8 Reasons Why You Don’t Save
Posted by Gail | Filed under Saving
Whether I’m working with the couples on Til Debt Do U$ Part, or with my new Princesses, there are some common denominators. For one, virtually none of them have a clue how much they’re making or spending. For another, nobody is saving nuthin’.
Here are some more. Do you see yourself in here?
They’re paying off credit card bills. Carrying debt means mortgaging your future income. My number one rule – Don’t spend more money than you make – means tailoring your budget to the cash you have on hand. If you can’t make your budget balance, find a way to make more money.
There’s a designer logo on your handbags, shoes and clothing. If you’re paying a premium to flaunt a famous name and you’re not saving for the future you’re a fool. If you’re defining yourself by the brands that some starlette who makes 100 times what you make wears then you’re a pathetic fool. Dontcha know that many designer items are made in the same factories as less expensive goods? Expensive brands are no substitute for a solid financial future.
You wouldn’t dream of drinking tap water. I live in a part of the country with some of the sweetest water and every week as I exit the supermarket I see loads of people carting out huge packages of bottled water. My neighbour has her water delivered in large bottles. I scratch my head. And don’t get me started on sparkling water in restaurants… we were once presented with a “Water Menu”…OMG! $62 for a bottle of water? Really?
Your refrigerator is empty. You’ve seen me peek into people’s refrigerators. Inevitably when there’s no food in the house, the spending analysis shows gobs of money spent in restaurants and for take-out. If you want to have some money to save make a menu for the week, shop with a grocery list, stock your fridge with fresh food, and use your freezer to save time on busy night or for when you’re just too tired to cook.
There’s a fancy hood ornament on your car. I’ve always considered a car a means of transportation, not a reflection of my identity or success. I scratch my head at young people starting out who think they should be driving a $50,000 or $60,0000 luxury vehicle. Even if you buy one second hand, they are more expensive to maintain and insure. I guess the big question is this: Is it more important to look rich or be rich?
You rent a public storage unit. I can’t believe the number of people who not only spend money they haven’t made yet, but then rent a separate home to keep all that STUFF. Sell the stuff, pay down the debt and eliminate the cost of the rental from your budget. Wow, that’s killing three birds with one stone.
You hit the malls because you’re bored. The easiest way to not spend – and therefore to have money to save — is to stay out of stores. If you’re shopping for entertainment find something else to do. Never go into a store without a list. And pay cash, or have the cash ready to pay off the credit card if you’re disciplined enough to use them as a tool and not as a financial bridge.
And my favorite: You think you’re too young, old, rich, poor, or busy to save. Everyone needs to set something aside for emergencies and for when they’re old and gray. It’s never too late to get started. And it’s never too soon. To make it easy, make it automatic. Have a specified amount from each pay cheque transferred to your high interest savings account or retirement savings plan every month.
March 2, 2010 at 8:20 am
I was probably one of those who consider debt repayment as an excuse for not saving. I just thought it would make sense for me to use all my spare money on debt repayment rather than setting a little bit for emergency. I now know better—balance!
March 2, 2010 at 8:29 am
@Jenny: Im struggling with the debt repayment versus savings dilemma. It’s a conflicting agenda with saving interests much lower versus unsecured+secured Line of Credit rates.
March 2, 2010 at 9:01 am
I agree wth all but the tap water. I may have been one of those people you have seen here in town carrying out lots of bottled water. We live just outside of the town limits and have a well. The local health department has said we shouldn’t drink the water from this well. I’d love to save in this area, but our health is more important.
March 2, 2010 at 9:05 am
I want to save more than I currently am, but with three kids, a husband, and student loan repayments, I’m happy I can put $50 away each money for savings. I have a pension with work, as does my husband, so we’re concentrating on paying off my student loans, and then turning those payments into emergency fund/savings/fun money – I’ll be glad when that day comes
March 2, 2010 at 9:14 am
For a decade, I was “too busy” being the mother of small children to save. I didn’t have the time or energy to balance my budget – I was drowning in life duties and had no energy left to figure out what was up or down with my finances.
Today I’m still busy with family life, but less so as my youngest of 3 is almost 5 yrs old, and I’m getting a bit of relief from 24/7 parenting for the 2 hrs she goes to school each day. As a result, I have been able to focus more on my money issues – thus paying down my LOC by $7000 and socking away nearly $10,000 in the last 7 months alone since starting Gail’s magic jars. It’s amazing what “paying attention” can do for the wallet!!!!!
March 2, 2010 at 9:19 am
Wow I only qualify for one of those. I’m paying off debt.
