Why can't I save money? 7 Challenges to saving and how to beat them

By Jennifer A. DiGiovanni

Putting away money may sometimes feel hard and your challenges to saving are valid. Your living expenses might be too high, or you might just lack good money saving habits.

Whether you want to stash some cash in an emergency fund or have long-term plans, like retirement or home ownership, your goals can be achieved!

Here are seven money-saving barriers that may be holding you back — plus advice on how to knock each of them down.

1. Spending too much on housing

For most Americans, housing — rent payment or a mortgage — is their largest monthly expense and their greatest challenge to saving. But with the median mortgage payment now around $2,800, are you taking on more than you should to own your dream home?

Experts advise to pay no more than 30% of your pre-tax income on housing. This includes utilities and, for homeowners, added costs like insurance, property taxes and maintenance. In addition to a higher mortgage payment, a recent study by Bankrate found that the added or "hidden" costs of homeownership recently rose to an average of $1,510 per month. Since housing is likely your biggest expense, it could potentially be the biggest rock to look under when searching for more money to save.

How do you overcome the challenge of rising house costs?

Is the lease on your downtown apartment expiring soon? Consider living outside the city in an apartment with more affordable rent. Looking to buy a home in the next year? You might be tempted to price yourself up to or beyond your budget. But if you buy a house for less than what you can afford, you can bank all the money you save on your mortgage payment each month.

2. Not budgeting for savings (or not budgeting at all)

We get it. The word "budget" doesn't exactly excite anyone. However, try to incentivize yourself to not only create a budget, but also include a line item for savings. Think of your budget as a financial game plan. This plan helps you set limits on your spending in certain categories, such as entertainment, or dining out. Plus, you can use a budgeting tool to track every dollar coming in and going out each month so you better understand how much you could be saving.

How do you add savings to your budget?

First, find the right tools that will help you create a budget. Once you've chosen a budgeting app or program that works for you, list out all your monthly expenses — bills, essentials, subscriptions, entertainment and more — and subtract these costs from your post-tax monthly income. How much is left over for saving? If you want to save more, track your spending for several months and find ways to free up more funds.

3. The “I’ll save when I make more money” mindset

OK, so maybe you're not saving as much as you'd like right now, but things will change when you get that promotion you've been working toward, right? Well, maybe.

Earning more money certainly makes saving easier. But as your income rises, and the years pass, do you expect your expenses to stay the same? Have you ever had a time your salary experienced a big jump? Are your expenses the same now as they were then?

This type of thinking can absolutely hold you back from starting to save right here, right now.

How do you change your savings habits now?

Start a new habit today by saving something. Even $50 a month gives you $600 a year. Don't put off saving with the expectation of having flexible income that'll help you make up for lost time. When you don't save money, you miss out on compounding interest that increases your account balance over the long-term. If you're tempted to push saving off into the future, remind yourself that as your income goes up, your expenses tend to go up, too.

4. Lack of measurable savings goal

Does your savings plan sound like this? Get paid, pay the bills, spend like you normally do, and then save what's left. What if you could figure out a smarter way?

Saving money is just like any other goal: It's much easier to achieve when you specify a target to reach. If you're looking to buy a house, stick a picture of your dream home on your refrigerator. Have a dream vacation in mind? Visit the library and check out a book about your favorite destination. Want to save more money? Write down a number. Visualizing and writing down your goals helps keep you accountable.

How do you become a goal-oriented saver?

Set a monthly savings target. When you hit that target, take pride in knowing that you stayed on track. When you don't, review your budget and decide if you need to make changes in your spending habits. Give yourself some slack if it was just one of those months where the car broke down, you had a major home repair, or you had another unexpected expense. Things happen but commit to starting again next month.

Bonus tip

Want to go a step further? Set up automatic transfers every pay day from your checking account to savings. It'll be done for you! Leverage financial tools, like Citizens Savings Tracker™¹, to automate your savings to help you stay on top of your goals.

5. Paying more on student loans than necessary

If housing is your biggest expense, student loan payments are probably next in line. The monthly average student loan payment is estimated to be around $300 for an undergraduate degree alone. That number is even higher, up to $700 or more, if you've gone on to obtain an advanced degree.

How can you spend less on student loans?

Look into refinancing your student loans. It could lower your monthly payment to make more room for saving, thanks to a lower interest rate or extended repayment term.

6. Giving into lifestyle creep

As you earn more income and settle into your career, you may notice your tendency to spend more as well. While it's normal to want to reward yourself for your success, think about opportunities to both spend and save your extra cash. If you find yourself thinking about spending more on a nicer car, a bigger home, or luxury vacations, it's also time to think about increasing your savings as well.

How do you resist the lifestyle creep?

Set long-term financial goals and stick to them. Make savings goals a percentage of your income, rather than a flat dollar amount. Ask yourself if you truly need the larger home, with added maintenance costs and expensive property taxes. Strike a balance between spending additional income on things you'll enjoy, while still staying committed to maintaining good savings habits.

7. Overusing credit cards

Credit cards provide flexibility when making purchases, but they also can lead to overextending your finances. Then you get a bill and wonder what the heck happened out there.

Often, the convenience of credit cards comes with high interest rates. To avoid paying interest, you may feel the pressure to make your full payments each billing cycle. Some months, you may be left to decide between overextending yourself to make the full payment — and thus cutting back on how much you save — or paying less and getting hit with interest charges.

How do you stop over relying on credit cards?

You don't have to wait until you receive your monthly bill to pay off your credit card balance. If it's easier to make smaller payments, track your purchases online. When you use a credit card to purchase a large item, do your best to pay it off as soon as it appears on your account. That way, you keep your bill to a minimum and stay within the constraints of your budget.

Another credit card tip

Avoid impulse purchases. Give yourself a day to think it over. If, after 24 hours, you still want to make the purchase, go for it. The extra time might keep you from indulging in those sounded-good-in-the-moment purchases we've all made and regretted.

Ready to take your financial goals?

Wherever you are on your financial journey, you'll likely experience some challenges to saving money. Citizens is here to help you overcome these obstacles with tips and tools to make budgeting easy. The Citizens Savings Tracker™ keeps you accountable and helps to ensure that you never miss an opportunity to save. We also offer automatic transfers from your checking to your savings account that allow you to set money aside and watch your savings add up.

Want to start a new path to savings today? Take the first step by opening an account with Citizens.