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NEW VOICES: Why is it so difficult to save money?

By Dr. Kyle O'Hagan Time of article published Mar 13, 2019

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The cornerstone of financial security, freedom and independence is the ability to save money. It’s the foundation of a solid and rewarding financial future.

If you Google “how to save money”, you’ll find millions upon millions of posts telling you how to do it and highlighting what you’ve been doing wrong all this time.

However, not many go further than that. Very few shed insight into why we actually find it difficult to save money. What are the psychological reasons that underpin it? And, more importantly, how do we start to move past them?

A little bit of digging reveals quite a few reasons why we struggle to get our heads around saving money. Below are a few that might resonate with you.

Your Upbringing Affects Your Ability to Save Money

It’s easy and tempting to blame our parents for anything and everything.

Your frizzy hair. Thanks mom and dad.

Your ability to pick up weight by simply looking at a donut. Thanks again.

Your predisposition towards fits of road rage. Yup – learned that from the folks too.

It’s true. Many of our traits are inherited through our parents, whether by nature or nurture. It seems our spending habits and attitude towards money is another example of learned behaviour, often influenced by the example that our parents have set for us.

No matter who you speak to, almost anyone can put themselves into one of two categories: spenders or savers. We may not admit it, but this perception is often a result of modelling how our parents approached their own finances.

It makes sense. Your parents would have given you your first introduction to money and how to manage it.

“Money doesn’t grow on trees, you know!” I can hear some moaning.

“There’s no such thing as a free lunch! You need to work for your allowance!” I hear others protesting.

You may not realize it, but hearing statements like these over and over again would cause you to view money as something precious, scarce and valuable. Your brain quickly learns that money is something you need to stash away like a squirrel hiding acorns.

On the other hand, if there was little guidance about how to manage your money, it’s possible that you’d find yourself on the other extreme: spending more than you can afford. If your parents afforded their lifestyle by spending money on their credit cards each month, it’s likely you’d find credit card debt hard to resist.

But all hope isn’t lost if you find yourself on the ‘spender’ side of the spectrum.

What can you do about it?

While we have little control over how we look or who we find attractive, certain behaviours are learned and, by their nature, can be un-learned. It’s useful to, at the very least, be mindful of the habits that you’ve picked up by way of your upbringing. By doing this, you’re already halfway there.

Ask yourself the hard questions: Reflect over the life that your parents have (or had) and ask yourself whether you want to be in the same position when you reach their age. It’s hard to sometimes picture our future selves (more on this later), but the journey your parents have traveled is often a somewhat accurate mirror. Figure out the positives (and hold onto those), but also hone in on the negatives and remind yourself that your path can (and should) be different – for the sake of your relationships and the future of your own children.

Find a financial mentor: If your parents weren’t the most positive of money mentors, don’t hesitate to go and find one. Whether it’s a friend or a colleague or someone who is in the financial position you hope to be in – put yourself out there and ask for help. If you can’t find a physical person, join an online community. Facebook groups have become an incredibly rich source of financial accountability and wisdom.

You Struggle with Learned Helplessness

Martin Seligman was one of the first to study the condition of ‘learned helplessness’. Through delivering electrical shocks to laboratory animals, he was able to show that they eventually conditioned themselves to believe they were unable to change their fate, even in situations where they were free to take back control.

He later translated his findings to humans, showing that we react similarly.

I’ve tried my hardest to stick to my budget, but there are always emergencies that derail me.

I just don’t earn enough income to save any of my money at the end of each month.

I will never be more than a low-income earner because there’s just no opportunity for me to get promoted.

Essentially, learned helplessness is a subconscious form of a pity party. You’ve taught yourself how to become helpless. Sorry to break it to you so harshly.

What can you do about it?

Get an objective perspective: Sometimes it’s hard to see through the fog that clouds our minds. It might be helpful to ask a friend or colleague or someone that you respect for their advice on a financial situation you’re struggling with. Also, think about how you would give advice to someone who was going through a similar situation. And then use that advice to make some decisive moves to take back control of your finances.  

Focus on your successes, no matter how small: In a world that promotes unrealistic goals and negative news, it’s no wonder that we struggle to hone in on our accomplishments. Sometimes it takes a single success to help you realize that you truly do have control over your finances. Don’t focus on the 1000 reasons you couldn’t save enough money last month. Focus on the fact that you at least saved as much as you could. When you make this paradigm shift, you’ll condition yourself to attracting success, rather than failure.

You Struggle to Imagine Your Future Self

I think one of the most difficult concepts to get our heads around is the idea of imagining our future selves. We live in a society that promotes YOLO (‘you only live once’) and instant gratification. Why should we bog ourselves down with worrying about the future?

Well, for several reasons actually

With the advancement of medicine, our life expectancy has increased significantly, which means we have several more years to worry about surviving in retirement.

The increasing costs of education means that providing a solid education for your children is going to come at a significant financial sacrifice.

With political and stock market uncertainty, will you have enough to retire and do all the things you had hoped to do?

