We’ve probably all heard of the importance of setting aside money for big purchases or unexpected expenses. But how many of us actually have savings to speak of? Better yet, how many of us can afford to build up our savings in the first place?
Finding even a dollar to save can sometimes be difficult – so difficult, in fact, that you may have given up on saving altogether. Do not abandon. You deserve financial security. Take a look at some of the worst reasons people don’t save, and you might find your way around. There are also tips on how to fight them.
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1. “I can’t afford to save”
When you feel like your money has already run out, you may struggle to find leftover funds to save. Likewise, you might think that a few dollars here and a few dollars there just aren’t enough to make a difference.
Consider this, though: do you have enough money for a morning coffee or a weekly night out? When you add up these purchases, how much do you spend in a given year? What if you saved that amount instead?
Times are tough, so cutting back may not be an option. If so, research potential new ways to make money. Whatever you do, resist the idea that saving is only for the rich. Savings is for all of us.
2. “I’m young, so I can wait to start saving”
If you apply this logic to your savings strategy, you could have a rude awakening. Saving isn’t just about how much to save for retirement. It also has immediate benefits.
Putting money aside now can be the difference between being able to buy the house you love or settling for the house you can tolerate. It can protect your finances when your car breaks down, when your dog needs an emergency vet after gorging on candy, or when your child hits a baseball through the neighbor’s window.
Instead of thinking of saving as an old person’s game, think of it as a way to create a buffer between your money and the horrible irony of fate.
3. “I’m too old, so there’s no point in starting to save now.”
Conversely, you might think that since you didn’t save when you were young, there’s no point in starting now. Here’s the simple truth: it’s never too late to save money.
The you of today might think it’s not worth it anymore, but in five years or even next year you might look back and wish you had acted differently. There may come a day when you no longer have the desire or ability to work, and you don’t want that day to come without a financial cushion to sink into.
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4. “I get an inheritance, so I don’t need to save”
Even if your parents or grandparents are lucky and generous enough to leave you money, it is always wise to save.
For starters, inheritances are not guaranteed. Your loved ones may face emergencies that deplete their financial reserves, or you may run out of what they gave you faster than expected. Also, what if you want to leave a legacy for your own children? If you haven’t developed those savings muscles, there may be no wealth to pass on.
Rather than banking on a large endowment from your family, take matters into your own hands and work to secure your own financial future. Then whatever they give you will be the proverbial icing on the cake.
5. “Savings accounts don’t pay much”
While it’s true that some accounts have extremely low interest rates, many of the best savings accounts might give you a better annual return. We’ve also come a long way from the days of one type of checking and one type of savings account.
These days, you can find savings accounts designed to meet different purposes or with different features. Plus, you don’t have to rely solely on a savings account. You could put some of your money into stocks or a Roth IRA, for example.
The moral here is that you have options when it comes to where you save. Don’t let old savings accounts be what’s holding you back.
6. “I’ll use my credit card or take out a loan if I need to”
Can you use a credit card in an emergency? Yes. Do many people advise opening credit cards for this reason? Yes. Should consumer debt be your only safety net amid surprise spending? No.
Interest rates on credit cards and loans can make it extremely difficult to pay what you owe. These interest rates also mean you’ll pay more over time if you carry a balance from month to month.
Building up savings separate from credit cards or other forms of debt could give you breathing room in a financial emergency. Without any savings, your options are more limited and you run the risk of a greater long-term impact on your financial health.
Pro tip: If you need to make a big purchase on a credit card, consider one of these three that will get you a break on interest until around 2024.
7. “I want to buy XYZ before I start saving”
You want to enjoy your money, we get it. You worked hard to earn it, so you deserve to spend it. But ask yourself the question: how much will you appreciate this new designer bag if it is empty? It’s not a fun reality to think about, but it’s something to consider nonetheless.
You should absolutely be able to treat yourself whenever you want, but it’s much wiser to balance those treats with regular contributions to your savings. In fact, you can use a large or frivolous purchase as an incentive to save more. For example, if you save $500 this month, reward yourself with something decadent. Just make sure you don’t spend more than you can afford.
8. “I have to pay off my debt first”
In this sense, if you have already incurred significant debt, you may feel that these balances take priority over savings.
Think about what you would do, however, if your financial situation deteriorated – if you were faced with a planned expense, for example, or if you lost your job. Not only do you risk falling behind on your usual bills, but you may not be able to meet your debts either.
It will take careful budgeting, but try to build savings goals into your debt repayment plan. Think of your savings as your own form of debt insurance — it’s money you have on hand so that your debt doesn’t increase in the event of bad luck.
At the end of the line
Now that you have a better idea of what’s stopping people from saving, take it a step further and learn how to save and how to invest in a way that’s right for you.
A quick way to start is to review your most recent bank statements. Take note of where your money is going and implement at least three strategies to reduce your expenses. At the end of the month, transfer your new reserve funds to a separate account and you will officially have savings.
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This article 8 Tragic Excuses for Not Saving Money originally appeared on FinanceBuzz.