Why don’t people save money? The biggest reason is the consumeristic culture that’s pervasive in society. People have a need in order to spend their money instead of saving it for a rainy day down the road. It’s quite difficult to fight that culture, no matter how hard we try.
Saving money is the way to freedom. There are many people who downright refuse to save money because they think, “save for what?”. They don’t want to protect their future and it’s all about living in the now. That’s just not true. Rainy days always happen when you least expect it.
There were many of my classmates who joined high flying names like Uber in 2019. However, when the pandemic hit in 2020, they were out of a job. They weren’t even that far along in their career either to be experiencing layoffs. They were 3 or 4 years into their careers when it happened.
Layoffs don’t happen with warnings. Layoffs happen suddenly and without warning. It’s the beauty of the “at-will” employment standard that we have. People get those 30%+ salary income raises by switching jobs that one time. Then they think the good times last forever.
That couldn’t be further from the truth. This is why people don’t save money. They think the good times last forever. The good times do last forever, until they don’t. In this hyper competitive world we live in due to globalization, change happens quickly, rather than slowly.
We have to be prepared for when the inevitable change happens.
Why Don’t People Save Money? 9 Reasons Why
Below are the nine biggest reasons why people don’t save money.
1) Consumerism Culture
This is the biggest reason why people don’t save money. At an early age, we’re taught that the Jones have the good life. That they have a life that we should strive to achieve. That’s not the right way to think or look at it. When everyone else is consuming, it’s a good idea to be producing.
When everyone else is buying things they don’t need, you should be saving your cash at all costs. The consumeristic culture is pervasive across the world. The government and companies did a good job of convincing us that having stuff is the way to happiness. That’s just not true.
True happiness comes from within, not from external validation. Why don’t people save? When everyone else is doing it, it’s hard to not be the 1,000,001st person doing the exact same thing. That way, if you’re wrong, well, it wasn’t your fault. It was the crowd’s fault.
It’s not a good idea to follow the crowd. Many people are buying things to fill a void, anyway.
2) Credit Card Debt
Credit cards are wonderful forces of nature. Not only do they help build credit, they help with cash flow management and give cash back to boot. Credit cards are wonderful tools for the customer. However, there are many people who mismanage credit cards.
People do not pay off their credit cards in full every month to avoid the interest charges. Credit card debt reached an all time high of $913B as of September 2022. This is even higher than the great financial crisis of ’07-09. Why don’t people save money? People rely on credit cards.
They see and use credit cards as a way to bridge the gap between their funding wants and the money that they actually have. With inflation running at a multi-decade high, people are relying on credit cards more so than ever before. That is a dangerous place to be in.
Relying on credit cards means people are at the complete mercy of their bank. Which is not good.
3) Thinking the Good Times Will Last Forever
We’ve always been through boom AND bust cycles. There have always been periods where financial stability and asset prices busted. The boom and bust cycle have happened and will continue until the end of time. The bust cycle of 2022 taught many investors a valuable lesson.
Why don’t people save money? They don’t think rainy days last forever. They see the flashy billionaires spending boatloads of money and think they should have the good life as well. If you actually analyze the billionaire spending habits, they don’t willy nilly spend their money away.
The good times will never last forever. When the tough market conditions happen, then we finally get to see who actually practices sound financial tactics and who took on too much risk for their own good. Many people who bought $100k+ homes over asking waiving inspection in 2022 will feel pain.
Downturns are inevitable. They’ve always happened and they always will.
4) Why Don’t People Save Money? They Think Short Term
They think saving $10 today won’t matter. In the short term, $10 absolutely does NOT matter. However, in the long run, $10 compounds to enormous gains down the road. Especially when compounded at an 8% rate of return per year. The short term doesn’t make a difference in the long term.
The reason why I save as much money as I possibly can is in order to protect myself from myself. There’s a reason why I max out my 401k every single year without fail. It’s money I can keep to protect myself from making bad choices. As long as I max out my 401k, I can spend the rest of my money!
Guilt free, at that. Why don’t people save money? They think too much in terms of days and weeks and don’t think in years and decades. The decades+ long project is what ultimately matters in the end. Only then, do we truly get to see who firmly holds the all-time greats title.
Thinking in days, weeks, and months are lowering people’s chances of building wealth.
5) They’re Unable to Practice Delayed Gratification
I get why delayed gratification is so difficult. We are biologically programmed to have things now. It’s an evolutionary advantage. When we are hungry, we satiate our hunger now so we don’t starve. It’s an evolutionary advantage to have things when we need them in the moment.
However, we have to go against our evolutionary urges. The short term needs may interfere with our long term needs. Why don’t people save money? They have a need to have things now the second they want them. Amazon did a good job conditioning people that it’s OK to have things now.
it’s OK to have 1-day delivery without worrying about the consequences to your dopamine chemical imbalance. Why wait when you can have it literally on the exact same day? Good things come to those who wait. There’s nothing wrong with waiting for the really good stuff down the road.
