10 Warning Signs You Are Not Saving Enough Money

Being able to save doesn't always result from having a high income and regardless of how much you earn, you still need to save. Current trends and flashy lifestyles on social media have a significant impact on how many people choose to live beyond their means. 

You may be tempted to copy the extravagant lifestyles of influencers but trying to keep up with the Joneses is an enemy to building a saving culture and one of the results is living beyond your means.

The result of this is that you may even struggle to pay your bills. This is an impediment to your efforts to save, invest and attain financial freedom.

A saving culture is the foundation of creating financial safety for your future. Are you on track towards a comfortable financial future?

If not, here are some 10 warning signs that you are off course and what you can do to catch up.

1. You Don’t Know How Much You Spend

You definitely  have an idea of how much money you make each month. But how much really leaves your account each month for expenses like coffee, your transport costs, subscriptions, mobile money transactions and deliveries? 

It's probably more than you realise, and you likely could discover ways to reduce these costs.

To have a clear picture of your expenses, keeping tabs on your spending is sometimes the first step in organising your finances. Understanding your spending patterns will help you identify where your money is going and places where you can make savings. 

How to Improve:

Keep a log of your purchases for a few months to see exactly where you are wasting money. 

To help you with this, you might want to keep a record of your expenses or you can use one of the several spending tracking apps online.

Read Also: 5 Principles of Spending You Need to Follow

2. You Have Not Automated Your Savings

Starting to save is about being decisive and having a commitment to do it regardless of changing situations.

By automating your savings contributions, it makes it almost impossible to miss the “payments” to your savings account or wherever else you keep your money. If you have not automated your savings, it then could be a sign that you are not saving enough.

How to Improve:

To get going on this, think about automating monthly deposits to your savings account. This is not only useful, but it might also make it easier for you to start saving regularly.

An automated savings plan allows you to set aside any amount you want each month. The best thing is that all income levels can benefit from using this strategy and so you don’t have to worry about your saving amount being too little.

Read Also: How to Automate Your Finances - Save Time, Money and Stress

3. Procrastinating by Saying You Will Save More When You Have More

Is money ever really enough? This is a question we can use to put this in perspective. If you wait for the time you will have enough money perfect to start saving, then this time may never come.

The author of Real Money Answers for Every Woman, Patrice C. Washington, says in the book that telling yourself that you will save more when you start making more is a lie most people tell themselves.

Washington says that it’s all a matter of attitude since we're the same person bearing the same attitude, behaviours and habits. She adds that saving is not about getting more money but being more disciplined with the money one has.

How to Improve:

Consider your savings as a fixed expense that you must pay each month, similar to your rent or groceries bill. With the automated savings mentioned above, the money for savings won’t ever pass through your hands and you can train yourself to survive without it.

Read Also: Why Waiting for the Perfect Moment Could be a Mistake - Money Psychology

4. You Have Not Decided on What You Are Saving Towards

You may have a fuzzy idea of what you want to buy and thus your savings for this are not yet narrowed down to the exact cost or purchase.

While this may sound like a goal, it is not one since it fails being specific, measurable, achievable, relevant, and time-bound (SMART).

How to Improve:

Setting a goal gives one a roadmap towards a specific target.

• Be specific by making the goal narrower which make clearer the steps to achieving it.
• Let your goal be measurable by ensuring that progress can be based on timelines, milestones etc.
• Your goal should be achievable meaning that it has to be realistic and to be completed within a set time frame.
• The goal has to be relevant meaning that it has to align with the long-term objectives.
• Your goal has to be time-bound. An idea remains an idea unless it is put down on paper and given a timeline to complete.

With this, you are able to distinctly tell what your saving goal is and what the objectives are.

Read Also: Money Mastery: How to Set & Actually Achieve Your Financial Goals

5. You Have no Savings in a Retirement Fund

Nobody desires to work until death. 

Saving for retirement must be done now regardless of how far off it may seem. One approach to take care of your future self is to properly manage your finances now. If you want to thrive in the future, always consider the big picture and make wise choices like living within your means.

How to Improve:

Many financial experts advise saving at least 10% of your earnings. If this is hard to do, starting low is preferable as a starting point. This means it’s still progress if you start with allocating 1% of your earnings to a retirement fund.

Read Also: 7 Reasons Why Retirement Planning is Important

6. You’re Living Pay Cheque to Pay Cheque

This means that all of your money typically enters and leaves your account by the end of the month, and sometimes even before the month ends. One of the reasons is that/ you could be not saving enough.

In addition, are you trying to keep up with your neighbours or those whose lives you see cold be better than yours? If the answer to this is yes, then you could also be living beyond your means.

How to Improve:

To get out of this quagmire, consider starting an extra revenue generator or cutting back on your spending. If you are in employment, you could ask for a raise seek another job that could increase your earning potential.

Additionally, you can create a side hustle, look for a part-time work or develop passive income avenues. If your issue is overspending, consider cutting back on your expenses by starting a budget, reading about practical money-saving tips and consulting a financial advisor to help you with your finances.

Read Also: Money and Me: The Struggles of Living Paycheck to Paycheck

7. You Have Not Started Investing

Investing is one of the best ways to grow your savings. 

The strength of compound interest makes it advantageous to begin investing early, making it an effective way to begin accumulating money. You aren't saving enough money if you don't feel like you have any money to invest.

How to Improve:

One way to invest is through retirement savings, but there are other options to consider like low-cost index funds, which Warren Buffett recommends as a conservative strategy and which financial advisers generally advise young investors to use.

A low-cost index fund is a pooled investment with low expense ratios in management fees. Investors in this segment can generate superior returns over time.

It is possible to start with such a fund through a brokerage.

Read Also: How To Turn Your Savings Into Investments

8. You Can’t Live Off Your Current Savings For A Couple of Months

What would happen if you lost your source of income today? If you can’t live off your current savings for a few months, then this is an indicator that you have not been saving enough.

One of the most crucial financial decisions you can make is starting an emergency fund. If you haven't given your rainy day fund top priority, you probably aren't saving enough.

How to Improve:

Think about opening a special, goal-driven high-yield savings account for your emergency kitty.

Then review your expenses and see where to cut costs which you can then put into your emergency fund.

Read Also: 9 Rules for Establishing an Emergency Fund That Will See You Through 2023

9. You’re Spending More Than 30% of Your Income on Housing

If you are spending more than 30% of your gross salary to paying rent, then it may prove hard to save which is a detriment to your financial future.

How to Improve:

Try keeping your rent at a maximum of 30% of your after-tax income. With this, you’ll be able to put some money into your savings.

To achieve this, you may have to relocate to a more affordable neighbourhood or try to make more to supplement your earnings.

Read Also: Spending 101: Skills to Keep Your Expenses in Check

10. You Don’t Know How Much Money You Need to Retire

You're probably not saving enough money if you don't know how much you'll need for your retirement.

Even if you don't have a precise estimate of how much money you need to set aside for your retirement, it is good to have a general idea. In addition to having enough money saved to cover living expenses, travel, and anything else you want to do in retirement, you also need to take inflation into consideration.

How to Improve:

Consider talking to a financial advisor to help you reorganise your finances towards starting a retirement kitty.  Additionally, review your expenses, consider cutting costs then redirect the savings to your emergency fund.