I’m sure you’ve heard it said that “it takes money to make money.” But for most people that isn’t true. For most it takes work to make money. And for many of those people their money is gone by the time the next cheque arrives.
Why is it so hard to save money?
Well, for some people there is no money to save. Some folks truly live hand-to-mouth with no wiggle room at all. It’s a hard situation to be in. For these people the only advice that I can give in a financial advice blog is to invest any free time that you might have into yourself. Study, ask about, research and practise the things that will help you improve your employment situation - anything that will help you get a raise or a promotion or that will make you more valuable to your present employer or to the next one. Or the one you hope to have.
Good luck.
There are other people who aren’t in this hand-to-mouth situation but think that they are.
Bloomberg did a study in 2023 among people who each made at least $175,000US per year, placing them all in the top 10% of earners in America. They were asked to rate their personal financial situation. About one quarter of them rated themselves as “Poor,” “Very poor” or just “getting by.”
Are these people really living hand-to-mouth?
If this group of people, who make more than twice the median income in America, see themselves as suffering financial hardship what does that suggest about people’s spending habits and their ability to save? Clearly the possibility or ability to save isn’t just a matter of income. For perhaps a quarter of the population it is a matter of psychology, discipline and self image.
It’s hard to be a saver. It’s an unnatural act. Our human instincts tell us that having something now is better than having it later. There is uncertainty in waiting to get that ‘something later.’ It’s natural to think, “What if it’s not there? What if someone else gets it first? What if I miss out?” Why delay gratification?
Human beings, by nature, are not inclined to save for a rainy day.
There are no songs that go, “Hey, big saver!”, but there are lots about big spenders. Western culture celebrates spending. Big gifts, new cars, monster houses, pool parties, exotic vacations. Whatever is new & trendy gets screen time and the new & trendy is shown as coming with social validation. Advertising would have you believe that if you drink the right beer, the Beautiful People will love you. What an ego boost that would be!
People who are not willing to spend as much money as their friends can sometimes be socially ostracized. Sometimes they remove themselves from their group for fear of being ostracized. Have you ever been called (or called someone else) cheap? It’s deflating to the ego.
If you’ve ever bought an impulse item at the supermarket checkout, bought a lottery ticket, drank a pop instead of water when you were thirsty, bought a luxury car or taken an all-inclusive holiday then you have the capacity to save money. Fear-Of-Missing-Out (FOMO) or absent-minded consumption drains the money from your wallet and from your future self.
If you’re going to start saving you don’t have to give up all of your small or pleasurable purchases. You should just spend consciously and with purpose.
Saving is the conscious act of waiting until later and trusting that when ‘later’ arrives the thing that you will have in the future is at least as good, and probably better than, what you could have today.
Without the realistic belief that saving will make your tomorrow better, there is little purpose in saving.
No one can predict the future no matter what they may tell you. The best anyone can do is study the past and try to make an educated guess about what the future may hold. Using the past as a guide we can say that hard times are coming. Hard times always come. Historically, saving (and investing) money has generally been a better plan than not doing so. Cash on hand won’t prevent every hardship but it can help you weather the storm.
So why is it so hard to save money? It goes against human nature. It goes against social norms. It’s a conscious decision to pass up today’s opportunity when FOMO is screaming “Grab it!” It is a conscious decision to believe that a better future doesn’t just happen, you make it happen.
I have an eight word saying that seems to apply to most things in life: “Hard now, easy later. Easy now, hard later.” Remember that, if you choose to save for a better tomorrow.
It takes work to make money but it’s hard to save. The reasons why include:
Truly living hand-to-mouth.
Psychology, discipline and self image.
Saving is the unnatural act of trusting in the future.
Saving is socially awkward. No one wants to miss out.
Advertisers know how to push psychological buttons.
Absent minded consumption. (We all do it.)
https://www.cnbc.com/2023/08/22/fewer-americans-consider-themselves-wealthy-report-finds.html
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