Last Updated on February 25, 2025
Contents
Find Out Why You Can’t Save Money
“Why can’t I save money? Where does it all go?” is a question a lot of people ask at the end of every month.
If you’re in that boat, it’s a boat overflowing with passengers! You’re literally just one of the millions of people asking themselves this same question.
Saving money is hard these days, whether you save it in the bank or your house. Inflation and prices are rising. Wages aren’t. There is a looming personal finance crisis as people incur more and more debt.
However, making yourself save money each month is not impossible, but it definitely takes focus and a bit of patience to analyze your spending habits. Once you start to see things from a different perspective you’ll want to put in the extra effort to budget your earnings better. So, how do we start to climb out of holes…first, stop digging!
Here are some of the main reasons why people can’t save money along with the proven strategies to get them back on the right track.
5 Reasons Why You Can’t Save Money
Most people don’t save money for one of the following main reasons.
- They can’t cope with debts. Often, they pay late and are penalized.
- They don’t track their spending. Less than 50% of Americans use a budget.
- Much of their budget goes toward wants instead of needs.
- They constantly spend money that’s not theirs (loans).
- Their lifestyle is not compatible with their income – they live beyond their means.
Too much debt and high living expenses top the list. To tackle the first item on the list, work hard to pay off your debts.
This will give you more financial freedom. Plus, it will help you fix your credit as fast as you can.
As for saving money, it requires some forethought and a bit of planning.
So, What Can I Do About It?
The solution is somewhere between budgeting and saving money.
Tracking your expenses will help. Put a spotlight on what drains your budget the most. Then, determine if those expenses are necessary or not.
Food and utility bills are necessities, while eating out or drinking coffee out each day are not. It really helps to be honest with yourself.
Budgeting doesn’t mean punishing yourself, it means being more mindful of your spending. Try to limit your disposable expenses. These might include:
- Eating out
- Going out with friends
- Buying clothes
- Buying electronics
- Paying for subscriptions you don’t use
Can you cut down at least 10% of these expenses? If you can, the results should start to accumulate in your account. You could end up having hundreds of bucks more each month.
If you can avoid the temptation to spend that found money then those funds can go into your savings account.
Let’s look at six more or less popular ways to save money with different budgeting strategies.
The Jars Money Management Method
This method is excellent if you have problems saving money. This is a classical budgeting method. It has multiple variations. We are going to focus on T. Harv Eker’s method. He authored Secrets of the Millionaire Mind.
The jars method is an old budgeting strategy. Before real or digital envelopes and safes, people used jars to store their money. Some used different jars for different expenses. They labeled each jar according to its purpose. For example, rent a jar, food jar, gas jar, etc. This is what the budgeting plan comes down to. Divide your budget according to your spending. Eker’s strategy involves six jars:
1. Jar 1 – 55% of your budget
This jar contains the funds for necessities. Here, you will include all your regular expenses (utilities, rent, grocery, etc.). If you can’t put 55% here, don’t worry. Put as much as you need into this jar.
2. Jar 2 – 10% of your budget
This jar is for your savings. To be more precise, Eker recommends long-term savings. For example, here you can put college money. You could also save the money for a house down payment here.
3. Jar 3 – 10% of your budget
Another 10% of your budget goes into your fun or play jar. This is the amount you can use for entertainment and fun time.
4. Jar 4 – 10% of your budget
This is the financial freedom jar. It sounds promising, and it is. This is another long-term savings jar. But you can’t use this money for a specific purpose (e.g., buying a car). You have to keep it in the long term. This money should go into investments. It will ensure a tranquil retirement.
5. Jar 5 – 10% of your budget
Education is very important, according to Eker. This is why it needs funding as well. 10% of your budget should go toward educating yourself.
6. Jar 6 – 5% of your budget
The last jar is for charity. The 5% should go to organizations that help people in need.
Zero-Based Budget
The zero-based budget strategy revolves around a simple principle. Every dollar you earn has a purpose. You first create a list of expenditure categories. It should include both necessary and optional expenses. In the necessities category, you may have a mortgage, insurance policies, utility bills, food, and gas.
The optional expenses category includes the rest. Here, you may have entertainment (going out, concerts, etc.), traveling, eating out, clothes, and books.
The aim is to ensure every dollar has a purpose. This way, you know for sure:
- How much you can spend.
- What you can spend on.
- When you’re done spending on a particular category.
You need to have this plan written down. Writing it on your agenda or a piece of paper is ok, but having it in a digital format is even better. You can have it on you at all times, on your phone. Then, when you go shopping, check it out.
Make sure you stay within each budget category. If you only have $150 for clothes, spend no more. This is a practical and flexible budgeting method. It allows you to rethink your budget each month.
Here is an example of how you can budget using this method for a $4,000 salary.
