Search for Savings & Loans
Why You Struggle To Save – Money Psychology
Money Psychology

Why You Struggle To Save – Money Psychology

Everyone has the ability to save money, however, doing it consistently over a long period of time is something most people have struggled with or are struggling with.

If faced with any kind of emergency for example unexpected medical expenses, most would find it hard to raise Ksh50,000 without plunging into debt.

As a matter of fact, a 2021 report that was published by the Central Bank of Kenya (CBK) showed that only 1.8 million Kenyan bank accounts had a balance of Ksh100,000 or more as of December that year. – This represents just 2.5% of the bank accounts in Kenya.

While it’s generally accepted that external factors such as insufficient income, natural disasters such as the pandemic, and unexpected expenses have a direct impact on one’s ability to save, it is important to acknowledge the limitations that emanate from a psychological perspective.

For anyone looking to improve their spending habits, it would be prudent to take a detailed look at these mental factors, how they influence the saving process, and look into any tried and tested strategies to overcome them in the long run.

Read Also: Money Psychology: Why Is it So Hard to Save Money?

Emotional Distortions Affecting Saving Habits

Anne Borges in her book – The More or Less Definitive Guide to Self Care, identified what cognitive behavioral therapists call cognitive distortions. She then went on to link them to specific saving patterns/habits.

The cognitive distortions and their overall impact are explained as follows;


According to the American Psychological Association (APA), individuals catastrophize when they are utterly convinced that the worst possible outcome will materialise in any given situation.

It is a negative spiral of expecting calamity at every turn. What if the economy collapses? What if I need my money at a moment’s notice, what if inflation eats away all of my savings?

Such thoughts then lead to inaction when it comes to decision-making. Borges further explains that catastrophization usually starts off as a small thought that then has the potential to escalate rapidly.

In this context, individuals who have suffered traumatic financial experiences in the past are believed to be more susceptible to catastrophization.

For example, someone whose savings were part of one of the commercial banks that went under receivership is more likely to reconsider the exponential benefits of saving.

Behavioral psychologists believe that this particular cognitive distortion can be countered by focused self-care.

This can be done by simply talking it out with trusted friends or financial experts. 

There are also limitless resources such as books that can help in the process of decatastrophizing. For example, The Worry Cure: Seven Steps to Stop Worry From Stopping You – by Robert L. Leahy, lists a seven-step plan aimed at changing the reader's worry patterns.

Read Also: What to do When You Lose A Large Sum of Money

Blaming Theory

The cognitive theory of blame was first presented by J.J.C Smart (1961) in a journal titled Blame published by the Stanford Encyclopedia of philosophy.

He argues that blame is basically a judgment or reasoning individuals make in order to relinquish responsibility when faced with negative outcomes.

Theorists have also argued that when it comes to negative financial results, most people often tend to find a way to shift the blame to factors beyond their control.

For example; One could say "I’m not saving because my boss doesn’t pay me enough. Or," I can’t save because the environment isn’t favorable. 

Read Also: 6 Saving Tips For Low-Income Earners

According to Susan Whitbourne – a Professor Emerita of Psychological and Brain Sciences at the University of Massachusetts, people apportion blame to external factors because it helps preserve their sense of self-esteem by avoiding awareness of their own flaws.

On one end of the spectrum, there are individuals who always find an external factor to blame when they fall short of their saving goals.

From a dilapidated economy to inflation, to the Russia-Ukraine conflict, to a higher power - they always find something or someone to blame.

On the other hand, there are those individuals who always tend to blame themselves for every financial challenge they encounter, even when they have nothing to do with it.

For example, saving diligently only for the bank to go under receivership. 

Behavioral psychologists present an argument that self-blame, when things such as financial decisions go wrong, relates to a general tendency to make internal attributions to failure.

Such individuals view themselves as foolish, inept, or irresponsible when it comes to making financial decisions.

According to Whitbourne, awareness of a tendency to shift blame is the first step to overcoming its negative consequences.

Simply put, taking ownership drives action. If a limited monthly salary is tagged as the reason for irregular saving patterns, taking ownership could involve finding practical ways to make some passive income.

>>>> Learn More About Savings Accounts in Kenya


In the journal titled Why Wait? The Science Behind Procrastination by Eric Jaffe, procrastination is defined as a complicated failure of self-regulation where an individual voluntarily delays an important task that they intend to do, despite knowing that they’ll suffer as a result.

As an example, you might put off reducing your spending if you have a tendency to procrastinate, despite knowing very well that you won't be able to save money until you cut back on your expenses.

Piers Steel, a professor at the University of Calgary, in a 2007 issue of Psychological Bulletin opined that procrastinators understand the varying utility of specific tasks: enjoyable ones have greater value early on while challenging ones become more crucial as a deadline draws near.

Splurging on a designer bag appears more pleasurable as compared to saving up for some future unknown activity. However, the individual in question also knows that saving is part and parcel of a healthy financial lifestyle.

As for solutions to the common problem of procrastination, drawing up a monthly budget and categorizing expenses that can be avoided is highly recommended.

This is based on the common knowledge that the earlier one starts budgeting their finances, the faster their rate of saving.

Behavioral scientists in the field of finance also believe that this can be countered by the Nudge Theory which was presented by Richard Thaler – a Nobel-winning economist.

In his book Nudge, Thaler details how findings from the world of psychology and behavioral science could help people make better choices with their money.

Now the key lies in nudging yourself when it comes to your personal finance. Thaler states that when you think of it, saving and investing can be kind of like striking a deal with your current self on behalf of your future self. 

He then proposes automating saving contributions as one form of nudge that also counters any temptation to splurge.

Setting specific goals also falls under the nudge theory solution. The rule of thumb is that saving goals should be specific enough that one can easily tell when they go off track.

Majority of research studies show that people who set highly specific goals that are difficult to achieve often end up doing better than those who set unambitious or vague goals.

Read Also: Money Psychology: How Procrastination Affects Your Finances


Small Wins Philosophy 

Research shows that behavior, whether positive or negative, reinforces itself when repeated.

Saving, just like exercise, may feel like an insurmountable task during the early days, but once it gets to a certain threshold it almost becomes second nature. 

Any negative patterns such as skipping monthly savings can be countered by automation as Richard Thaler pointed out in his nudge theory.

This key is to acknowledge that psychological impediments do exist, then narrow it down to those that apply to any given person. This then makes it easier to identify practical solutions that could then lead to a healthier financial lifestyle.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind. – T.T. Munger
No items found.

Eddy Mwanza is Creative Consultant living and working in Nairobi, Kenya. His areas of focus are Content Creation, Creative Writing, Research and Photography. When he is not writing in his favorite coffee shop, Eddy spends most of his time reading, cooking, and traveling. He is also a sports fanatic. Connect with Eddy on LinkedIn.

Get the Money254 App and don't miss out on the next article.

Join 1.5M Kenyans using Money254 to find better loans, savings accounts, and money tips today.

Get it on Google Play
A person holds the Money254 App in their hand.

Welcome to Money254 - your simple way to compare loans in Kenya online.

Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.

Download the new Money254 App and don’t miss out on the next article.

Join 1.5M Kenyans using Money254 to find better loans, savings accounts, and money tips today.
Get it on Google Play

Learn more about Personal Loans available in Kenya on Money254

Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.

Instantly search loan products from established providers in Kenya and compare on the terms that matter most to you.
Find the best Personal Loans for me

Don't miss another article - download the new Money254 App Today

Get it on Google Play
Download the Money254 app on Google Playstore

Sign up for our newsletter and get weekly money tips to your inbox.

Get updates from the Money254 team on financial news and new Money254 features.