The Psychology of Saving Money: Why some do it successfully and others struggle

The Importance of Saving Money

A sound financial plan has a variety of elements. These elements include everything from retirement planning to an understanding of investments and financial choices. However, I can’t emphasize enough how important your ability to save money is to your financial future.

The ability to save money is one of the foundational principles for reaching financial independence. Good money behaviors, including spending habits and a commitment to saving, are a recipe for success.

While some people seem to save money intuitively and without a great deal of effort, others find it difficult or almost impossible to do so. This leads me to two important questions:

1.    What are the differences between people who can save without a struggle and those who can't?

2.    How do people who struggle to save overcome these difficulties?

Why Some People Can Save and Others Can't

It's never a good idea to blame our problems on others, but your upbringing exerts a great deal of influence on your spending habits. Typically, children raised in frugal households tend to save money more easily during their adult lives. The opposite holds true as well-- children of parents who spend impulsively or don't have a good hold on their personal finances tend to have difficulty saving money as adults. Although this is not always the case, it's certainly worthwhile to look at family money scrips.

Another reason some people struggle saving is related to a phenomenon called learned helplessness. This is state of mind that causes people to believe that there's nothing they can do to escape a negative situation when the opposite is actually true. As it relates to saving money, learned helplessness often arises in people who have had consistently negative experiences with money.

Although learned helplessness can begin during childhood, it can come about from adult experiences as well. The more often someone experiences a failed attempt to save money, the more likely they are to believe that they're simply not capable of doing so. In other words, they begin to think that the inability to save money is just a part of who they are.

You'll notice that both of these difficulties are learned behaviors. While it's not always easy to reverse the trends established early in life, the good news is these patterns can be unlearned as well. The best way to begin unlearning these patterns is through practice. Here are a few ways to get started on the path to saving money:

·      Start by saving a small amount each week.

·      Track the progress you make, however small it is.

·      Set savings goals and acknowledge reaching them with a small reward.

·      Find a 'financial buddy' and establish a dynamic with them where you're mutually accountable and can encourage one another.

While these can help, the most impactful practice I have seen is removing choice from the equation as much as possible.

Automate Your Savings For a Better Financial Future

Hopefully, you've gained some insights into the psychology of saving money from what you've read here. But it's equally important to understand that these insights are not enough to elicit the necessary changes. Self-awareness is necessary for making positive changes, but it's far from sufficient. Any real change results from constructive action.

The best way to develop a savings habit it to automate. With an automated savings plan, you'll be able to change your habits without even thinking about it. Follow these steps to get started on an automated savings plan that could eventually become life-altering:

·      If you don't have a savings account, open one immediately and connect to your checking account.

·      If you haven't already, sign up for direct deposit and arrange for a percentage of your paycheck to be deposited into your savings account automatically.

·      Set up an emergency fund and contribute a reasonable amount to it consistently. This will help you cover unexpected expenses and facilitate the next rule of automated savings.

·      Don't touch the money in your savings account. Let it grow through good budgeting and proper use of your emergency fund.

·      Ensure you are receiving your 401K match. This means contributing at least the maximum percentage that your employer will match, usually around 2-3%.


Removing the need to choose to save by automating your savings is an easy way to establish the habit. For people who struggle saving money on their own, making the process automatic may be a necessity.

Don't be discouraged if you happen to be someone who struggles to save money. Simply acknowledge the problem and remain focused on the solution. A big part of this solution is automated savings. Start executing your automated savings plan today and you'll begin to see a rosier financial future.

Want to learn more about the Psychology of Money? Check out our other recent articles:

Can Money Buy Happiness?

The Psychology of Money, Part II: Make it a Treat & Buy Time

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