Top 10 Reasons It's So Hard To Save Money


If you’re struggling to save money, you’re not alone. A worrying report from ME Bank in 2022 found that 1 in 5 or 22% of households have less than $1,000 in cash savings including 11% with less than $100. The report also mentioned that around 25% of single parents dipped into their emergency savings! Don’t listen to the boo-boys though – there are some legitimate reasons why you might be struggling to save.

Here are 10 of the biggest reasons why saving money is so hard today.

1. It’s so easy to spend money

Spending money at merchants is easier than ever thanks to contactless payments technology and the abundance of banks offering credit and debit cards. According to the RBA’s Payment System Report for 2017/18, 8.7 billion card payments worth $591 billion were made in that financial year – an increase of 13% for debit and 8% for credit cards from the previous year.

Plus, you can easily enter your card details and buy anything you want in minutes online. The average person can easily make more than 5 card payments in a single day without realising it.

The solution? Withdraw a set amount of cash from an ATM and use that for your daily spending, set up a notification to your phone every time money leaves your account, or use an budgeting app connected to your spending account to track daily expenses.

2. You don’t know where the money is going

You could be completely unaware of just how many direct debits (automatic payments) you’re making every month, which could include things like Netflix and gym memberships. I recently went through my bank account and discovered I was paying a monthly direct debit for a magazine that was still being sent to my old address.

All of these direct debits can easily cost hundreds of dollars a month.
The solution? Review your bank statements and cut out any unnecessary direct payments monthly!

3. You’re encouraged to spend money

A lot of people have it drilled into them that if you have savings you’re not doing it right. FOMO (the fear of missing out) is huge at the moment, and the emergence of buy-now-pay-later schemes like Afterpay encourages the ‘treat yo-self’ attitude. Around 25% of Afterpay’s income comes from late fees, which means a lot of people using it can’t actually afford what they’re buying.

The solution? Practice discipline in your spending by really thinking about whether you need that new jacket, and include goals into your budgeting so you have something to plan and save for.

4. Credit card debt is rife

This is a big killer of budgets. According to the RBA, Australians are currently being charged interest on $32.2 billion worth of credit card debt. This averages out to about $2,000 per credit card holder. You can do your bit by paying off as much of your debt as you can every month – if you can pay off your entire balance by the due date, then you won’t be charged any interest at all. Just don’t pay the minimum required amount, because this will maximise how much you owe.

The solution? Use a debit card instead of a credit card for everyday purchases, or make sure you only spend on your credit card to the point you can pay it off at the end of the month.

5. Wage growth is slow

Wage growth since 2015 has been around just 2% – that’s the lowest level of wage growth since the great depression of the 1930s. People who’ve built their wealth over decades past might slam people now for spending too much, but the fact of the matter is that people just aren’t earning as much as they used to compared to how much it costs to live.

The solution? There’s not much you can do about this one except watching your budget and waiting for the market to correct itself, but you can also improve your negotiation skills and seek a pay-rise (or land a higher-paying job!).

6. Everyday expenses are greater now

This one is up for debate since the costs of items vary, but given what we talked about above, wage growth is just barely keeping ahead of inflation. In June 2023, premium fuel reached a high of 222 cents per litre – back in 2001, you’d pay just 89 cents per litre, which means you’re now paying almost twice as much for a tank of fuel compared to the start of the millennia.

The solution? Look for bargains where you can and think about ways to cut down on the overall cost of living, such as costs of car ownership or everyday groceries shopping.

7. Education and housing costs are huge

It’s not just food and gas that’s more expensive now. Education and housing are possibly the two biggest expenses you’ll ever have, and both of them have skyrocketed in price compared to generations past. University education, in particular, used to be free between 1974 and 1989, but now the average three-year degree in Australia costs roughly $50,000, which can take years to repay through the HECS/HELP program.

We’re sure you’ve heard of and have maybe even experienced the housing woes Australia is currently facing. Saving up for a house deposit means you may have to for-go saving for other goals such as holidays, or reduce how much you eat at restaurants.

The solution? Focus on one big goal at a time – if you have ambitions of owning a home or paying off your student debts make that your priority.

8. Savings account interest rates aren’t enough to beat inflation

If you think you can save big coins by parking your money in a savings account, you might be mistaken. Interest rates on cash options – savings accounts and term deposits – have increased, but not enough to contend with inflation. If you also factor in tax on interest, you are possibly losing money.  That being said, savings accounts aren’t all bad – they’re good vehicles for practising good savings habits. Just don’t rely on them for earning large returns.

The solution? You might need to look elsewhere for long-term gains, such as investing in shares.

9. People think budgeting and saving is hard

A lot of people think this way – a study by ASIC found that 27% of people who broke financial resolutions put their woes down to a ‘lack of willpower’. Saving doesn’t have to be hard though – you can start by simply setting up an automatic transfer to a savings account every payday, which is the forced savings method of saving.

The solution? Automate as much of your budget and savings as you can! Let technology practice willpower for you.

10. You aren’t investing your savings

Many people make the mistake of sitting on their cash instead of investing it, with Millennials being the worst offenders. When it comes to return on investment, cash options like savings accounts are safe but perform worse than shares, managed funds, property and bonds over the long term.

A diversified option like an ETF (exchange-traded fund) could be a good way to expose yourself to the higher potential of the share market without taking on too much risk.

The solution? Invest some of your savings instead of sitting on it if you’re after greater returns.

Final Tip:

Another important step in getting better at managing your money is to set your goals. Make saving money part of a bigger financial plan, start using wealth creation techniques to add purpose and structure to your efforts, and think bigger.

You May Also Like:

3 strategies to pay off your debt. We'll walk you through how to choose the right method and how to...
04 September 2023

How to Pay Off Debt Fast [Step-by-Step Guide]

Budgeting General
Being better at saving money is something that most people desire. This guide is a great place to start improving!
25 November 2019

Money Saving & Budgeting Tips

Enjoy the holiday season to the fullest while ensuring you're on track to secure your dream financial future with these...
27 November 2018

8 Easy Ways To Control Your Holiday Spending


Want advice specific to your unique situation?

We hope this resource gave you a start in tackling the financial challenges you may be facing.

If you’d like guidance tailored specifically to you and your particular needs, we’re here to help.