Financial illiteracy is one of the biggest reasons people have difficulty saving or investing money. Many people don't understand how to save or budget their money, which causes them to spend more than they earn. Ignorance can also lead them to make bad financial decisions that can further hurt their ability to save.
You can't save what you don't have. This reason is by far the most challenging part of saving money as there is not a “saving” problem; there is a “money” problem. You need to make more money.
Lack of financial knowledge
Another obstacle to saving money could be a lack of financial literacy. It's imperative to enrich your financial knowledge because often parking all your money in a savings account will not be enough.
If you can't save money, it's due to spending more than you earn each month. The only ways to solve this are to reduce certain expenses, eliminate some expenses, and/or find ways to earn more income.
Holding too much debt
Whether you choose to pay off the highest-interest-rate debts first or pay down the smallest balances first, it's important that you commit to paying it all off. The faster you free yourself of debt, the more money you will free up to meet your savings goals.
One of the most essential secrets to saving money when creating your financial plan is to start an emergency fund. If any unexpected expenses arise, you can dip into this fund without touching your primary checking or savings accounts.
The Bottom Line
Saving money is incredibly important. It gives you peace of mind, expands your options for decisions that have a major effect on your quality of life, and eventually gives you the option to retire.
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.
“But those without much money, perhaps over half of all households, depend largely on saving accounts.” There is a silver lining: Account ownership among the bottom fifth of families is up to 30% from just 27% over the past 15 years.
According to a recent survey from ConsumerAffairs, 1 in 5 Americans say they always or often regret their financial decisions. In addition, almost one-third of respondents regret having too little in the way of emergency savings.
$300 weekly is how much per year? If you make $300 per week, your Yearly salary would be $15,587. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.
If you have 20 years until retirement
The longer you wait to start saving, the more cash you'll have to put aside each month to reach your goal. If you wait until retirement is 20 years away, you will need to save $1,382 per month to hit the million-dollar mark, assuming a 10% return.
In fact, if you sock away $400 a month over a 43-year period, and your invested savings generate an average annual 10.5% return, then you'll end up with $3.3 million. And that should be enough money to enjoy retirement to the fullest.
Putting away $1,500 a month is a good savings goal. At this rate, you'll reach millionaire status in less than 20 years. That's roughly 34 years sooner than those who save just $50 per month.
Here's the breakdown, according to CNBC. If you start saving $1000 a month at age 20 will grow to $1.6 million when you retire in 47 years.