I do however save. I save a lot. I should probably use the savings to pay off debt.
regards,
Jason
March 2, 2010 at 9:27 am
Gail with your words of wisedom, and my family ramming it down my throat, I have always saved something. My mom taught that one early. My first purchase ever, from my brand new bank account, that back in those days dollar matched the savings until I was 13 years old (gotta find business somewhere I guess), was a POGO Ball. My sister and I wanted one so so badly. My mom said if you both want it so much you have to save your money to get it. We found out the price and the taxes and added all that up on a piece of construction paper, and then split it in half – that was the amount we needed to save. Back then $15 felt like you were rich so when you had to spend $8 on the POGO Ball you really thought twice.
At 13 I funded a Band trip to New York City off the money I saved from my paper route – only kid to do that. At 16 I funded my trip to Florida from the paper route and the new cashier job I had – only student to fund the whole trip by herself. At 19 I funded my first year or University by myself from the bonds and GIC’s, money in my savings account from the job and birthday/christmas money I had saved – all $12,000 of it on my own. I did get OSAP to help out with the rest of University but paid back half when I switched to College, and funded my entire college experience without help at all – thanks to co-op positions and a family who traded room and board for hard labour around the house.
Even though I have a pretty hefty debt I’m knocking down $1100 per month at a time, I’m still putting into my Emergency Fund and my Planned Spending Fund and my RRSP $400 combined per month. thanks Gail for your constant reassuring advice about this. Even though I could be using that money to pay the debt down faster, I have the money set aside incase life happens, and for retirement! I can’t wait to be done so I can boost the savings up!
March 2, 2010 at 9:27 am
I was “god I barely have enough money to get by!! How am I supposed to pay off bills let alone save”
It took a lot of years for me to be ready to see that I had control over a good part of my financial destiny. I may be saving slowly, but I am saving. It’s almost as fun watching those progress go up, as it is watching the debt ones go down!
March 2, 2010 at 9:45 am
RE: Debt repayment Vrs. Savings.
I believe in saving while you pay down the debt for a few reasons. Saving makes me feel good. Seeing a small nest starting to build & grow, gives me peace of mind to know it will be there if I need it. I save $25/pay in an account for car servicing & repairs. If I didn’t do that, it would mean those expenses would become new debt and result in more stress and me leaving the mechanic feeling anxiety. I save for retirement through an empoyer match program. I would like to save more, but right now I don’t see it as possible. Once my son is out of daycare and hubbie out of school, our expenses should lessen and saving will be easier to afford.
As for looking rich or being rich, I had a talk with my son yesterday about being nice to other and treating others as we would want to be treated ie: “The Golden Rule”. I told him that being rich isn’t about having lots of money, it’s about having lots of friends. I could have all the money in the world, but without good friends, what’s the good of it? I am blessed with the wealth of friendships. (doesn’t mean I don’t think money is important because I do. I just don’t need fancy expensive items to feel rich in my heart – plus I’m too cheap to spend $500 on a purse!)
I am guilty of spending because I’m bored or stressed. I’m working on it.
My fridge is stocked with healthy foods and I drink the water from my well : )
March 2, 2010 at 10:11 am
Hmmm, when I found out at the age of 10, that I had access to my own savings account – I withdrew the money $10 at a time and bought junk food for a month.
I worked at odd jobs from the age of 11 to purchase all of my own items (clothes etc).
My parents moved out of the city at age 20, so I moved into my own apartment. And learned the pain of this thing called “utilities”. Unemployed for a bit, learned the joy of sharing a kitchen with 4 other roommates. Got a job, got an apartment by myself…. time passes
I have always had debt. But in my early thirties, that debt changed to RSP loans. I never say the need for having savings – I thought if I had it, I would spend it.
Well, last year (39), you have a couple of health issues, downsizing at work, and I realized I don’t want to share a kitchen with roommates again so maybe a little money socked away “just in case” isn’t a bad idea.
You know what they don’t tell you about savings?
How bloody GOOD it feels to have some coin in the bank. A part of you you didn’t even realize was scared can suddenly BREATH. If you don’t have savings, try it. It feels AMAZING.
Full Confession: I wiped out my savings in Feb to put $ in my RSP, but I put in 4K of my own money that I had saved (I still had to do majority in loan but have a budget and plan to solve that for 2011).
And I can’t wait for my paycheque on March 11th, because I want to start my savings again.
