Why Savings Fail

2011-01-19T05:16:00.000-08:00

About a month ago I decided to start looking at my savings seriously. I was overwhelmed by the sheer volume of information available. I simply didn't know where to start.

I have tried to save money before without success. When I started I was highly motivated, but this motivation dwindled over time and I found myself slipping into old habits and spending money on useless items that I often didn't really want or need. So prior to beginning my latest savings plan I decided to reflect on why my past endeavours failed.

I identified what i think are the 4 main reasons. I hope that in becoming aware of these barriers to savings success I can create a savings plan that worked for me.

Slow Progress

Savings do not grow overnight. Building a savings account takes time and dedication. In this world of instant access and immediate gratification I had forgotten how to be patient. The slow progress of my savings growth was having a negative impact on my motivation because I didn't have a clear plan to stick to.

Ineffective Goals

I did not set realistic and attainable but challenging goals. In fact I didn’t know how to set goals. ‘I want to save money’ is not a goal. You need to be specific in defining what you want to achieve and how you are going to achieve it.

Motivation

Motivation ties in with goal setting. Do you have something specific you are saving money for? Is it to get out of debt? To save for a house or car or holiday? Your retirement? An emergency fund? You need to identify why you are saving and identify why this saving benefits you. Identifying and constantly reflecting on the future benefits of your money saving motivates you to continue.

Understanding your current financial situation

You need to understand your current financial situation. Are you currently in debt? Do you have a budget? Are your savings goals reasonable for your current income and expenses?

With this knowledge in mind I created five start-up steps for saving money involving:

Saving Money by Setting goals.
Saving Money by Creating a Budget
Saving Money by Starting a financial diary
Saving Money by Saving my change
Saving Money by Decluttering

Following these simple steps you can be well on your way to saving money or getting out of debt. In the coming days I will provide an overview of what each step involves.

How I Save Money

Why Savings Fail