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4 Reasons You’re Not Saving Money

Maurie Backman, The Motley Fool

We all need savings -- for emergencies, retirement, and other goals. Here’s why you might be falling behind.Image source: Getty Images

A glass jar with its lid open is overflowing with coins.

There are plenty of negative consequences that might ensue if you don’t save enough money. If you neglect your emergency savings, for example, you may have no choice but to rack up credit card debt the next time an unplanned bill falls in your lap. If you fail to build a nest egg for retirement, you might struggle to pay the bills when you’re older and unable to work. And if you don’t build a college fund for your kids, they could wind up with mountains of student loans upon graduation.

That’s why you must make saving money a priority. If you’ve been failing in that regard, it could be due to one or more of these things.

1. You don't have a budget

Without a budget, you’re apt to have a hard time determining where your money goes month after month. And that, in turn, could make it difficult to save.

If you don’t have a budget in place, setting one up is easy. Open a spreadsheet and list your recurring monthly expenses -- things like rent, car payments, food, utilities, and cable. Then, factor in once-a-year expenses, like your annual warehouse club renewal fee or life insurance premium. Finally, compare your total monthly spending to your earnings. If there’s no room left over for savings, you’ll need to cut back on some expenses -- and having that budget will make it easier for you to pinpoint which bills to slash.

2. You're not automating your savings

Some people need to be tricked into saving money because they don’t have the willpower to do so without a push. If you’re one of them, then you absolutely need to start making the savings process automatic. Otherwise, you’re likely to get stuck in an ongoing rut.

If you’re behind on building an emergency fund, arrange for a portion of each paycheck to land directly in your savings account. If your retirement nest egg needs work, sign up for your employer’s 401(k), which will allow you to have money deducted directly from your paycheck. Or find an IRA with an automatic savings option, which will allow money to filter directly from your checking account into that plan.

3. You're giving in to impulse buys

Many people fall victim to impulse buys, but if you continue to do so, your savings efforts will continue to get thwarted. While you can’t avoid retailers forever, you can help prevent impulse buys by implementing what’s known as the 24-hour rule.

The rule goes like this: Every time you’re tempted to buy something you weren’t planning to purchase, force yourself to wait a full 24 hours before moving forward. Much of the time, you’ll realize within that time frame that you don’t actually need the item in question, at which point you’ll be able to take the money you would’ve spent and stick it in savings.

4. You haven't mapped out your goals

It’s hard to prioritize your savings when you don’t really know what you’re saving for. Identifying your savings goals might motivate you to focus on hitting them, so spend a little time thinking about your personal priorities. If, for example, your goal is to build an emergency fund with six months of living expenses over the next two years, you’ll be able to do some math and see how much you need to save on a monthly basis to make that happen. The same holds true if your goal is to pay for your child’s education in 10 years. Mapping out your goals could spell the difference between being a better saver and falling behind.

If you’ve had a hard time saving money, it’s time to break that cycle. Avoid these traps, and with any luck, your savings balance will grow before you know it.

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