When it comes to saving money, most people fare poorly. Most of them impulsively pick at any excuse to explain this tendency. One of the most natural culprits is lack of self-control. But it affords turns out the reason saving money so hard has less to do with self-control but more to do with a lack of attention.
The main reason people save money is to help them become financially secure and provide a safety net when hard times set in. Several other ideas for saving include: Saving money for retirement, emergency fund and creating wealth. So why are many people not saving?
If you’re only barely able to make ends meet you may think you cannot afford to save a dime, but it’s surprising how you can save small amounts here and there and get surprised how soon they add up. Here are five reasons why so many people’s savings account are bare:
1. Getting the same interest from your bank
The U.S Federal Reserve has not changed interest rates since last September, but some economists are forecasting a slight increase during the coming December meeting. Getting the same interest from your bank discourages you from investing more. If you invest more, you are likely to get more interest. Since not all savings accounts are created equally, the rate will barely rise above 1 percent in most cases.
2. Bank fees hit the poorest hardest
When it comes to encouraging savings, banks have made minimal progress among low-income groups and households including young people. Banks don’t feel like they can make a profit from the lower income cadres, so they continue to charge exorbitant fees for accounts, overdraft fees and to continue keeping small balances. All these charges discourage young people from maintaining an account.
3. Living beyond your means
If you cannot afford that lifestyle, then you shouldn’t be paying for it. It’s really that simple. When you pay for a lifestyle you cannot afford, then you’re preventing yourself from saving more money. And this leads you to get more broke often.
4. Failure to stick to a budget
If you don’t prepare a budget or fail to adhere to one to the letter, then this can be a good reason for you not having any money to save. A reasonable and realistic budget can assist a person manage his money better. It might also help you realize where you’re going wrong with your finances and how to fix the issue. Most people fear to create a budget because they fear to face their spending.
5. Confusing “wants” with “needs.”
Some things are needs, but many things that people buy and remain unable to save are wants. You will have no money to save when you confuse wants with needs. Note that the only things you need are a place to live, food and clothing.
Some will think expensive cell phones, huge home with a swimming pool, gym memberships and eating out in restaurants are all necessary. But they’re not. They’re simply wants. So if you’re looking to start saving money seriously, this list of wants must go.