Financial Optimisers

Why you feel you earn a lot but don’t seem to have much money to save.

5 Reasons why you aren’t saving as much as you should. 

You’ve been working for years now and are advancing in your career. The problem is, your finances don’t seem to be making the same progress. You are making way more money now, but still don’t have much to show for it… 

Here are 5 reasons why you aren’t saving and investing as much as you should, and how you can change that. 

Lifestyle inflation  

This is when your spending increases to match your income. As you get a promotion or raise, your wardrobe gets a makeover. You start dining out more. You go on bigger, better holidays! It’s ok to reward ourselves occasionally. The issue comes when the spending increases as much as your income.  

Overcome this by putting aside a set amount per paycheck, which will increase in line with pay raises. Then, be sure to keep expenses low, even when your income increases. 

Limited money management knowledge 

We learn a lot of things at school – money management isn’t one of them. So, when we leave school and land in the real world, the ever-present advertising and marketing hijacks us. Credit card and loan offers are being pushed and before we know it, all of our income is being used up. This is when people start living paycheck to paycheck. 

To get out of this cycle you have to educate yourself – there is plenty of information on this topic. Make the time to learn. If needed, get solid financial advice from a professional. Your future self will thank you! 

Failing to set goals and savings plans 

Without knowing what you are aiming for you will never hit your target. Figure out what you really want in life and what you need financially to make that happen. This can be anything from special holidays, to supporting family, to launching a startup. 

To start, ask yourself: 

  • How much do you need to put aside? 
  • When are you going to need access to the money? 
  • What resources do you already have? 

Not allocating where your money goes 

This key step is often overlooked. Instead of just a savings and checking account, use the bucket approach. Allocate a percentage of your income into different accounts (‘buckets’) for different purposes. You can do this even if your income fluctuates weekly. Some bucket examples include: 

  • Travel fund 
  • Emergency fund 
  • Kids 
  • Bills & loans 
  • Investing (shares, investment property) 
  • Financial Freedom fund 

You can then spend what you have left guilt-free because your top priorities are covered. This is called paying yourself first. It’s the number one way to make better use of your income. 

Manually managing your finances 

Managing your finances manually is hard. Most people have their rent and loan payments automated, so the next step is to automate payments into your other “buckets”. Automate regular payments through your online banking. Then, just check in occasionally to see your savings start to grow.  

Gaining control of your money feels incredible! It clears your mind and creates confidence, rather than frustration or anxiety. The answer isn’t making more money, it’s about what you do with the money you have. 

Want to learn more about managing money and growing your wealth? Book a FREE Discovery Call with one of our friendly Financial Planners. Get tailored financial advice that you can start implementing right away!