March 2, 2010 at 10:15 am
The only problem with waiting to shop with a list (which I have experienced lately) is that if you’re looking for something that is not something you would normally buy, it takes time to “shop” and find the right thing. Because I’m not a shopper, I have had the experience of needing/wanting something that I’m ready to buy, but I can’t find the “right” one because I haven’t been shopping in so long. For example, I’m currently looking for bedside pendant lights for our new house. It takes time and multiple browsing trips through lighting and home decor stores for me to find the right one without blowing my money on something I’m not in love with.
I used to be of the theory that you shouldn’t shop without a list. But now I have experienced what it feels like to wait until you have that list and it’s incredibly frustrating sometimes! I’m all about learning to discipline my spending, but not to get freaked out by the idea of “shopping” just to look and see what’s there. I realize though that it takes time to get to that place.
March 2, 2010 at 10:18 am
My new “board” shopping place is the library, they have books cd’s dvd’s all for the year membership of 12 bucks a year. I go every friday to kill time and I always find something I want to read its a great idea!! I drink bottled watter but the giant jugs i hall to the store and fill up none of this bring it to my door biz….humm $3 compared to $7 to have it delivered to my door….no thanks ill put my $4 elsewhere
March 2, 2010 at 10:37 am
@Kat – absolutely spot on about how good it feels to see those numbers ticking upwards month by month. I’ve always been good about Rule #1 – not spending more than I earn – but not so good about planning and saving. This website has been a godsend for me. It’s got me and my husband through probably the toughest (financially speaking) 6 months of our relationship with flying colours. Last week saw our first month of two full paycheques in over a year, and it was the sweetest feeling in the world to see the savings balances go up.
I’ve got more categories of planned spending in our budget than you could shake a stick at, and we’re on track to save a full 6 months of expenses in under 2 years, while still having fun and taking vacations. Husband is fully on board, I can’t imagine doing this without his support, though he’s not involved in the day-to-day money grubbing. We sit down together usually at the end of each month and whenever a big purchase (e.g. car insurance) is needed.
March 2, 2010 at 11:53 am
I’m working on building a savings account…and then I have to buy new tires, or a dentist bill or something. At those moments I get discouraged I remember that although my savings account goes down short term, I’ve HAD the money to pay for those emergencies – Thank God, because I don’t even have a credit card to cover me! And I WAS able to take my kids on the first vacation we’ve had in many years! All in all, a much different place than I was a year or two ago…
March 2, 2010 at 12:11 pm
Well we just got dealt a very nice blow by my work who did not deduct nearly enough taxes for this year so I ended up owing 4k in taxes..
Instead I took 4k from savings + another 2k from my line of credit and plopped it in my rrsp reducing my income (on top of the regular rrsp that I usually save), and now instead of owing 4k in taxes I will owe only 1k for taxes + 2k on the line of credit. Which sucks but I’d rather owe 3k (and have an extra 6k in rrsp) than owe 4k and no extra in rrsp.
Weird tax math…
But it really burns my hide that they did this to me, because it affects our emergency savings and debt and everything. My husband and I had a few situations last year and we know how important it is to have emergency savings…
March 2, 2010 at 12:30 pm
Regarding #3, I’d like to point out that in some parts of Canada, it is unadvisable to drink the tap water (especially in oil/natural gas areas). When I lived up north, I did not drink the tap water at all. So for people who are able to drink their municipal water, yay…
March 2, 2010 at 12:59 pm
@ionana
It sucks to owe extra money in taxes…
re: RSP — most banks will give you a loan on an RSP regardless of credit history as the loan is secured by the RSP itself (as long as you keep it in that bank — which you can, and transfer it anywhere you like when it’s paid off) – in addition, most RSP loans can also be deferred for the first 90 days (this is so that people, theoretically can apply their tax refund towards the RSP).
The interest rate on an RSP loan vs. a credit line are much more favorable.
March 2, 2010 at 3:01 pm
Savings…it is such a difficult thing to do! I just read Gail’s book and am trying to follow the steps, especially those about saving. I recently set up two automatic withdrawls one into a Tax Free Savings account and the other into a regular savings account, which hopefully will be used for a vacation some day, as well as increasing my RRSP payment to bi-monthly. The only problem is it looks like I am trying to save too much as I ended up with only $3 remaining (fixed costs have been covered) for the next two weeks! It looks like I am going to have to find some serious ways to cut costs in the next few months to adjust to this new concept of “saving”.
March 2, 2010 at 3:09 pm
I actually didn’t even think of saving AND paying off debt at the same time until I discovered Gail. It was always such a personal struggle to figure out which one I should be doing. I too, am now enjoying seeing the savings account rise and the debt fall at the same time. We have shared our wisdom with some family members who desperately need help with their finances. They aren’t ready to commit to the lifestyle yet, but we are going on vacation this week (paid for with cash) and they are not. Hopefully, we can get them on board soon.
