As I looked at my balance, I was overwhelmed by how fast my salary had disappeared. I’m not the only one! Many of us handle daily expenses and unexpected costs one day at a time, especially those living paycheck to paycheck. With the high cost of living, unnecessary purchases, and unforeseen expenses, why is it so challenging to save money? Here are some key reasons:
#1: NOT PRIORITIZING DEBT
Debt can be a major obstacle to saving money. The desire to pay off debt rather than save is strong, especially with revolving debt like credit cards. Interest rates on these accounts can fluctuate, often increasing the amount owed.
For example, the average interest rate on credit cards in Singapore is around 25% per annum. Consolidating debt with a low- or no-interest card or taking out a lower-interest personal loan can help ease this burden.
#2: IMPRESSING OTHERS WITH SPENDING
Social pressures can lead to overspending. Maybe friends invite you to an expensive restaurant, and you go along, only to split a hefty bill. Or perhaps you use a bonus to buy a status watch to fit in with big-spender pals. I recall a colleague who stole money from the company just to maintain face in their religious community.
If you find yourself overspending with friends, consider more affordable activities like museum-hopping, hiking, or local events. These are simple ways to save money while still enjoying time with friends.
#3: HAVING INSUFFICIENT INCOME
Your earnings need to cover your expenses, but sometimes unexpected costs outpace your paycheck. Keeping a budget helps track spending and identify areas for adjustment. For example, if your rent increases by 12%, you’ll need to find the extra money. In such cases, a side hustle might be beneficial.
#4: SHOPPING EXCESSIVELY
Shopping excessively doesn’t necessarily mean always filling your online cart. It could mean not being strategic about your spending. I’m guilty of this, especially since I prefer designer makeup and skincare for my sensitive skin. For instance, daily trips to a grocery store are more expensive than bi-weekly bulk shopping trips.
Making lists, tracking prices, and using coupons and cashback offers can help save money and even make the process enjoyable.
#5: LACKING MOTIVATION TO SAVE
Saving money is challenging if you don’t have a compelling reason. You might be overly focused on the present or unsure about future goals. Creating a savings plan starts with asking yourself where you want to be financially in the next 5 to 10 years and what you need to do to have “enough” money.
#6: INCREASING EVERYDAY EXPENSES
Many people debate whether the rising cost of living is as bad as it seems, but most Singaporeans have felt the pinch in recent years. Inflation affects housing, utilities, and groceries, and wages haven’t kept up.
#7: LACKING THE INSTINCT TO SAVE
Saving for the future isn’t a natural human instinct. Our brains struggle to think about the future in concrete terms. However, we can either trick our minds into better future planning or make saving money automatic. Behavioral economist and Nobel Prize winner Richard Thaler suggests, “If you want to help people accomplish some goal, make it easy.”
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By understanding the reasons why you need to save and making mindful adjustments, saving money can become more achievable.
