It is not surprising if you are having difficulty saving money because a lot of people also go through the same problem. CNBC even shares that about 21% of working Americans do not set aside money for their goals. That is an alarming percentage of people who are not able to save money for future needs. This can inevitably result in being in perpetual debt or being forced to work longer than they need to.
Negative effects of not saving money
If you are unable to save money, it can lead to a number of financial complications. Here are a few of the things you might expect if you fail to save money.
You can get in debt
If you are having difficulty saving money, there is a good chance that you can get in debt real quick. One reason for this is that you could be running on a shoestring budget and one wrong move could lead to missed payments. Once this happens, your lenders could start to attach penalties and interests on succeeding payments making it a lot harder to make your payments.
Getting in debt is not in itself a bad decision but if you get there because of money mismanagement, then you need to make some drastic changes with your finances. If left unchecked, the amount you owe can balloon into unmanageable debt amount. This will make is a lot harder for you to climb out of debt and regain control over your finances.
Your goals in life get pushed further away
It is important to have goals in life both short and long term ones. Your short term goals need to complement and bring you closer to your long term goals. These two need to work together to give you the chance to reach your goals. However, if you have difficulty saving money, you could have a difficult time reaching your goals.
One thing you need to understand is that your goals need to be tied to a timeline. If not, they are just dreams you wish would happen. If you have a schedule for it, you are forced to work towards that goal. A timeline gives you a working schedule and helps you monitor your progress as well. If you are having difficulty saving for your goals, they get pushed further away.
Once your goals are pushed back, it might take you a while before you get back on track. Losing a few month’s worth of retirement savings also means you lose the chance to earn from the compound interest. If that happens, your retirement date can be pushed further back and you might find yourself working longer than you would want to.
Financial emergencies put your finances in peril
If you are having difficulty saving money, small emergencies can be magnified into huge financial challenges. A small car repair can set you back in your budget or even put a big debt in your credit. If you suddenly find that you need to make big repairs on your roof, you could suddenly dip into your retirement account pushing your retirement date further away.
You need to understand that when it comes to emergencies, you never know when it will come. The best course of action is saving up for it. However, if you are not able to save money, emergencies start to become a big problem. Your credit card is usually the first option when you have no money set aside. It is also possible that you might consider taking out a high-interest loan just to get by.
Stress starts to catch up
Stress is a big part of life and when you are having money problems, financial stress starts to creep up on you. If you can do away with it or reduce the stress you have in your life, the better. Stress that is financially related has a lot to do with the fact that you do not have enough funds to cover your financial needs.
A clear sign of this is having difficulty when it comes to saving money. If your income is not sufficient or you cannot manage your spending, you will have a big problem in saving money. You could be losing money and you do not even know about it and you start to stress about it. If you cannot find out the reason why you start to stress about it even more.
How to address difficulty saving money
Now that you have an idea about the negative implications of being unable to save money, here are a few things you can do to help you get started on saving for the future.
Check your household budget
This is a good place to start because your budget should be able to give you an idea of where the problem is. A comprehensive list of income and expenses can help you pinpoint where you can make the most difference if you want to turn things around. This is one of the reasons why you need to have a comprehensive household budget.
For your budget to work, you need to list down all your sources of income. This task is a lot easier if you only have one source of income much like a day job. If you have a side gig, you need to include that income as well. Next is having a list of all your expenses. It is a good idea to try and list all your expenses for a month from the biggest to the smallest purchases. This gives you the chance to have a detailed list of expenses.
Cut down on unnecessary spending
You could be having difficulty saving money because you have too many expenses in your budget. This is a good time to identify which ones you can cut down on and work on it. You need to be very careful with this part of the process because you might start to take away expenses that you actually need and is important in your finances.
One of the areas where overspending is prevalent is in your food expenses. After a tiring day at work, you might choose to simply get take out food or call for delivery. This might prove to be a costly decision since NY Post shares that Americans can spend about $70,000 in a lifetime on food delivery and even for takeout.
You can start to learn how to cook and even consider batch cooking and buying in bulk to save money. This way, you get what you need at a discount and you prepare them ahead of time so you do not have to cook every night.
Look for a side gig
This is one of the best things to help you increase your income and help you save more money. The way most people do it is to look for a second job outside their main day job. It can be waiting tables, taking on being a bartender, or even a consultancy job in line with their work. It is also a good idea to look into income positive hobbies.
This is where you use your hobbies and earn off from it. Take for example baking where you just do it to satisfy your own cravings or to give away to family and friends. If a lot of people like it, maybe it is time to start selling it to make a profit. You can do the same with other hobbies such as graphic design, photography, or even carpentry. If you can market your skill, other people might need your services.
Automate your savings
This is one of the best strategies to help you save money more efficiently. There might be times where you cannot save money because the idea of going to out and depositing the money in your account is too cumbersome. Even manually making online deposits could be something you forget from time time. This is why automating your savings can be a big help in making sure that you get to set aside a specific amount every month.
There are a lot of reasons why you would have difficulty saving money that is why it is important you understand the reasons behind it and what you can do. Once you address the challenges, you will have an easier time setting aside funds to help you strengthen your finances.