Why is it so hard to save money?

If you're wondering, "why do I struggle so much to save money?" you're not alone. In a Citizens survey of 2,300 adults ages 18 to 34, 47% said they don't budget, and only 9% feel like they're in control of their spending, both of which can spell trouble for building up savings.

Indeed, the rising cost of living expenses combined with a lack of planning can make saving your hard-earned dollars feel more difficult than ever. Fortunately, whether you want to stash cash in an emergency fund for unexpected expenses or have long-term savings goals like a home down payment or retirement account contributions, the right mindset can help you develop a healthy savings plan.

Here are eight money-saving barriers that may be holding you back, plus advice on how to overcome them.

1. Increased cost of living reduces buying power

Since 2020, the cost of buying everyday essentials has increased by nearly 25%. You've likely felt it when buying groceries, filling up your gas tank or dining out.

Although wages have increased for some industries, many people have less buying power as they struggle to keep up with the increased cost of living.

When money is tight, people may contribute less to their savings accounts or stop funding them altogether. Looking for creative ways to cut costs can give you some much-needed breathing room in your finances, so you have more to save.

Tips for saving with cost-of-living increases

• Consider buying used whenever possible. Many used items are still in excellent condition but are a fraction of the cost of a new purchase. Online buy-and-sell platforms make it easy to shop from home and compare prices.
• Instead of paying for entertainment, look for free or low-cost alternatives in your community, such as concerts, festivals, classes, clubs, meetups or volunteer opportunities.
• To manage the rising costs of food, cook at home and plan your meals around what's on sale. Comparing prices and using coupons and loyalty programs can help you stretch your monthly grocery funds.

2. High housing costs overwhelm your budget

For most Americans, housing is the largest monthly expense and the greatest challenge to saving. But with the average mortgage payment now around $2,000, are you taking on more than you should to rent or own your dream home?

Experts advise spending no more than 30% of your pre-tax income on housing, but it's not just your rent or mortgage payment that's taking a huge bite out of your budget. A recent analysis by Zillow and Thumbtack found that added or "hidden" costs of homeownership average $1,325 per month, or $15,979 per year. Since housing is likely your biggest expense, it could also be your biggest opportunity to save more.

Tips for saving with rising housing costs

• If the lease on your downtown apartment is ending soon, consider living outside the city in an apartment with more affordable rent.
• Rather than pricing yourself up to or beyond your budget, buy a house for less than what you can afford.
• Once you're living below your housing means, bank all the money you save on your mortgage or rent payment each month.

3. Lack of budgeting leads to overspending

Budgeting is essential for figuring out where you can save, but many people don't keep track of where all their money goes. If you aren't aware of how you're spending money, you're likely overspending on non-essential purchases, decreasing the amount of money you can set aside for savings.

Think of your budget as a financial game plan that helps you set limits on your spending. Using budgeting apps or tools to track every dollar coming in and going out each month can help you better understand how to adjust.

Tips for adding savings to your budget

• Find the right tools to help you create a budget and choose the best budgeting strategy for your financial situation.
• List out all your monthly expenses and subtract them from your post-tax monthly income to determine how much is left over for saving.
• Try the pay yourself first budgeting method to fund your savings first, before paying expenses.

4. Postponing saving for later delays compound interest

You may not be 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, not necessarily.

Earning more money certainly makes saving easier. But as your income rises and the years pass, your expenses tend to go up, too.

Don't put off saving with the expectation of having higher income in the future that'll help you make up for lost time. Starting contributions to your savings now enables you to realize the benefits of earning interest on your savings over time.

Tips for changing your savings habits now

• Start small. Even saving $50 a month gives you $600 a year.
• Build strong savings habits by automating your savings so you can't procrastinate.
• Identify your savings goals and cut everyday expenses to save money fast.

5. Unclear savings goals undermine a savings plan

Does your savings plan involve getting paid, paying the bills, spending like you normally do and then saving what happens to be left over? This is the default saving plan for many people, but there is a smarter way.

Saving money is just like any other goal: it's much easier to achieve when you set a target. 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. Visualizing and writing down your savings goals helps keep you accountable.

Tips for becoming 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 hit your target, review your budget and decide where you need to adjust your spending habits.
• Give yourself some slack if your car broke down or you had a major home repair this month. Commit to starting again next month.

6. Paying more on student loans than necessary

If housing is your biggest expense, student loan payments are probably next. The average monthly student loan payment is estimated at around $368 for an undergraduate degree alone. That number is even higher, up to $925, if you've gone on to obtain an advanced degree and are paying on loans for both.

Tips for spending less on student loans

• Check out income-driven repayment (IDR) plans for your federal student loans.
• Evaluate your current loans. Refinancing your student loans may be an option depending on your personal financial situation. A lower interest rate or extended repayment term could lower your monthly payment.

7. Giving in to lifestyle creep downsizes saving opportunities

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 time to think about increasing your savings as well.

Tips for resisting lifestyle creep

• Determine your long-term financial goals and stick to them. Set savings goals as a percentage of your income rather than a flat dollar amount.
• Ask yourself whether you truly need the larger home, given the 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.

8. Overusing credit cards prioritizes debt payments

Credit cards provide flexibility when making purchases, but they also can lead to overextending your finances.

Often, the convenience of credit cards comes with high interest rates. To avoid paying interest, you may feel the pressure to overextend yourself to make your full payments each billing cycle while cutting back on how much you save.

Tips for not relying on credit cards

• Don't wait until you receive your monthly bill to pay off your credit card debt. Track your purchases online and make smaller payments throughout the month.
• When you use a credit card to purchase a large item, try 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.
• Give yourself a day to think over impulse purchases. If, after 24 hours, you still want to make the purchase, go for it. The extra time might keep you from indulging in those spur-of-the-moment purchases we've all made and regretted.

How to overcome money-saving challenges

Saving money is easier when you have a plan, but it doesn't have to be complicated to be effective. A few simple changes to your habits can improve your financial situation and help you save more.

• Reduce expenses: Track your purchases for a month. Then review your list and look for anything you can cut back on or eliminate. Small purchases, like a daily coffee, can add up over time.
• Automate savings: Set up direct deposit and automatic transfers from your checking account to your savings every payday. Leverage financial tools, like Citizens Savings Tracker®, to automate your savings and help you stay on top of your goals.
• Create a budget: Allocate your monthly income to budget categories to prevent overspending. Periodically review your budget and adjust as your situation changes.
• Set savings goals: Have one or more clear goals to work toward. This makes it easier to stick to a budget and helps you stay motivated to grow your savings.
• Increase income: Look for ways to earn more money. Consider working overtime, taking on side work, selling unused items or negotiating a raise.

Ready to tackle your savings goals?

Wherever you are on your financial journey, you'll likely experience some challenges to saving money at some point. Learning how to budget and plan for common obstacles can put you on the path to achieving all your savings goals.

Want to start a new path to savings today? Take the first step by opening a savings account with Citizens. Then use Citizens Savings Tracker® and automatic transfers to take the guesswork out of saving, so you can sit back and watch your money grow.