7 reasons why people find it difficult to save money

Saving, and subsequently investing is the first step towards your financial goals.  Yet, many of us find it difficult to take this first step. This is arguably more common among people who have just started earning, but it is not uncommon to see people who are well established in their career unable to save!

Here are 7 reasons why people find it difficult to save money.

why people find it difficult to save money.

1.Low income 

You need to begin somewhere to end somewhere. Right?

Having a decent source of money is the starting point. If you don’t have a stable source of income, or have low income, you are unlikely to save much even with a frugal lifestyle.

2. High recurring expenses

If you are staying at a posh area or have a well furnished big house (bigger than what you need), have high cost of utility bills (Air conditioning in summers can lead to high electricity bill!), multiple domestic helps, kids’ school with high fees etc. be ready to save less money. The bad thing is that these expenses will come month after month, denting your savings plan.

3. Lifestyle needs

Do you order food every alternate day (and waste half of it!)? Like to party every weekend? And unplanned trip\s (with expensive last-moment flight tickets!) are cool? And fashion is something that changes every season? Are you aware of how much dent they can put on your finances?

4. Taking too much debt

Home loan EMI, car loan EMI, personal loan EMI, credit card EMI – Are these an integral part of your life? Then you have too much debt in life.

In this case, a good chunk of your income will be dedicated to servicing this debt, rather than saving money. And the fact that you got into so much debt is probably an indicator of you not saving enough!

5. Poor budgeting & tracking of money 

You don’t realize when the money that comes in goes away?

The probably lies with budgeting and tracking of money. Having a budget based upon your inflows and net outflows (and possible optimizations!) can be a good starting point.

6. Lack of financial goals

Having a goal can actually enable you to save. “How to save money for this goal” can be the starting point. And assuming that you have a decent source of income, you can start thinking of ways to save money.

This can take many routes – for example, reducing the frequency of eating out (say, twice a week to once a fortnight!), reducing frequency of buying new clothes (say, once a month to once a quarter) or moving to a smaller apartment (which still fulfills you need, but is less expensive).

The starting point need not be a lofty goal (e.g. buying a car or house). You can start with a very small goal too (e.g. saving for a new phone)

7. Unforeseen circumstances

Unplanned and unforeseen circumstances are  …well, unplanned and unforeseen. Some may require one time expense (e.g. replacing a lost phone) while some may require recurring expenses (e.g. medical issue in family). These unforeseen expenses can severely dent you financial plans.


What is the solution if most of the above holds true for you?

I would suggest to follow the below 3 steps to get started to save money.

  1. Identify inflows and outflows. You need not identify each and every item you spend your money on, but at least get the broad idea about where is the money coming from and where is it going.
  2. Identify areas where you can cut back expenses. Again, you need not go overboard with stopping eating out altogether or not going on shopping trip at all, but do identify areas where you can cut down on. Avoid falling prey to lifestyle trap.
  3.  Invest the saved amount. If you have a contingency fund in place, this saved amount can be invested in a place which is not easily accessible. This way, you may be able to control the urge to go back to old ways.

(Also read –  10 practical tips for youngsters to save money)

Saving is the first step towards investing. And investing well can be a good first step towards financial independence, if you are aspiring for one.


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