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What keeps you from saving?

Maybe it really does take every dime to make ends meet. Or maybe you're not holding yourself accountable.

By Donna_Freedman Nov 5, 2012 1:05PM

Logo: Man smoking (Steve Mason/Photodisc Blue/Getty Images)The U.S. personal savings rate dropped to 3.3% in September, according to the U.S. Bureau of Economic Analysis. This time two years ago, we were saving 5.6%.

Pick your reasons why: stagnant wages, rising costs of food and fuel, rent/property tax increases, utility price hikes, high student loan payments.

Or how about: frequent meals out, big televisions, expensive vacations, buying more car/house than you can afford, and our increasing national tendency to be smartphone rich and cash poor.

In some cases, it really does take every dime just to keep the lights on. The under- or unemployed truly may not be able to save, and even those who make decent money are increasingly pinched.

Be honest, though: Do you skip saving because you can't afford to, or because you don't want to do the hard work of holding yourself accountable?

One couple I know has zero savings and no emergency fund, and they are regularly late with mortgage and car payments. Yet somehow they have the money for junk food, smartphones and satellite television. Their main financial tool seems to be hoping that the checks clear; they consider nonsufficient funds charges a necessary evil.

Their bank probably loves them.

Round up the usual suspects

As noted, some people can't make ends meet because they don't earn enough or can't find jobs. Others sabotage themselves with one or more of the following bad habits:


Not having a budget. Without some basic money management, you bleed bucks on things like late fees and bounced checks. Two or three of those per month means $60 to $75 that won't go into savings.

Picture yourself putting three or four $20 bills on the barbecue grill and turning on the gas. Bad idea, huh? Especially when you can: 

  • Automate payments, making late fees a thing of the past.
  • Plug your finances into an online budgeting tool like or
  • Go to MSN Money's personal finance page for articles on the basics of budgeting.

Autopilot spending. Do you tend to buy a soda and a bag of chips when you go in to pay for your gasoline? Grab a couple of magazines while waiting in the supermarket checkout line? Take money from the cash machine on Friday even though you have no firm weekend plans?

Get one of those online budgeting tools going, and track your cash for a month. Or track it on paper. The amount of cash you piddle away each week might make you cry.

You don't have to give up fun. You just need to be more intentional about it.

Vices. Just about everybody has a nonessential but oh-so-satisfying treat: beer, pedicures, cigarettes, lottery tickets. Personally, I could give up Diet Coke or midnight movies. But I don't want to, so I treat myself -- after all the essentials are covered. That includes putting money into savings.

Again: You're allowed to have fun. Just don't do it at the expense of long-term security. Take care of business before you see to your pleasure.

The bigger picture

Not having an emergency fund.
This sounds counterintuitive: I can't save because I haven't saved yet? Yes. When you don't have that cushion, an unexpected expense can sabotage your budget: You end up bouncing checks, adding to existing consumer debt or, heaven forbid, taking out a payday loan. The extra you pay out is cash you don't get to keep.

Don't give your money to a bank, a credit card company or a payday lender. Give it to yourself, by putting it into savings. Start with the $500 that MSN Money columnist Liz Weston recommends for a baseline EF. Coaxing just $10 a week out of your budget will get you there.

Or automate savings from every paycheck, which will force you to learn to live on what's left. You might have to cut back on smoking, skip the payday pizza, drink water instead of soda and give up taking the kids to a movie every Saturday.

Yep, you'll miss those things. My advice? Until you build yourself that cash cushion, find some cheaper ways to have fun.

Think of the bigger picture: The next time a tire blows out or your kid breaks her glasses, you'll be able to pay cash for the unexpected expense. The stress that unexpected expenses used to cause will be gone.

Believe me: You won't miss that sort of thing at all.

More on MSN Money:

Nov 5, 2012 6:29PM
Wells Fargo was charging me a $5 per month fee just to have a savings account. The interest on my $12,000 was not enough to offset the monthly fee... so I removed it from the bank...
Nov 5, 2012 3:41PM

I just read an article that restaurants are hurting because the 18-24 group isn't eating out as much any more due to the economy.  Seems those darn kids are RUINING an entire industry.  The point of the article was someone needs to get these kids back in restaurants several times a week for the good of the country.  Is it any wonder young people don't save?  They're bombarded by the self-serving industries and corporations to NOT save, to spend everything they have on STUFF.  And then blame some other generation because they don't have any savings.

