14 Reasons You're Failing at Saving Money

49% of Americans say they want to save more money this year, so let’s get set up for success by identifying common pitfalls and the actions to take instead.
Last updated Jan. 11, 2022 | By Kate Daugherty | Edited By Becca Borawski Jenkins
Jar filled with dollar bills

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Saving money can seem complicated at any age, especially if you’re living paycheck to paycheck. And saving for the future may be way down the priority list when you’re worried about having enough for groceries. But setting aside even a small amount every month can make a difference if you do it consistently.

Regardless of your age or income, saving money is an important habit that you’ll be grateful for establishing. Keep reading for some of the most common money mistakes people make when it comes to saving — and the actions you can take to give yourself a brighter tomorrow.


Spending more than you earn

Kawee/Adobe Woman stressed about paying bills

Spending more than you earn is usually a sign you’re either overspending or not bringing in enough income to meet your needs. According to a study by Mint-Intuit, 65% of Americans don’t know what they spent last month, and almost one-third of people said they wish they had spent less.

What you can do:

Start by tracking your spending for a month or two to determine whether there are any patterns. Once you have your data, look for categories that seem high or where you know you could cut back. Prioritize spending on what matters the most, and cut back on the rest.

If you think the problem is that you don’t bring in enough income to cover your basic expenses, look for ways to make extra money. You could also spend your free time studying to earn additional credentials so when it's time to ask for a raise, you’re in a strong position.

Failing to plan for unexpected expenses

Vitalii Vodolazskyi/Adobe Emergency fund jar

One of the best ways to bust your budget is by failing to plan for unexpected expenses. An unexpected car repair or a medical emergency always seems to crop up at the worst time. Not having funds available to help you deal with these unexpected bills can worsen a painful situation and put you deeper in debt.

What you can do:

Start an emergency fund and add a little bit each payday. Even if you’re only able to contribute $10 or $20 per paycheck, you’ll still have some money set aside to help you deal with unexpected expenses.

Instead of buying a new TV or gadget, consider depositing the money from your tax return or other rebates or reimbursements to help bolster that account.

Make sure you use an online savings account separate from your day-to-day bank account. You want to make this money difficult to access so you don’t spend what you’re trying to save.

Not allowing room for treats or splurges

Asier/Adobe Woman shrugging holding piggy bank

What happens when you go on a restrictive diet and deny yourself repeatedly? Eventually, you snap and eat everything in sight, undoing all your hard work. The same can be true with finances. Not giving yourself room in the budget to have a little fun now and again could cause a chain reaction that leads to financial disaster.

What you can do:

Plan for the occasional indulgence or chance to let off steam so you don’t go crazy trying to be good. It doesn’t need to be much, and you can still hold yourself to your savings goals, but make sure you give yourself a treat now and again.

Not saving your raise or tax return

BillionPhotos.com/Adobe Handing over stack of money

When you get a raise at work or your tax return finally hits your bank account, the first thing you want to do is go out and celebrate. You’ve worked hard, and it’s nice to see your labor pay off in the form of nice things or a fancy meal, but lifestyle inflation is a real problem, and this is the perfect time to add to your savings account without depriving yourself of anything.

What you can do:

Although you should set aside a small amount of this money to give yourself a treat, try to put the rest of your raise or tax return into your emergency fund. This can be a powerful money move to make with your tax refund. Because you were already living on your original paycheck, saving the difference can be a great way to add to your emergency fund without feeling a pinch.

You confuse wants with needs

Comeback Images/Adobe Two women discussing saving

The difference between wants and needs is usually pretty obvious on paper but harder to distinguish in real life. Although they’re not directly related to your survival, if going to a concert or buying some fancy cheese for a treat makes you feel good, then that’s valid and important to acknowledge.

But if you find that sometimes your wants look like frequently eating out because you’re too tired to cook after work or subscribing to yet another streaming service for that popular show you’re not really excited about, you might need to take a second look at your spending.

What you can do:

Review your spending and see whether there are places to cut back. For instance, instead of subscribing to that streaming service, can you look for DVDs at the library? Do you get coffee every morning out of habit and could make it at home instead?

These little savings won't create a massive difference in your emergency fund overnight, but over time they will start to add up, and you’ll be more conscious of your spending habits.

You’re “house poor”

Damir Khabirov/Adobe Couple paying mortgage

Owning a home is an integral part of the American Dream, and it can be easy to think that you’re investing in your future and making the smart financial choice when you close on a house. But when that mortgage payment takes up most of your paycheck and keeps you from reaching other financial goals, you might want to think about making some changes.

What you can do:

It’s a general rule of thumb that you shouldn’t spend more than 30% of your adjusted gross income on your combined home expenses. That includes your mortgage or rent payment, property taxes, utilities, maintenance, and insurance. If running the numbers has you spending more than 30% on housing each month, there are a few things you can do.

First, look for ways to cut costs elsewhere to help make some room in your budget. There are a number of ways you can save money on utilities, for example. You might also consider refinancing your mortgage or renting out a bedroom or two to help cover costs.

Unfortunately, if the payment is overwhelming and you can’t cut enough expenses, you might need to look into selling and moving to a more affordable home or neighborhood. Everyone deserves to live in a home they feel proud of and safe in, but remember not to confuse luxury with safety.