March 2, 2010 at 3:10 pm
Actually, I should rephrase that. Gail’s wisdom, that is, and our experience.
March 2, 2010 at 3:24 pm
Both my husband and I have tried to get RRSP loans and two banks have turned us down. We have been told you cannot use them as collateral. We were bankrupt 3 yrs ago and although we have a mortgage, and have rebuilt a decent credit rating, they will not even lend 5k for an RRSP. We also wanted to buy a truck through a loan and had the cash to do so. Went to the bank said we want a loan to help rebuild a better credit score, take the cash and lock it into an account and then we will repay the loan. It was a no lose situation for the bank, the principal would be locked in and they would be getting interest from the loan but we were turned down. But despite the bank we save each month and put away for retirement. We are in better financial shape than we ever have been so it will happen in its own time.
March 2, 2010 at 3:48 pm
Only category we fall under is “Paying off Credit Card Bills”, but we are continuing to put away for retirement… one day…..
We do not have a fancy car, and there will never be designer handbags or shoes that will find their way into my closet. We’ve forgone the cases of water, and now have a water filter system attached to our household taps. Our fridge is only considered empty the night before we do the weekly grocery run, and I don’t think our 1999 Chrysler can be deemed a “luxury” car. We are not a “clutter” couple, so we don’t have a lot of extra “stuff”; I would never dream of renting a public storage unit! Last but not least, I’m one of those rare women that REALLY doesn’t enjoy shopping… I only buy a new anything if I absolutely, positively have to, and even then, it’s only when the pennies are saved for the purchase!
Gail, LOVE your show, your advice and the “tell it like it is” attitude… wish you’d have been on TV when I was in my 20’s; you’d have saved me a lot of grief, but I’m learning and living by your example.
March 2, 2010 at 4:02 pm
Okay, so I’m sitting here looking at my account books. Pay debt vs save. This is a tough one for me right now. I want to sock every single penny (including those the teenagers throw on the street cause they think they are worthless…silly kids should have jars!…..and I pick them up with a smile) onto our line of credit. But darn, it feels so good to have a little nest egg. What to do? what to do? And then last week I find out I shouldn’t pay my bills as soon as I get them like I have for eons. Pay them a few days ahead but keep your own money for a while. OMG my fingers are itching here! I love the feeling of seeing the zeros for a balance….I need the fix…. I need the rush of ahhhhhhhhhhhhh I’m doing alright…I need to hit the ‘transfer’ and ‘pay bill’ buttons. A debt paying monster has been created and her name is Catherine.
So, I’m hitting the buttons here instead. I’m paying off as much as I can, but, saving a little besides. Oz seems so far away on this yellow brick road. Methinks these red shoes are defective.
March 2, 2010 at 4:12 pm
To Ioana, people who have to pay employees and others who are interested in checking their take-home pay deductions, for Canadian standard deductions, you can find tables by province at this website:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/cpp-rpc/mthds-eng.html
I used to be a payroll clerk in a company with 40,000 employees, so I would often double check these tables to make sure my deductions were on par with what they should be. I’ve also used these to double check my own salary deductions, since our payroll person forgot to take any off one employee for the year and he was stuck with a massive repayment at the end of the tax year.
March 2, 2010 at 4:54 pm
We are listening to you Gail and saving while aggressively paying off debt. Right now we are doing 10% saving but while I am on Mat. leave it will drop to just over 1% plus RRSP’s bought with my husbands bonus. This will raise it to over 5% for that year, not perfect but okay considering! The savings have helped us not go into more debt while paying off debt which is not self-defeating when surprise bills have come up.
March 2, 2010 at 5:02 pm
I have always saved for retirement even when I had debt, but don’t have much of an emergency fund (only $2500 or so). I am planning on having my last credit card paid off by 12/31/2010, then I can start building more of an emergency fund – eventually I’d like to have at least $20,000. My biggest thing is finding and stopping money leaks – the $50 or $100 here and there that I spend on fun stuff that is really not in the budget. Now that I’ve stopped the money leaks, it’s a whole lot easier to stay on track.
March 2, 2010 at 5:25 pm
I admit to number one and seven. This year is the year! We are working on debt repayment and small savings. I have had to tell myself at least once daily that I don’t need to go shopping. (Not always boredom, sometimes a desire to escape the non-stop work at home after working all day) I have even had to redefine the need for grocery shopping, much like how you (Gail) have on some TDDUP shows made a weekly challenge be grocery shopping only one time that week. It makes it easy to resist temptations/unneccesary spending. Now the only exception is the milk and bread…sometimes I have my hubby pick those up as I KNOW he’ll spend as little time and money there as possible.