Nov 9, 2012 2:36PM

Very good article.  I have been saving since I've been working.  I put 15% of my income into my 401K (this happened over a period of years, incrimentally it increasing at each raise).  I fund my emergency fund contantly - $300 a month right now-automatically deducted, also fund seperate funds for car repairs, annual expenses (home insurance, property tax, car registrations and plates) monthly - easy to do with on-line savings accouts.  These are also automatically deducted.  Windfalls like bonuses, profit sharing, tax refunds, etc. get divided into more accounts - extreme emergencies and travel fund.

I use the local emergency fund for any minor emergencies that come up.  If it builds up too high, I will transfer some of it to another fund.  And I do this on about $50,000 a year (gross, less after taxes, insurance, etc)  At present, I have about $30,000+ that is easily accessible but not too easy!  Yet, my home is paid off, cars paid off, no consumer debt at all.  It can be done, but it takes some discipline. 

Nov 6, 2012 3:49PM
Major point they missed in this article -- savings and good money management is what you the parent teach your kids starting when they drop coins in the piggy bank and say the word dollar. By the time they are 18+ you are 17+ years too late. It isn't just what you have but what you do with it. This is a how-much-a-month pay-me-later- put-it-on-plastic everybody-owes-me gimme-gimme generation, zero understanding of owe vs own. You can educate yourself about money management and basic investing for free at the public library, well your tax dollars pay for it even if you won't get off your butt to make use of it, public schools sure don't teach money management basics. We earned much less than average, I was a barber and my hub worked on a dairy farm, we have a modest little house that is paid for, we paid 2 years of college for each of our 4 kids, we now have 529 college accounts for each of our 7 grandkids, and yes we saved and invested a few bucks so now that we are retired we are OK. It starts at home, but sadly you cannot teach common sense.
Nov 10, 2012 5:46PM

I love this statement:

    "One couple I know has zero savings and no emergency fund, and they are regularly late with mortgage and car payments. Yet somehow they have the money for junk food, smartphones and satellite television."


One couple REALLY?!!  IT is the MAJORITY of people sister -not one couple. The vast majority of us -including our federal, state, and local governments. It is a part of our culture to not only live BEYOND our means, but to also cry and blame someone else when we can't make these unreasonable lifestyles affordable. We all want to live like the rich and famous - we just want someone else to foot the bill. So we never save for a rainey day - an event which is bound to happen in everyone's lifetime - but we spend, spend, spend as though we will ALWAYS have that paycheck, no hiccups along the way. Then when the inevitable hiccup comes - we cry and demand "Somebody do something".


So - to answer your question: 

         "Do you skip saving because you can't afford to, or because you don't want to do the hard work of holding yourself accountable? "

WE DON'T WANT TO BE HELD ACCOUNTABLE -not by you, not by him, nor her, and certainly not by ourselves!

Nov 6, 2012 12:11PM

As to the low interest rates and high fees, the last few years we've been saving in checking accounts with on-line banks.  Absolutely no fees and two percent interest if we pay one bill online and use the debit card 12 times a month.  We pay all our bills online, as it is, and this bank lets the transaction initiate with the creditor to the bank or from the bank to the creditor -- whatever you want.  (We do this with an automatic bill payment to a utility.)  As to the usage requirements, my husband rides the train to and from work enough that we just meet it through paying his fares.  (He has to take his car some days, so this is cheaper than buying a monthly pass.  We've checked.)  When we do have to make a purchase to meet the usage quota,  I just get something we need anyway from the dollar store such as food, toiletries, cleaning agents, etc.


We're now making enough interest that it does make a difference in our monthly savings endeavors, so, yes, it is worth the effort.  It just surprises more people don't use this venue for saving.

Nov 5, 2012 3:44PM

Wow another insightful article that answers it's own question.


