Why People Can’t Save Money

How often have you heard someone say, “If I had a nickel for every time I heard that I would be a rich man today!” I know I have heard it many times. And the truth is that human behavior does seem to follow a lot of repetitious patterns.

Common Excuse for Not Saving Money

This is true with our economic choices and ideas as much as it is anywhere. Specifically, it is common to hear what I heard again this week from a woman I know.

I have heard this statement many times before. It goes something like this:

We just can't seem to save any money. We try, but every time we get a little ahead something unexpected happens. We have to get tires for the car or the dishwasher breaks down. One thing or another eats up our savings and we have to start over again.

The Truth About Unexpected Expenses

One reason I like working online as we are doing instead of dealing with people face to face is that I tend to be a little hesitant in my responses when face to face. I don't want to sound harsh so I try to word my comments more politely—although I do still try to make my points clearly.

In a case like this my first thought is usually to ask what could be interpreted as a little pointed, “That's interesting. Tell me, when is the last time you bought a set of tires for your car that did not wear out or a dishwasher that never broke down?” But I usually respond a little less directly.

What they are telling me in truth is that (even though they do not recognize it themselves in all likelihood) they planned all along to use this money for tires and dishwasher repairs, that they did not have a savings plan at all.

Include “Unexpected Expenses” in Spending Plans

The point is important. Your spending plan needs to cover all the real expenses in your life. Just because they are irregular or harder to predict does not mean we can ignore them in our planning.

Can we have unexpected expenses or financial set backs? Sure. Hurricanes Katrina and Sandy brought on consequences beyond what might have been predictable. Tires wearing out and dishwashers breaking down are not unpredictable.

Dollar sign logo EXAMPLE:

I did not expect that our vacuum cleaner would stop working today, but it did. Right in the middle of completing this post.

Sort of makes this blog real on a personal level doesn't it! I didn't need the object lesson to convince me I was right on this point, but it does show this idea is relevant to real life.

We need to keep in mind that such things as occasional repairs and appliance replacement are just as predictable as our house payment and electric bill when we work on our spending plan, and as we design our savings programs. Otherwise we will find ourselves not only unprepared for these expenses, we will find our retirement and other savings programs suffering as well.

Plan Inclusively for Financial Success

The point is really clear and doesn't need repeating, but here it is anyway. When you make your spending plan, plan inclusively. Include everything or your spending plan or it will be like a bucket with holes in it. It is a part of being real and successful.