As a financial advisor, working with clients is often a lesson in psychology. I can’t tell you how many times I’ve heard the same old excuses for why people aren’t saving more money or saving at all. The truth is that these excuses are just coverups for chronic, self-sabotaging behaviors. And I can relate. I’ve used a few of them myself.
We all have financial demons that lurk in our subconscious and get in the way of making smarter money decisions. Whether they stem from our childhood, our experiences with peers or partners, or even our DNA, these negative messages remain in the background of our minds, clouding our better judgement.
And women seem particularly susceptible. Studies show that women save less than men, invest less than men and create financial plans less often than men. Women also live longer than men, make less than men, sacrifice earnings more than men and are much more vulnerable after divorce or becoming widowed. Clearly, the need for women to save more is greater today than ever before.
So, why aren’t you saving enough?
The key to your success lies in your ability to understand and confront the truth behind your excuses. Then it’s a matter of taking a few simple steps to break the cycle of bad money behavior. Here are six real reasons you’re not saving enough and what you can do to change it.
What You Say: “I don’t have anything left to save.”
Translation: You spend everything you make. It’s all too easy to have your hard-earned money vanish in a few quick swipes of a card or clicks of a button. Without making a conscious effort to set aside savings on a monthly basis, you will most likely spend all of your income. Doing so then gives you the excuse that you don’t have anything left to save. So you don’t.
Solution: Automate. Set up an automatic paycheck deduction to contribute to your 401(k) or recurring transfer from your checking account to an IRA to force yourself to save, even if you don’t think you can. Start by maxing out the amount you can contribute to your retirement account each month (at least as much as your employer matches -- you can always scale it back if need be) and aim to also transfer $100 each month into a “curveball” account for those periodic “uh-ohs.” This will help keep you out of debt.
What You Say: “I deserve this (and this, and this…).”
Translation: You are trying to fill an emotional void. A spa treatment and new pair of shoes here, a weekend getaway or extra round of drinks there... it is easy to justify overspending. The occasional indulgence is healthy, but remember that allowing yourself too many treats will undermine your savings goals. Whether it’s insecurity, jealousy, sadness or anxiety, emotions are a powerful fuel for frivolous spending that can quickly add up -- and ultimately add to the stress that triggered it in the first place.
Solution: Reframe your thinking around what you deserve. Sure, splurging can provide a temporary fix for your emotional void, but the high only lasts for a brief time. Even worse, it is usually followed by guilt and regret. Don’t you deserve financial security and a comfortable retirement more than the fleeting buzz of instant gratification? Yes, you do. Remind yourself of this on a regular basis.
What You Say: “I’ll save more when I make more.”
Translation: You are a chronic procrastinator. It is easy to use the excuse of bad timing to justify putting off what you should be doing now. But the fact is, you may not earn more in the future or as soon as you would hope; plus, most procrastinators who do ultimately make more money end up increasing their lifestyle to match their increased income, only perpetuating the vicious cycle of not saving.
Solution: Start saving now. Even if it is a seemingly insignificant amount, the sooner you get into the habit of saving money consistently, the better. Then, if you do end up making more money, it’ll be easier to add to your savings rather than starting from scratch. Remember, the key to long-term wealth is not timing the market, but time in the market. So get going. NOW.
What You Say: “I have to pay off debt first.”
Translation: You are not ready to change your bad habits. It is easy to use debt as an excuse for not saving and can make sense if you’re being charged a high rate of interest every month. However, saving is a good habit that takes practice, and in order to stay out of debt in the future, you need to have some savings. Otherwise, your old, bad habits will inevitably get the best of you again.
Solution: Make a commitment to saving something in a separate account every month in addition to your debt payments. Even though you might not pay off your debt as quickly, you can at least help yourself avoid falling into further debt by having some savings available when you need it. It is also easier to increase your savings once you get into the habit of doing it at all.
What You Say: “I can’t even think about the future.”
Translation: You don’t have a plan. It’s amazing how much time we waste on watching TV or browsing the aisles in Target, and yet so few of us take any time to think about what we want in life and how to get there. Sure, it may seem overwhelming or impossible to achieve, but just taking a few simple steps can help you wrap your brain around what life could be like in the future and motivate you to work towards making it a reality.
Solution: Take as little as 15 minutes to consider your financial goals. Set an appointment for yourself on your personal calendar, if necessary. Write them down. Then prioritize them by time frame and importance. Try to assign each goal a target amount (this will probably require doing some calculations). The next step is setting up dedicated accounts for each goal with monthly automatic transfers from your checking account. Keep your list of goals in a highly visible place or multiple places so that you can be reminded of what’s most important to you on a regular basis, which will help keep you focused and accountable.
What You Say: “I have to worry about my family.”
Translation: You pay yourself last. Whether you have scaled back on work to be a caretaker or are spending all your discretionary income on your kids and/or their college savings, women all too often focus on the needs of others, thereby neglecting their own future security. But given all of the statistics regarding women consistently underearning men, living longer and the risk of divorce and widowhood, women need to be saving more for themselves today than ever before.
Solution: Pay yourself first. Just like you are supposed to put your own oxygen mask on before a child’s in the event of an airplane emergency, you should prioritize your own savings in order to ultimately save those you love most. This means dedicating as much income as possible towards maxing out your personal retirement account (whether 401(k) or IRA) before contributing to any education savings plans or spending unnecessarily.