March 2, 2010 at 5:34 pm
Dont mean to throw a wrench in the gears but here is a nother point of view on savings versus debt repayment.
http://themoneygardener.com/2007/10/defying-cash-emergency-funds.html
March 2, 2010 at 5:38 pm
…and yet another point of view on why your HELOC can be your emergency fund.
http://www.four-pillars.ca/2008/02/26/reasons-why-your-heloc-can-be-your-emergency-fund/
March 2, 2010 at 6:33 pm
Daniel C – I disagree with those articles. If you are worried about interest put the money in a TFSA. If you end up using the HELOC in an emergency, how will you pay it off after the emergency?
March 2, 2010 at 6:44 pm
The savings vs debt repayment dilemma could so easily be avoided if the savings take place before spending so that no debt is incurred. If a fund for the next car is started as soon as the present one is bought, the money should be available to pay for it when the time comes. It works the same for any purchases. If you know approximately how long the new furnace or roof will last you’ll know how much to save each year so that the funds will be available when the need occurs. It’s such a relief to know that no money will need to be borrowed or interest paid, although it can get confusing with holiday savings, appliance savings, renovation savings, etc.
March 2, 2010 at 6:45 pm
I have debt, to family though. I also have a storage unit. Hopefully neither for too much longer. I am slowly learning how to save. I am 24 and I realize the importance of it, debt was my priority last year though and now I am trying to BALANCE savings and debt.
March 2, 2010 at 8:53 pm
There really is no excuse to not save. I finally got two automatic deductions set up for savings, then promptly quit my job for other reasons. Our family lived on one part-time income for four months before I found work again, but I didn’t have the heart to stop that savings program I had just put in place. It was tight, but we lived and now I feel really proud of the money we set aside during a time we could have been drawing on credit or savings.
March 2, 2010 at 9:25 pm
I find I am in the debt category, although I am saving some money. I put about a hundred dollars away each month. I am married and my husband and I get paid bi-weekly so I just take 25.00 from each check then it doesn’t seem like a lot at once. I know watching Till debt do us part, has done wonders for my husband and I. We are both young and we both take active parts in our finances. I think I am little more stingy than he is though. I just hope that we will have enough self discipline to get all are debt paid off and not get into anymore. I hope you all have a lovely day.
March 3, 2010 at 5:47 am
Some people don’t save
I know one couple who have almost paid off their house but he has been out of work for a year and six months
I can sure understand when he tells me now they can’t save
March 3, 2010 at 11:02 am
Catherine: I think the post about waiting to pay bills was directed at small businesses. I know that I can easily forget about my household bills if I don’t catch them right away…
March 4, 2010 at 1:21 am
This is all too true. In the last year I have stopped shopping when bored. I would rarely wear most of the stuff I bought. Thanks for reminding us all what is taking our savings away.
March 4, 2010 at 4:45 pm
Catherine, I feel just like you. The debt paying monster. I can’t wait to pay my bills each week too. I know I should start saving, but I just want to pay, pay, pay. And I know it’ll srill take me 2-3 years to pay off all debt regardless. I need to stop feeling so Pay eager and start feeling more Savings Eager!!
March 4, 2010 at 5:51 pm
I have a storage locker (through our townhouse — $400 a year). Our house is simply not big enough to have the Christmas tree stored in the summer and the patio cushions in the winter. I turned our indoor storage closet (very small) into a pantry with an additional freezer to take advantage of great meat sales. That $400 might have made a nice addition to savings each year, but I’d rather have those items safely stored so I don’t have to buy new patio cushions or a Christmas tree regularly and they’re out of sight. Also, the nice walk-in pantry & extra freezer space encourage us eating at home and to stock up when we buy on sale instead of just going out and buying whatever.
We’ve almost paid down every single cent of debt (except the mortgage), but the cars are ours (not fancy), the consumerism from our 20s has stopped and we’ve almost paid it all off and we have some half decent RRSPs for our age and a little bit of a nest egg (enough for a mortgage payment or so). We have the jars and I shudder to think what our situation would have been if we hadn’t started a year ago.
March 4, 2010 at 7:38 pm
Snoopy/Catherine; using the future payment function in online banking allows for you to “pay” your bills right away and choose a date a couple of days prior to the due date inorder to keep the money in your bank account longer. I always “pay” bills when the bills come in by always choosing a pay date of just before the due date to ensure no past due charges. I have never had bill not get paid using this method.
March 5, 2010 at 2:43 am
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