After two decades of personal finance reporting, I’ve heard every excuse in the book for not saving money. That said, none of them really hold up — at least over the long term. Here are eight excuses I hear all the time, why you’re likely saying them and what you should be doing instead:
1. “I’m too busy.”
Yeah, you, me and everyone else. Sure, you’re busy, but this excuse really means you’re too lazy to make saving (i.e. your security, wealth and overall future) a priority. It’s a total cop out, especially when you can make it automatic and devote little to no time to the exercise at all. Automate your savings so that you have money taken directly from each paycheck and deposited into a 401(k) or other workplace retirement account. If that’s not an option automatically have money transferred out of checking into savings each time you get paid. How much? Saving 10 percent is a good goal, but start where you can and increase when you can.
2. “I don’t have enough money.”
I’ve never met a budget that I couldn’t coax a few extra dollars from — and I’ll bet that you can do the same. For instance, you’re probably buying more minutes and more cable channels than you use. Oh, and how many black skinny jeans do I count in your closet?
You have enough money, just the wrong priorities.
If you’re saying this, then it’s time for you to track your spending. Not forever, but for as long as it takes for you to get a good idea of where your money is going (push yourself to do it for a month). You can do this by either writing all of your purchases down or by plugging them into a mobile budgeting app. After you see how much is going out (and have compared it to how much you have coming in), you can make adjustments to save more and spend less.
3. “I’m too young. I have time.”
I get it. You just graduated and started your first job. Why think about long-term savings, like your retirement, right?
Not starting early is the biggest regret I hear from people my age (i.e. Boomers and Xers — I’m right on the cusp). Well, the sooner you start saving for your future, the better it will be. If you’re just starting out in the workforce, the very best thing you can do for yourself is to get started in your workplace retirement plan. Contribute enough to grab any matching dollars your employer is offering (a.k.a the last free money on earth). If that’s not on the menu, open and automatically (see excuse #1) fund a Roth IRA with contributions from your checking account. If you contribute $458 a month you’ll max out for the year.
4.“I’m too old. It’s too late for me.”
It’s never too late to make tomorrow a little better by saving some money today. Never. So even if you’re nearing retirement, take a step back and ask yourself what you can do to boost your savings. Three things immediately come to my mind: work a little longer (so that you don’t have to start taking social security until age 70, if possible), live a little leaner (downsizing before retirement when you’ve under-saved is the rule) and set some goals. People who actually have a reasonable number that you’re trying to achieve are more likely to get there than people who have no idea where they’re going.
5. “My employer doesn’t offer a retirement plan or a match.”
While that’s unfortunate, it shouldn’t be a deal breaker for your saving efforts. If your employer offers a 401(k) with no match, that’s still a good first choice as long as you like the investment options. Having money drawn out of your pay is easier than contributing it yourself. And you can put up to $17,500 a year into a 401(k) or similar plan — more than three times the money you can sock away into an IRA. If you don’t have the option, though, an IRA is a must.
Should you go Roth or traditional? Generally, the younger you are, the more a Roth makes sense. But an easy way to make the call is to look at your tax rate. Do you think it will be higher in retirement than it is today? If so, go Roth. If not, go traditional.
6. “My spouse saves, so why would I?”
Because you’re leaving big tax benefits on the table, for one reason. Even if you’re not in the workforce, you are allowed to kick $5,500 a year ($6,500 if you’re 50+) into an IRA each year because you have a spouse who is a wage earner. Similarly, in my experience, having savings in your own name means that you’ll step up and start to manage those savings. That’s an important life skill — not just financial skill — to have in your arsenal.
7. “Why save when interest rates are so low?”
Yes, they’re low. So low they’re ridiculous. But saving money isn’t just an action you take, it’s a habit you want to build for a lifetime. Besides, you’re not going to keep all of your money in a savings account. You’re going to build an emergency cushion and then move on to invest your money where it has the opportunity to earn substantially more.
8. “I’ll do it tomorrow.”
Really? You will? You said that yesterday. I get it, why save for tomorrow when you can look fabulous in those red-bottom pumps today, right? The problem is: your perspective on time affects your financial behavior. If you’re stuck in the past, you’re more likely to be conservative and take less risk. People living for today — like those of you using this excuse — tend to do just that, taking fewer steps for making sure you’ll be financially ready for tomorrow. People focused on the future, however, are more inclined to be financially literate. If your time perspective is inhibiting healthy, financial behaviors, now you know. If you live for today, automate your savings. Your future self will thank you.
Jean Chatzky is a member of the DailyWorth Connect program. Read more about the program here.
With reporting by Kelly Hultgren