You don’t have a solid financial foundation

JonoErasmus/Adobe People talking

Financial literacy isn’t usually something we’re taught by our parents or in school, and according to the Organisation for Economic Co-operation and Development, 15% of teens have not learned the basics of financial literacy.

What you can do:

Learn how to put together a basic budget, how to comparison shop, and how to invest money so you can create a solid financial foundation. This can help you prioritize saving.

Use the library and other free resources to help educate yourself and also start talking about money in your day-to-day life. The more you ingrain and normalize talking about finances with family and kids, the better off everyone will be.

You have credit card debt

F/Adobe Paying credit card bills

Saving money can feel next to impossible when you're also trying to pay down your credit card balance. Although credit card debt, in general, was down in 2020, according to credit bureau Experian, 95% of Americans still carry credit cards every day, and 75% of those people have a balance greater than $0. The average credit card balance in the US is $6,194.

What you can do:

It’s tough to balance paying off your credit card debt with adding to your savings. Paying off your debt means you don’t spend any more on interest charges than you have to, but adding to your emergency fund means you have funds available to help avoid debt in the first place.

It can feel like a Catch-22, but in general, you want to build a small emergency fund to give you a buffer and then prioritize paying off your credit cards as quickly as possible.

Consider ways to earn extra money from home, or look for shopping hacks and cashback. programs that will allow you to create savings out of “found money.” Create savings games for yourself, such as keeping every $5 bill you receive and adding it to your emergency or debt pay-off fund.

You don’t have clear financial goals

KOTO/Adobe Couple discussing finances

There are many things to save for in life, including retirement, higher education, a down payment for a house, or any other significant financial goal. Most of us can’t prioritize all those things at once, and it can be frustrating to listen to all of the contradictory advice telling us to focus on this or that goal first.

What you can do:

Instead of getting distracted by every shiny new goal that someone else thinks is important, take some time to identify your goals, whether that’s on paper or out loud to a financial advisor or your partner. Consider using the SMART goal framework to help you define your goals and the milestones you need to hit to achieve them.

You think you’ll be able to catch up later

ponta1414/Adobe Couple with piggy bank

When you’re young, it can seem like you have all the time in the world to save for retirement and that you’ll be able to catch up in your forties and fifties when you make more and can afford to save for a rainy day.

What you can do:

Saving is a habit, and if you don’t start building the practice as soon as possible, it’s unlikely you’ll pick it up later in life when you’re more likely to have more people depending on you as well as higher expenses.

Start to save often, even if it’s only a few dollars from every paycheck so you build muscle memory. As a bonus, the sooner you start saving and investing, the more you’ll earn in compound interest.

You think little amounts don’t add up

kite_rin/Adobe Overspending with credit card

It’s tempting to believe those little indulgences here and there don't add up to much, but when you spend without noticing what you’re doing, you’re left wondering where all your money went and why your paycheck never lasts to the end of the month.

What you can do:

Include an amount in your budget for treats, and once that money is spent, you’re done for the month. You may find you run out of funds before the end of the month a few times while you build the savings habit, but hold yourself accountable and question whether you need that little splurge.

You don’t take advantage of your company 401(k) match

We often have the best intentions to get our finances in order, but it amounts to a lot of talk for many of us. Talking about your intention is a good first step, but make sure you take some actions to help you achieve your financial goals.

What you can do:

Take an afternoon to consider what financial goals you’d like to reach this year, as well as in five or 10 years. Put down actual numbers on the page and (realistically) challenge yourself to meet them.

Take a step toward a higher savings account by setting up one thing right now. For example, you can set up an automatic transfer from each paycheck in about 10 minutes or check your 401(k) account and confirm that you contribute enough to get the full employer match.

You’re underemployed

fizkes/Adobe Underemployed woman bored at work

According to Monster.com, as many as 22 million Americans may be underemployed, and if you’re one of them, it can make it challenging to save for the future. It’s essential to make sure you’re earning as much as possible, not only for your current financial situation but also because it affects how much you can earn in the future.

What you can do:

Although you might not be ready to make a move on a new job or opportunity just yet, do your best to position yourself for future advancement by taking continuing education classes and networking within your industry.

If you’re looking to switch industries, do some research on the minimum educational requirements needed for the position you want and start working your way toward that goal. Take advantage of things like websites that offer free online education.

You talk about saving but never do it

fizkes/Adobe Woman budget planning

We often have the best intentions to get our finances in order, but it amounts to a lot of talk for many of us. Talking about your intention is a good first step, but make sure you take some actions to help you achieve your financial goals.

What you can do:

Take an afternoon to consider what financial goals you’d like to reach this year, as well as in five or 10 years. Put down actual numbers on the page and (realistically) challenge yourself to meet them.

Take a step toward a higher savings account by setting up one thing right now. For example, you can set up an automatic transfer from each paycheck in about 10 minutes or check your 401(k) account and confirm that you contribute enough to get the full employer match.

Bottom line

LIGHTFIELD STUDIOS/Adobe Happy man enjoying financial freedom

Although none of these tips will make you rich overnight, starting now and taking small steps over time will help you reach your goals and secure a better future for yourself.

Remember, the first step to any significant investment portfolio begins with the money to open your first account, and even after, there are simple investments you can make to get closer to success. So don’t be afraid to go slow and steady toward your savings goals.

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Author Details

Kate Daugherty Kate Daugherty is a freelance writer based in Denver, Colorado. She specializes in personal finance, grant writing, and senior health.