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6 excuses for not saving money

Making excuses seems to be human nature, especially when it comes to money. Do you use any of these common 'reasons' to avoid saving?

By MSN Money Partner Nov 23, 2011 1:27PM

This post comes from Tara Struyk at partner blog Wise Bread.


Have you ever settled on a new exercise program, only to get a bad cold a few days in and happily throw yourself on the couch, relieved to have a handy excuse? Excuses must be human nature; I know I usually make them when I'm facing something that's new, that's hard, or that I just don't enjoy. And I've certainly made excuses when it comes to money.


In the years that I've been writing about personal finance and investing, I've also heard my fair share of excuses, mostly from readers who don't agree with my advice. The problem is, unlike good financial habits, excuses are easy to come by, even though most of them just don't stand up to reason.


Check out some of the ones I hear most frequently:


"I don't make enough to save money."

This may be true for some people, especially in this economy, but not having any money left at the end of the month doesn't necessarily mean you can't afford to save. After all, most people spend money on a number of unnecessary things each month, such as restaurant meals, impulse buys and cable TV.


Finding some money for saving doesn't have to mean voluntarily living in a dark, unheated room without any entertainment or luxuries, but if you've declared your budget too tight to put money aside before even looking for ways to reduce your spending, you're making an excuse.


"Interest rates are too low to bother with."

Interest rates are at an all-time low right now, and that does make putting money into a savings account a little, well, disheartening. However, it's likely that many of our grandparents -- and certainly our great-grandparents -- may have gone years without using a bank at all. Now that banks provide a safe place to park your cash, they pay interest in return for holding your money. Interest is a great way to grow your savings, but even if you get almost nothing, at least you have some cash when you need it. Plus, if you're able to put enough away, you can always look into investments with the potential for higher returns, such as stocks and mutual funds.


"I have too much debt to put money into savings."

If you have a lot of debt, it's important to focus some serious effort into getting rid of it. But that doesn't mean that every bit of money you can spare should go straight to your creditors. In fact, it's more important than ever to save when you're in debt because it can help you avoid digging yourself in deeper. If you don't at least have a small emergency fund, you'll be forced to pull out your credit card when unexpected expenses -- such as a car repair -- inevitably arise. Post continues below.

"I'll catch up later when my salary is higher."

In my experience, quite a number of people actually follow through on devoting money to savings when their salary increases. The problem is, if you wait too long, the time value of money can make it impossible to catch up. Consider this -- if you start putting $1,000 a year into a mutual fund with a 15% average return when you're 25 years old, you will have more than $340,000 in the bank when you turn 55. Start 10 years later, and you'll have to save three times as much per year to even come close to $340,000 -- and you'll still fall short by about $25,000. The bottom line is that if you start saving earlier, you won't have to work nearly as hard as if you put it off.


"I won't be able to save enough to make a difference."

This is one excuse that often comes up when saving for retirement. With many experts citing figures such as a $1 million retirement fund, it's easy to be discouraged. What many people forget, however, is that even a little bit of extra money can make a difference in your standard of living during retirement. If you retire today, you'll get about $1,100 per month from Social Security. Depending on where you live, that'll probably allow you to get by, but you won't be taking any holiday cruises.


But what if you were able to save $100,000 for retirement? It's a small sum compared to $1 million, but it could mean an extra $500 per month in income during retirement. That's enough to make life a lot more comfortable. The best part is, it only takes savings of about $1,000 per year, or $83 per month (assuming you save for 35 years at 5% interest) to arrive at that sum.


There's an old proverb that says that if you don't want to do something, one excuse is as good as another. When it comes to making changes to how we handle our money, most excuses arise from a desire to avoid rocking the boat, even when a financial shakeup is often just what we need. Excuses, therefore, act as a mental escape route, allowing us to avoid tackling our finances, rather than facing them head on. And there's no good excuse for that.


More on Wise Bread and MSN Money:

Nov 24, 2011 10:58AM
Where do I find a mutual fund with 15% return for 30 years in a row? Amazing!
Nov 25, 2011 7:54AM
Never mind the 15%..where do you get the 5% on your savings?
Nov 25, 2011 6:19AM
It's never too late to make some difference.  I didn't think I should live below my means until my late 30s when I woke up. I bought my first home at age 40 (15 year mortgage).  Even with the small pension I have, I wouldn't have been able to retire comfortably at 56 if I didn't have a paid-off mortgage and a nest egg that was large enough to take care of emergencies.

There is a major difference between wanting to save and actually saving. The very first thing is make a budget and once that is in place work up a plan and put it in writing. Next determine what is a want and an actual need. Some needs are food, housing, clothing, transportation and medical. If the budget is tight food does not include eating out, (pack your lunch) clothing does not include designer jeans, housing means minimum needed and most of all transportation does not include a late model, gas hog, SUV.  One last thing live your life and stop trying to impress your friends.


I believe most people choose to be poor. No, I do not think they set out to do so; however, due to their own actions they end up poor. I will explain one of several cases that I am familiar with. Let's start with 2 eleventh grade girls: one gets pregnant and has a baby out of wedlock, then drops out of school and has the second child. The other girl continues through high school, enters college and receives an engineering degree. Fast forward 7 years. Girl number one is on welfare and other government aid. Girl number 2 has her degree and a job paying a $79,000 annually salary. Both girls had the same opportunity; however, they made different choices.  

Nov 25, 2011 2:02PM
my nest egg is small but i could not get by without it- save whatever you can while you can- 1100.00 ss is peanuts when the  car insurance , property taxes and homeowners policy comes due each year-
Nov 26, 2011 10:54PM
How about things like my toll is going up 50% next year - I have to get to work.  So I have to pay an extra $240 next year on tolls.  My daughter needs braces next year, my property taxes went up, so we have to put extra money in escrow a month.  Food prices gone up.  I could go on and on.  So I've made a plan on cutting money and we will save some money next year by cutting some things, but this means I have to decrease the amount of money we put in our savings account by almost 70%.  For some people it has nothing to do the reasons in your article.  It has to do alot with the economy. 
Nov 24, 2011 11:06AM

Yeah, and when you're rich, everything is easy! Sarcastic


Thank you Miss Tara Einstein! Eye-rolling



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