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How to Overcome the Top 5 Excuses to Saving

Many people equate savings some of your income to depriving themselves of the rewards of their hard work, and sometimes even fuels the desire to spend even more. Having to constantly hand over our cash for necessities is just part of being an adult or running a family budget. Things like mortgage or rent, food, car repairs, insurance can take aware the joy of earning money but not having the ability to spend it on fun some exciting things. So why add to that list of necessities by reducing our disposable income and putting some of that into a boring savings account.

But setting aside money in an emergency fund, education and retirement account is crucial. Here are some common excuses to saving that I learned about from clients and other financial experts, along with some ideas on how to overcome these obstacles just start saving now.

Excuse #1: I do not know how to get started: Here's how to get past that. Staring a savings habit is very simple, but you do need a plan. Savers with a plan are twice as likely to make substantial progress meeting their savings needs for things like emergency funds, college, or retirement.

The first step is to create a simple savings plan by setting a realistic goal. Most financial advisors will recommend that you have a minimum of three months of expenses in an emergency fund, and that you should build it up to six months. While that sounds like a savings mountain you cannot climb. Why not start with a realistic goal of savings one month of expenses over the next few months. Like climbing a mountain, you must start at the base and slowly work your way up. Then as you reach each elevation you take a breath and then move on to the next. Over time you will find that you have reached your goal and arrived at the summit.

Bonus Tip: The easiest way to save is an automatic process. If you have an employer that uses direct deposit, have a portion of your paycheck directly deposited into a separate savings account. If you do not have that option available, then set up automatic monthly transfers into your saving account through your bank or credit union. Overtime you will be surprised how quickly the account will grow if you just ignore it.

Excuse #2: Why save money just to lose it in the stock market: The stock market will always have fluctuations, but that is no reason to bail on investing, or savings in general. Many people were impacted by the drop in the stock market during the Great Recession of 2008-2009. Many people either personally suffered during that time or saw their friends a family lose money, and that causes people to be skeptical. However, when you look over a ten to twenty-year investment horizon, the stock market is one of the best ways to create wealth.

Starting with investing is like kicking off a new diet or exercise routine. You need to start slowly and build up your financial muscles before you start trying to lift the heavy weights. Start off with safe investments like stock index or bond funds to get your feet wet and learn. Then once you are comfortable with those you can investigate owning individual stocks, bonds, or other financial investments.

Excuse #3: Interest rates are too low, and I will not get a good return: Remember savings is not only about getting rich, but it is about developing financial security. Knowing that you have funds set aside to deal with an unexpected expense or emergency will give you peace of mind and help you through a challenging time. That said, you still want to make sure you can get the best return possible on your savings and investments. Do research the interest rates, fees, and read the fine print anytime you are putting your money into an investment. Do your homework and check the legitimacy before transferring or depositing any money, as well, and be wary of anything that offers returns that seem too good to be true. This will help you avoid scams.

Excuse #4: I need some help, but I do not know who to trust: If you're looking for a financial advisor, ask trusted family and friends for referrals. You can also check out a potential advisor with the Financial Industry Regulatory Authority via its online tool. However, it is still your responsibility to change your behavior and exercise self-control to reduce your spending and increase your savings. There are many finance apps that can act as a personal trainer for your finances and give you a visual representation of your budget at a glance and on the go. Those apps can really boost your self-control and help you monitor your spending.

Many people equate budgeting with deprivation, and this only makes them want to spend more. Instead, try to think of it as a tool for being able to afford the life you want, and increase your future financial security. If you are spending too much and not able to save because you are adding to your credit card debt and paying too much interest. Then you need to decide to reduce your overall debt by paying off your balances faster. This is another area where a financial advisor can help you develop a plan.

Excuse #5: I am already saving so everything is ok: But are you saving enough? Some people think they already are saving, only they are not. What they do is save what is left over after at the end of the month, rather than make saving a priority. By only saving what's left over, they end up usually only saving a fraction of what they otherwise could.

What could you do to improve your savings plan? Trick yourself! Utilize technology to create automatic deductions and deposits to increase your savings and retirement accounts with every paycheck to help you stash away money on a regular basis. It is never too early or too late to start saving and making the most of your money, so you can increase your future financial security.

If you are looking for a Financial Consultant that can work with you to develop a strong strategy for next year - contact Stephen Westurn (214.240.0701) or for a get acquainted session.

Guiding People Towards Financial Security