Tag Archives: savings

Top reasons why we don’t save!


Photo Courtesy of Alan Cleaver

We all have excuses on why we don’t save enough. We have children, we want to go on a vacation, we just don’t have the time, etc, etc, etc. The list goes on and on till the break of dawn. Right? Well, the list goes on if we let it, but there are ways to sneak in savings.

Jonathan Stein, CEO of the investment site Betterment says, people regularly overspend and don’t save enough money to achieve the goals they have planned for the future. Whether their goal is to afford retirement, college tuition, or big-ticket purchases, saving with an eye towards future financial needs is key. In other words, “I live paycheck to paycheck. I save for short term things.”

“I have a savings account, isn’t that enough?”

Stein says, “People don’t take enough investment risk with their savings to achieve their goals. Instead of investing in stocks and bonds, they park their money in a savings account, which has its own risk: not keeping up with inflation.” He says that under-investing is what happens when people fail to see the huge opportunity cost of parking money in savings.

Sometimes we’re just too darn busy!

This one’s a biggie. When we fail to maintain our accounts, we lose. “People tend to slack off after they’ve set up their accounts, says Stein, “That’s like joining a gym and then never going to work out – you get little benefit.”  It’s important to stick to rebalancing, contribution and diversification routines, or, if you’re subject to slacking, like most of us, chose a service that does these important things automatically for you he says.

Ways to overcome bad habits

How much can you contribute?

Stein advises savers to decide how much money they need to contribute regularly to meet their goals. “Work backwards from where you want to end up and understand that you’ll need to be patient with yourself and the markets.”

Maximize risk

Another strategy he suggests is to maximize the risk we’re taking with our savings, given of course our limits for risk tolerance because as he puts it, what may seem like playing it safe could actually be ruining our chances of ever hitting our financial goals.