As far as saving-saving, i.e. socking away money in CD's and the like.....well if you do happen to be able to do so don't you all just love the return. Where are we these day's with CD rates? Figure in the almost 0% you get from your bank, then subtract the "true" rate of inflation and just watch those $$'s shrink.

Nov 5, 2012 4:07PM
hummm....having to use it to buy food, shelter, know just the usual necessarities.
Nov 11, 2012 2:56AM
We are making 1/3 of what middle class men in the 60s made and your asking why we are not saving? Thats right, 1/3. Go back and look at the prices for major purchases like cars and homes. Then look at our food cost, clothing, insurance, gasoline and electricity. Education as well and you will quickly see that we've been had. It was done quietly, even silently. Maybe thats why they call it a silent war. It was so gradual most of us didnt notice. The media kept us occupied with stories of shortages (mostly faked) as well as inflation rates, bank rates etc all to make us think that it was happening totally by accident.Its amazing what you can get away with when you control the media AND the government. All that hoopla about us making great strides with factory automation and computerization. Where's the benefits? We are so far behind the 8 ball that our great great great grandchildren wont be able to pay off the debt that has been dumped on us. We can no longer allow ourselves to be so ignorant. Every American needs to know who's doing this to us and our country.   
Nov 5, 2012 5:38PM
What keeps people from saving?  Well, the government bails everyone else out and taxes me for it ... so why bother?
Nov 5, 2012 3:38PM

Why should we try to save money when the banks give such abysmal interest rates for savings accounts (one bank in the building where I work offers a whopping .25 - that's point two five - percent) that won't even remotely cover the cost of having an account?

Nov 6, 2012 6:16PM
Traveling and attending funerals and visiting the sick will eventually deplete savings too.
Nov 11, 2012 10:05AM

Yes, obviously this story must be mastered by some banks (as usual, hidden agenda) who just love to have our money for free, and then you/ we take the inflation loss, as well as having to pay taxes on that miserly  interest-- except of course 401 K gain/int a, unless you all of a sudden need that money for 3 years of no job, never mind that you pay SS/Medicare of all 401 K first, double if you are self employed, which by the way  are many people these days, remember it is not just the 22 million looking for a job, what about the 100 million, who had a 1-3 year no job the last 10 years, in which case they got set back a decade in recovery efforts.--Never mind new college students looking!

Never mind as well those DJ investors, the Dj is right now only 5 % higher than jan 2001, so do not even try to explain why we must invest, in that period our USA money has lost at least 35 % in value.

Most people are very easily snowed here every day.

Never mind all the big safe government/school/police/ fire/university people, who are always safe, and laugh at the rest of us with their pensions and medical all paid for, and they are a big part of the comments here, since they work in many cases about 1/2- 2/3 of the time an engineer like me flying all over the world has to do, and that my friends need to be changed, that is exactly like the old Soviet Union, only the government types were actually "treated to" tax payer money.--And yet those here make so much money that they even vote Republican, because they think they are rich, and have it made. I have met Garbage "Engineers" right here down in NYC who makes over 100 K a year and everything is paid for, where regular people would get 30-35 K, and they work in NYC 2 hours a day and then they click on for overtime every day, and then because of that they get 80 K a year in pensions later, all paid for by us/subsidized--no regular company would ever do that, that is pathetic!---And that is corrupt!

Based on positive negative comments here on this one I/we can see how many of those free        "loafers" have time to sit here all day!!! ----Yes, I am old  and have seen 2600 food plants and about 3000- universities, being into molecules of all the food developments/design/testing of what you and animals eat, and retired, just so you can spare those comments, on why I am on here!


But do have som savings for emergency, otherwise invest in producing stuff, anything--they are the only ones currently who actually make money, like Apple, an Microsoft, as well as most food production/utilities, although slow they do always make stuff, so they are alive.--Forget real estate, unless you are buying and rebuilding and selling.

Nov 11, 2012 1:58AM
"you people" as mrs. romney would say just don't have a clue! oh, excuse me I have some cake to eat as I can't afford bread!
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Donna Freedman's Frugal Nation blog is for readers who want to live cheaply -- whether due to necessity or a lifestyle choice. It explores living sustainably and making life more meaningful at the same time.


Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.