Why is It So Hard to Save Money?

Have you struggled to save money, even though you know that you should be saving? If so, you're not alone. You may not be surprised to learn that there's actually a psychological component to savings that makes it hard for us. 

However, that's not to say there's no hope! By understanding the psychology of savings, we can improve our savings habits and hopefully be better for it.

Why People Are Bad at Saving Money

Believe it or not, it's hard-wired in your DNA. According to financial psychologist Ted Klontz, it all links back to our tribal ancestors. Communal living meant that hoarding too much of a good thing could mean ex-communication. Hanging on to leftover food could also mean death. So those who were predisposed to save had a lower chance of passing on their DNA.

It's no wonder, then, that such a small portion of people seem to be natural savers. Klontz estimates that around 14% to 17% of all people are naturally inclined to save money.

Furthermore, people don't always save for something concrete. And the lack of a defined goal can prevent people from being successful the moment something "concrete" becomes an option. Think about it—how often have you saved because you think you should, only to spend it on something unexpected and arguably frivolous?

How the System Works Against Us

If credit card companies and lending institutions feel a bit predatory, it's probably because they are. Most of these institutions are well aware of the statistics. That's one reason your mailbox is likely to fill up with credit offers each month. Lending companies base their whole business model on the notion that most people are not good savers.

After all, if you don't have the money to buy something, it's simple to run a purchase as credit. It can make it feel like you have more money available when what you really have is a greater debt obligation. And interest isn't cheap either—credit cards often charge anywhere from 14% to 30%.

Even traditional banks are out to make a dime on "human error." Overdraft fees are a silent killer, leeching money from those who are without. Reports show that big banks took over $11 billion in overdraft fees in 2019, disproportionately affecting the most vulnerable people. Those hit hardest are people who tend to carry low balances, averaging less than $350.

Tips for Saving Money

If you're ready to overcome "DNA" and say yes to savings, we're here to help. In fact, we can even assist in surmounting the typical hurdles of financial institutions.

To take a page from Klontz, you'll have to trick your subconscious mind. Essentially, you've got to cater to your brain's most primal programming: fear or pleasure.

1. Use All of Your Senses

Think back to your early school days. Your behavior was often reinforced with things that excited the senses. It could have been a good behavior chart or stickers for a reading program. Maybe you even had celebratory pizza parties for reaching certain classroom goals.

The reasoning goes beyond just fun. Educators are taught to use the senses to reinforce good behavior and learning. Klontz explains that "Any work to change the subconscious has to be sensory. It has to go beyond words."

So, get your savings goals in mind, and start involving your senses. If you're saving for a vacation, a vision board can help set the mood and rewire your brain to accomplish that goal. Enhance the experience by taking in music from your destination or eating dinner out somewhere representative. The more you can immerse yourself in the excitement of the goal, the more motivated you'll be to make it happen.

2. Set It and Forget It

If you struggle with savings, sometimes the best solution is the one you don't have to think about. For example, how many of your bills do you have on auto-pay? And how often do those bills get paid? They get paid every month. So it stands to reason that if you automate your savings and treat it like another bill, you'll do a better job of saving.

Employees who enroll in an employer-sponsored 401k, for example, have automated their savings. A portion of their paycheck goes toward the plan before the check ever hits their wallet. And you can't miss what you don't have. The result is stronger retirement savings.

3. Initiate the Fear Factor

We don't want to scare you; however, psychology suggests that a little fear can go a long way in helping you reach your savings goals. So long as it spurs you to action. Instead of us scaring you, however, it's more effective if you let your imagination run its course.

To rev up your savings goals, a bit of introspection is required. Consider what your life would look like if you didn't save a dime. What would your retirement look like? In fact, what might your final weeks on this earth look like? Invoke your five senses again, and really envision what you might encounter.

If you're looking for more short-term incentives or imagining something too far in the future is difficult for you, take a different approach. Imagine your life a year from now, and an emergency strikes. Would you have enough money to pay for the unexpected? What would happen if you lost your job? 

Consider your individual situation and how you may want to prepare yourself for the road ahead.

4. Find Accountability

Many journeys are made easier by having an accountability partner. Work deadlines, fitness goals, and getting sober are just a few examples of things made easy by partnering with someone. So why not partner with someone on your savings journey?

With so few people hard-wired for saving, chances are you know someone looking to build better savings habits. Help hold each other accountable by working on your savings goals together. This could take the form of a contest or a dollar goal. The important thing is that whatever you do feels rewarding upon completion. That's how you trick your brain into enjoyment.

5. Raise the stakes

We all have values, people, and causes that we like...and ones we don't. Raise the stakes on your goal by identifying an organization you disagree with. Write them a check for $100 and then entrust it to a friend. Then, set a savings goal for yourself. If you don't meet that goal in the specified time, give your friend permission to mail the check. You'd be surprised how motivating that can be.

Increase Your Savings with Monorail

You can't blame your DNA forever. At some point, you've got to take responsibility and own your results. Ready to start saving more money? 

Join Monorail to begin automating your savings today. So you don’t rely on motivation to reach your goals any longer.

See what saving with Monorail could look like for you.

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