Science backs this up

Scientific studies have actually shown that those who are mindful of the future tend to be some of the most prolific money savers. Keith Chen, a behavioural economist from UCLA, was intrigued by the savings behaviours of different countries and the disparity of living in a developed country that showed a low savings rate. It all came down to the language.

He found that those languages that used the same verb to describe present and future tense (such as German and Chinese) tended to be much better at saving money compared to those that differentiated their tenses (for example, English). Here is an example of what I mean:


 Whereas the Chinese and German languages use similar words to describe the present and the future, English uses different words or phrases, distancing the two concepts. It’s been shown that this has an effect on saving money for the future.

His reasoning behind this was that ‘futureless’ languages (where present and future tense use similar words) are able to elicit similar feelings, essentially blurring the lines between present and future. This makes it emotionally easier to save money now for the future. In contrast, ‘futured’ languages forced you to remove yourself from the present and to think about the future in a viscerally different manner. The present and future are so far removed that it’s almost impossible to give the future the attention it deserves.

In a different study, some people were asked to view a current image or an age-progressed rendering of themselves. They were then assessed for possible changes in their financial behaviours (specifically focusing on their retirement contributions).

Interestingly, those viewing their future self tended to contribute up to 30% more towards retirement compared to those viewing a current image. This suggested that imagining and visualizing the future has a surprising benefit on your future finances.

What can you do about it?

If you can’t picture where you want to be in the future, financially, you’ll never find the motivation to save more and spend less.

You need to dream: I’m not ashamed to suggest this. Take a few moments each week and reflect on the dreams you want to accomplish in the future. Do you hope to travel to every country in the world? Do you hope to buy a yacht and sail the open seas when you retire? Do you hope to be a philanthropist, helping disadvantaged students get a proper education in rural communities? Place yourself in the future. Feel the emotions you hope to feel.

This is you imagining your future into reality. And it’s so important in motivating your every financial decision in the present. Set aside some time. Go to a quiet place. Dream about it. Where do you want to go? What do you want to do? What do you not want to worry about in the future? What legacy do you want to leave? Write it down. Memorize it. Think of it often. THIS is your future.

Write your future self a letter: Sounds cheesy, I know. But you’d be surprised at how effective it can be to reflect on where you were when you wrote it and how far you’ve come. It’s sometimes so easy to forget your ‘why’ and you deserve a reminder every now and then. I recently discovered FutureMe, where you’re able to send your future self an electronic letter in 1, 3 or even 5 years’ time. Give it a try!

You’re a Sucker for Malleable Mental Accounting

Malleable mental accounting is a term that has been coined by economists to highlight the disparity between how our minds perform accounting versus the actual number-crunching.

Our brain has this tendency to justify purchases that we haven’t really budgeted for. For example, let’s say you find a laptop on sale, with a R2,000 discount on an originally priced R15,000 computer. Immediately, you think: “Well damn, I’ve now got R2,000 to spare. What should I spend it on? I could afford to upgrade it. On the other hand, maybe I should spend it on Friday night drinks? Possibly a weekend away with the guys? A romantic date?”

Think about your tax refund. For some reason, our brain tricks us into thinking that our refund is free money, when, in fact, the government has simply taken more from your salary than they were entitled to. They’re paying back the money you were supposed to have all along.

Another example is signing up for subscription services. It’s easy to justify spending $240 a year for your favorite online software. I mean, it’s only $20 a month. Before you know it, the company’s marketing strategy has worked and they’ve sucked you in to a year long contract with them. But imagine that the software company advertised their service at $240. You’d probably think twice about signing up, simply because it appears as a larger amount of money.

We come up with all these reasons to justify us spending this money when, in fact, the money you’ve saved isn’t free. You simply paid less for a laptop. Or you paid more taxes than you were supposed to. Or you were tricked by good sales marketing.

What can you do about it?

Redirect your savings: By all means, shop around and find the best discounts on items you need to purchase. But be cognizant of the fact that any discounts you accrue on those purchases should not be considered free money. Immediately redirect that cash into your savings account before your brain convinces you to spend it on things you don’t need.

You’re Unsure of When Your Next Paycheck Will Come In

Self-employment or earning commission has been described as a “feast or famine” type of career. Your ability to earn an income depends highly on whether a business is booming or bust.

If you’re self-employed or a commission-earner, your finances are a little more complicated than the general population. There is no guarantee of a set monthly income, which makes it harder to decide on how much to save each month. In addition to the stress of unguaranteed income, you also have to consider several other factors, such as withholding your own taxes, paying for business licenses and other potential unexpected expenses that might affect your ability to save money.

How can you possibly put aside money when you don’t know when or how much your next paycheck will be?

What can you do about it?

Save more than your average Joe: Since taxes aren’t automatically withheld from your monthly paycheck, ensure to save a much higher percentage of your monthly income that is suggested for others. This will help to account for tax and avoid any unexpected payments or penalties. This could be anywhere in the range of 30-40%, depending on the amount of income you bring in each month. If you end up setting aside too much when tax season rolls around, you at least have more money to funnel into your retirement fund.