Available budget: $4,000 | |
Necessities (bills, mortgage, insurance) | $2,000 |
Other essential expenses (food, gas, clothes) | $1,500 |
Non-essential expenses & savings | $500 |
Money left: $0 |
The 50-30-20 Method
The 50-30-20 budgeting method is one of the simplest budgeting strategies. It is one of the most popular and easy to use. You have to divide your budget into three distinct categories. Namely, needs, wants, and savings. Here is what it will look like:
This is a sound and simple rule.
50% goes toward your needs
Here include everything that’s necessary, such as all the monthly payments you can’t miss. Mortgage or rent, utility bills, insurance, and groceries are some examples. These are the main categories. If you have debts to pay off, include them. Making those payments is necessary, but they might be the main reason why you can’t save money.
30% goes toward your wants
This category comprises things you like. The habits you may include here differ. Some people feel good eating out. Others prefer spending money on clothes or gadgets.
The wants category is broad. Having one is necessary for your mental wellbeing. Working only to put money aside might feel overwhelming. You need some entertainment and pampering in your life too, but make sure you only use 30% of your budget for this or you risk compromising the strategy and saving less.
20% goes toward your savings
This is the part where you put money aside. The ideal place to keep it? A separate savings account. You can deposit money there in the long term. You can also save for a particular goal. Another alternative is to save for investments. There are different types of assets to invest in. Choose something that’s stable. Safer investments may include gold, stocks, bonds, and mutual funds.
The Envelope System
With this method, every month, you will divide your budget into separate categories. Then, you will assign a specific budget to each. Here are some of the main categories to consider:
- Rent and utility bills
- Insurance costs
- Grocery
- Gas
- Entertainment
- Savings
For each category, use an envelope. This can be a traditional paper envelope or a digital one. Choosing the latter means different bank accounts. Each account represents one spending category.
The first method is practical but less safe. Keeping money in cash and in envelopes exposes it to different perils. You can lose it in a natural disaster such as a flood or hurricane. Someone can steal it. You might also feel unsafe using cash too often. That’s why digital envelopes can be easier to set up and less stressful.
This way, your money stays safely in the bank. You can use different apps to configure these envelopes. They will also help you stick to your budget. Learn more about such budgeting apps in this Mvelopes review.
The whole purpose of the envelope strategy is to limit each expenditure. Let’s say you have $700 in your entertainment envelope. After this amount runs out, this category closes for the month. You can start spending on entertainment again next month. You’re free to spend again after you deposit the new funds in that digital envelope.
This system is useful for people with reckless spending problems. It helps you analyze your spending habits. It also enables you to limit your expenses based on each month’s budget.
The 80/20 Budgeting Method
This is a straightforward budgeting strategy. You divide your budget according to an 80 / 20 ratio. 20% goes to your savings account. In theory, this amount is for your financial goals. These may vary. You might save money as a safety net. You might also save money to buy a house or a car.
The important thing is to make sure you put aside the 20%. For this, the strategy recommends you allocate this amount first. If you get paid on the 14th, set an automated payment for that date. You can use internet banking tools to automate payments. Configure your debit account so that 20% always goes into your savings account. This should happen instantly after you receive the payment.
Some people call this the ‘pay yourself first budget’ rule. That is because you always take care of your financial goals first. Then, you live off the remaining 80%. It is a less restrictive budgeting strategy. You don’t need to calculate and categorize a lot. You can also adapt the percentages. It would be ideal to set aside more than 20% for savings.
The Value-Based Budgeting Strategy
This method is ideal for those who seek flexibility. More traditional strategies emphasize savings, debts, or housing expenses. This method allows you to prioritize your budgeting needs. Your spending will depend on a value-based principle. You can spend more on anything that brings you pleasure. In other words, use more money for that particular activity or product.
For example, you might have three hobbies – sports, traveling, and eating out. You love traveling the most. You decide you can only use 15% of your budget for hobbies. Based on your priorities, here is how you can divide it:
Activity | Percent of your budget |
Traveling | 10% |
Sports | 2.5% |
Eating out | 2.5% |
Value-based budgeting means spending more on what you like, but it still involves sticking to a fixed percentage. That is the only way you can also save money each month. If savings is your number one concern, prioritize it. Try to use 20% to 30% of your budget for savings. Then, use less money on the other categories. These include all your necessary and dispensable expenses.
Frequently Asked Questions (FAQs)
Why can’t I save money fast?
You might have a small income. This means it takes time to save money while covering living expenses. Patience is key in this case. Be patient and commit to saving a bit of cash each month. In time, your savings account will grow.
How to save money when I have a lot of debt?
Do your best to pay your debts each month. Never let penalties pile up. Use your savings if necessary. You can also rely on popular debt payment strategies such as the snowball method.
How to save money on utilities?
You can use the half-payment method. With this strategy, you put aside 50% of your bills’ worth from each paycheck. Also, try to reduce your consumption. For example, try using energy-saving light bulbs and appliances.
How to Save Money Each Month?
Try one of the budgeting strategies above. They are suitable for different financial objectives and spending styles. Some are more flexible than others. All of them teach you how to save money, regardless of your income.
Sources:
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