I promise it’ll come as long as you put your mind and effort to it.
6) Why Don’t People Save Money? High Inflation
Whether we like it or not, we are living in one of the highest inflationary times in 40+ years. That is a one in a lifetime event. We’ve experienced so many once in a lifetime events that it is uncanny. The coronavirus pandemic, record high inflation, the war in Ukraine, and the like.
And we haven’t even see the worst of it all, I’m sure! This all happened in my 20s and I feel like I already aged and experienced 4 decades worth of once in a lifetime events. In any case, the reason why people don’t save money is because of high inflation. Just being able to afford food is pricey.
The basic necessities like food and rent are going up in price at a record pace. That’s just nuts! Those are things we need in order to live. Not things we want, but things we need. Inflation have decimated many people’s finances and spending plans this year.
The even scarier part is that people are funding their inflationary lifestyle with debt. There’s only one way that story ends.
7) They Live Bigger Than Their Paycheck
People are broke because they live bigger than their paycheck. Not because they don’t make enough money. But because they spend too much. It’s a dangerous spot to be in. When comparing spending versus earnings, spending is the part of the equation where we have the most control.
We don’t need to go out and stay at fancy hotels every weekend for vacation. Or have to go out to eat dinner every single day. That’s just not how it works. Traveling is a luxury, not a necessity. The more people who understand and figure out how to live within their means, the better off they are.
Why don’t people save money? People don’t realize their paychecks are their limitations. People really should NOT be spending more money than what they are earning. However, some people see their paychecks as suggestions and not limitations. So they go out and spend even more money!
That’s not right. Financial prudence is necessary. There’s no need to spend more money than the money you’re bringing in.
8) They Compare Themselves to Others
I’ve met so many people at my job who were curious as to what my finances were. They would want to know which neighborhood I live in, what cars I drive, how much I spend on vacations, and the like. There are many people who wanted to know the information in order to compare themselves to me.
That’s just not right. At the end of the day, it was their life and their story. There was no need to live their life based on someone else’s standards. Why don’t people save money? It’s because they compare themselves to others. When one person buys a Tesla, everyone wants to buy a Tesla.
It’s one of those cases where jealousy gets the better of people and the only people who win are the companies who sell those products. People should not compare themselves to others especially when their life is just fine. What people see is the shiny new car.
What they don’t see is the debt that was needed to fund that purchase. Comparing finances is not the smartest move to take on.
9) They Don’t Educate Themselves on Financial Literacy
The real generational wealth is passing down financial literacy. Why don’t people save? They score low in the financial literacy scale. Therefore, they have a need and a want to spend as much money as they possibly can. Financial literacy does not have anything to do with a college education.
There are many college educated people I’ve met who score very low on financial literacy. They don’t quite understand what it takes to build wealth and make a lot of money. They practice individual stock picking and scoff at index fund investors, even when the index fund investors outperform them.
Financial literacy is valuable. It should be a class that should be taught in school by real life millionaires. However, that’s not the case it is today. The government does not want to educate you on strong and sound financial practices. If they did, there would be no one working after the age of 45.
The government needs you poor enough so you have to keep working but not so poor that you start to revolt. This is the world we live in today.
Why Don’t People Save Money? Lots of Reasons
The nine reasons above are the biggest reasons why people don’t save money. However, there are many more reasons on top that isn’t outlined here. Whatever the reason is, people make excuses to spend as much money as they possibly can. They think, “oh, I deserve it” or the like.
Saving is the number one step in order to build wealth and financially grow. There are many more nuances to that but the building foundation starts from saving money that you earn. Then you can go into earning more and the like.
My parents instilled great financial frugality habits upon me ever since I was little. I started working at the now bankrupt Sears when I was a teenager and I banked and saved every single penny I earned. Living under the roof of Mom and Dad really helped.
Why don’t people save money? Variety of reasons. But the most important lesson is that you shouldn’t follow the crowd. You should follow your own path and be on the path of profitability, growth, and building wealth. Once you make saving money a habit, it becomes enjoyable.
There’s no reason to make a lot of money excuses only to end up with nothing to show for it by the end of it all. You have the power and ability to carve your own path to riches. If you’re living in the developed world, there’s no reason why you shouldn’t be wealthy.
Making money is more than a possibility.
Why Don’t People Save Money? 9 Reasons Shortlist
- Consumerism culture
- Credit card debt
- Thinking the good times will last
- They think short term
- They’re unable to practice delayed gratification
- High inflation
- They live bigger than their paycheck
- They compare themselves to others
- They don’t educate themselves on financial literacy