Speak to a tax or financial advisor: If you’re unsure of the ins and outs of managing your money as a self-employed person, it may be worth the investment to seek the counsel of a tax or financial advisor. They’d be able to guide you in the most cash-efficient direction to save money.

Get ahead of your paycheck: If you’re self-employed, one of your first priorities should be to set up an emergency fund. If you can get ahead of your paycheck and create a financial buffer for the low-earning months, it will remove much of the stress and allow you to make a plan when times (or business) gets tough. You can read more about setting up an emergency fund here.

You Don’t View Your Savings as an Expense

If you take one piece of advice away from this article, let it be that you need to pay yourself first. Even if you have to consider your savings as a type of expense.

Too many people wait until the end of the month, with hopeful optimism that they would have spent less than they got paid and could save what remains. But, again, our brains are great at doing shoddy accounting, convincing us that we can afford a lifestyle that is beyond our means.

What can you do about it?

Don’t trust yourself – just automate: Trust yourself to follow through with your savings goals? Just don’t do it. You will always come up with reasons to justify a purchase that you don’t need, depleting any leftovers available for you to save. The only way to get around this is to automate your savings for the first day of each month. Out of sight, out of mind.

Change your mindset: Decide on an appropriate amount of money you’d like to save each month. Then treat these savings as something you don’t currently own. It’s something your future self owns. It’s a simple paradigm shift like this that will ensure you maintain the habit of saving.

You Don’t Question a World That Accepts Instant Gratification

Ever heard of the Stanford marshmallow study?

It was an interesting psychological experiment that looked at the concept of instant gratification. Children (between the ages of 3 and 6) were told by researchers that they could either eat a single marshmallow immediately or, if they waited, they’d be able to eat two marshmallows when the researcher returned to the room (which was about a 15 minute waiting period).

While I haven’t watched the videos myself, I’ve heard they are adorable – children trying to fight the urge to eat their marshmallow with the hope of a future reward. Some ate their marshmallow immediately after the researcher left the room. Others agonized and waited it out, enjoying the benefits of two. However, what was more interesting was that follow-up studies showed that those who were able to ward off instant gratification were better off later in life.

Delaying gratification was associated with an increase in SAT scores, a change in brain chemistry, lower levels of substance abuse, lower levels of obesity, improved responses to stressful situations and significantly better social skills.

Clearly, it pays to not buy into impulsive decisions.

What can you do about it?

Question everything: Having a pep talk with yourself can do wonders! Before you make any purchase, ask yourself several questions: do I need this? Will it simplify or complicate my life? Can I truly afford it? Can I sleep on the decision to purchase it? Is it an emergency? If you’re honest with yourself, you’d be surprised at how many things you buy that are impulse purchases, followed by a bout of buyer’s remorse.

Give yourself some time: My personal philosophy is to give yourself at least one week (but preferably up to 30 days, especially for large purchases) to think about buying something you think you need. Sleep on it. Weigh out the pros and cons. Write them down. Discuss them with trusted friends. The product isn’t going anywhere, as much as they market it as a ‘limited time offer’.

You Have a “What’s the Point?” Attitude

Similar to “Learned Helplessness”, we have come to believe that if we can only save a small portion of our take-home salary, then what’s the point?

This is a scarcity mindset. One that doesn’t deserve much thought.

Day by day, your goal is to reach a financial position that is better than the previous day. If you’ve made a $1 move forward today, then congrats are in order. You managed to save money. You’re $1 richer than you were yesterday. It may not sound like much, but you’re slowly building habits that will create a snowball. Soon, that snowball is going to gain momentum and mass. You just have to be patient.

I’m a member of a Facebook group focusing on how to save money. And I once saw a post of someone who was trying to pay off their debt. I can’t recall the exact amount, but I do remember them adding that $1 on to the amount that they had paid. And it made me smile. Because they were proud that they had $1 less to pay. This is the mindset we should have.

What can you do about it?

Ignore the voice in your head: No amount is too small, as much as your brain would like to tell you otherwise. Whether this pertains to paying off debt or saving some extra cash. Do what you can and pat yourself on the back for it. You’re moving forward, not backward. Take some time to appreciate that!

Final Thoughts on Why It’s Difficult to Save Money

I’ve presented 8 unique mindsets that might be affecting our ability to save money. If you’re serious about getting started on changing these mindsets, feel free to download The Saving Scientist’s FREE Financial Starter Pack.

It will get you started on setting monthly goals, monitoring your progress and establishing a budget that will make sure you achieve the goals you’ve set out to achieve. 

Dr. Kyle O'Hagan is a UCT scientist and an avid personal finance blogger. With over 20 years worth of experience in the SA schooling system, he has come to appreciate the value of a proper education and feels that personal finance is an area that is often neglected, particularly at a young age.

O'Hagan is one of Personal Finance's New Voices and his finance blog is called the Saving Scientist


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