deposit thing? Ask your company’s human resource representative. Want to know where to put your money? See my second point…
2. Their Savings is Too Easy to Access
Money in a savings account attached to your regular checking account is just begging to get raided. No one has enough discipline alone to keep their hands off of cash savings in a regular bank savings account. Well, maybe some do, but those people are few and far between. Most of us struggle with this.
Short-term savings should be kept in an Online Savings Account or a Certificate of Deposit. Both of these products make your money harder to access, increasing the chances that you’ll leave it alone.
Long-term or retirement savings should be kept in a tax advantaged account like a 401k or and IRA. Both accounts come with big disadvantages for early withdrawal, more motivation to just leave your savings alone.
Now, Just Spend the Money that’s Left Over
The beauty of this setup is that you can literally spend the rest without worry. If you’ve got your retirement and short-term savings taken care of prior to you even getting your money, then you’re set. No worries, right? Pay your bills and spend the rest.
It’s not fool proof, I know. But, I’ve found it’s the method that’s easiest to stick with. It’s worked for me. Give it a go!