6 Common Excuses for Not Saving Money

Photo: B-D-S

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’ve heard most frequently so far. (See also: 37 Savings Changes You Can Make Today)

Excuse: “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.

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.

Excuse: “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.

Excuse: “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.

Excuse: “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 like 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.

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Meg Favreau's picture

I used a variation of the last excuse at my first job out of college, and I totally regret it. I decided not to use my company's 401(k) because I didn't intend to stick around for more than a year, which is when the company would have started matching my contributions...so I thought it wasn't worth it.

Guest's picture

Good article but I always hate the 15% mutual fund argument. I started when I was 25, have put at least $1000 a year in there, keep a strict eye on my portfolio, do my research, and make occasional adjustments. I'm 40 now and I highly doubt there will be anything close to $340,000 in there by the time I'm 55. Where are these mythical 15% average return mutual funds? Anyone know? Even if you search for the best performing funds in the world, most of them are sitting around 8% tops for a 20-year return.

Tara Struyk's picture

Thanks, Edward. You make a good point. The higher percentages are often used to illustrate the power of compounding. That said, even at a much lower interest rate, the point here is that the longer you wait to start saving/investing, the more you fall behind. This means that investing a smaller amount of money early is actually worth more than investing a larger sum several years later. Unfortunately, investors can't control the markets; what we can control is ensuring that we set money aside and get the most we can with the resources available to us. It sounds like you're on the right track!

Guest's picture

While I agree with everything this article has to say, you go out and find me a 15% return on a mutual fund. I dare you. You can barely get that kind of return on relatively risky stocks. You're more likely to see those kind of returns with options and derivative trading. But please, by all means, show me this 15% ROI mutual fund. I'm putting all my money in this sweet low-risk, high-return investment.