Why People Save So Little: 5 Hidden Forces (and How to Fix Them)
For many, it’s challenging to save because our future selves simply don’t feel real. Research shows that we treat our future selves almost like strangers—it’s much easier to spend on ourselves today. Photo by Shaan Johari on Pexels.
Reading time: 7 minutes
Quick answer: Saving money is hard because spending rewards you instantly while saving feels distant and abstract. Add lifestyle creep, frictionless credit, and investing confusion, and most people default to “I’ll save later.” The fix is to tie saving to a concrete goal, automate it on payday, and increase your savings rate gradually.
TL;DR — Why People Save So Little
🧠 Future self feels distant: “I’ll save later” wins → define a concrete freedom goal
📈 Lifestyle creep: raises become expenses → lock in savings before upgrading
💳 Spending is frictionless: saving takes effort → pay yourself first, automate
🤯 Investing feels complex: fear leads to inaction → simple + consistent beats perfect
😮💨 Emotional & comparison spending: stress + social media → reduce triggers, add rules
🔑 Takeaway: Saving more isn’t about willpower—it’s about clear goals, systems, and a higher savings rate
Why People Save So Little (and Why “I’ll Save More Later” Rarely Works)
Saving money feels harder than it should be—not because we don’t know it’s important, but because modern life is designed to pull spending forward into the present and postpone thinking about savings. It doesn’t mean we’re broken, lazy, or bad with money. Most people struggle to save not because of the math—but because of psychology, culture, incentives, and a lack of clear goals.
For some people, saving genuinely is hard—especially with housing, childcare, or medical costs—but at nearly every income level, there are still levers that can create a bit more breathing room and long-term flexibility.
This article breaks down five common reasons that keep savings rates low, shows how to recognize which ones apply to you, and shares simple, practical fixes—from “pay-yourself-first” budgets to reducing lifestyle creep—so you can turn saving into a path to freedom rather than deprivation.
Your Future Self Doesn’t Feel Real (So You Save “Later”)
For many, it’s challenging to save because our future selves simply don’t feel real. Psychologically, we treat our future selves almost like strangers, strongly prioritizing today’s comfort over tomorrow’s security or enjoyment. When the benefits of saving feel very distant and intangible, it seems pretty rational to choose present enjoyment instead.
That’s why “I’ll save more later” feels reasonable in the moment and why retirement planning is so easy to postpone. Unfortunately, it rarely works in practice. Again, the problem we’re dealing with today is mostly psychology and inertia.
The problem is often compounded by the way we talk about the future. “Retirement”, unless you are already in your late 50s or early 60s, sounds vague, abstract, and emotionally flat. It usually doesn’t evoke a strong image, identity, or sense of urgency. And without a concrete picture of what savings actually unlock—time, flexibility, and choice—saving today will feel like a sacrifice with no clear benefit.
This disconnect also explains why people can still be successful and motivated in other areas of life. When there is a clear goal—training for a race, buying a house, launching a business—people usually wrap their heads around it and go all in. But without a clear and defined financial destination, saving can feel like floating aimlessly. At best, it can feel like “what we’re supposed to do”, but without conviction.
I see this all the time in friends around me. They are objectively successful in their jobs and enjoy solid salaries, but even though they are in their late 30s and early 40s, they haven’t spent much time thinking about their saving goals. It’s crazy when you think of it—some people spend over 2,000 hours per year thinking of what’s best for their bosses’ company, but practically no time on what’s best for their financial future.
So, how can we recognize and overcome this? If you often postpone addressing savings or save inconsistently without a clear purpose, this likely applies to you. The solution isn’t more discipline, but clarity. Replace “retirement” with a concrete vision you want to pursue: perhaps it’s to retire in your early 50s and dedicate more time to other interests; have the choice to work part time for the last two decades of your career; or have the ability to switch careers into something that provides more meaning or is more aligned with your lifestyle preferences.
There are literally as many visions as there are people. The important thing is to have a clear destination. When saving is clearly tied to freedom, the motivation to save can change dramatically.
Lifestyle creep and our need to keep up with our peers can eat away at any raises or bonuses and keep our savings rate low. Photo by Lotus Design N Print on Unsplash.
Lifestyle Creep Eats Raises and Bonuses
Another one of the most common reasons people don’t save more—especially true for higher earners—is lifestyle creep. As income increases, spending tends to follow automatically: a nicer neighbourhood and housing, more frequent travel, or the upgrading of daily conveniences. None of these decisions feel reckless in isolation, but in aggregate they ensure that financial pressure remains constant.
This creates a treadmill effect. You work harder, earn more, yet don’t feel any closer to financial security. That’s because your savings rate remains just as low as it was before. Your lifestyle expenses keep moving upward, and your savings never quite catch up. Over time, higher fixed costs reduce flexibility, making it psychologically difficult to step off the path you’ve created.
Social comparison plays a key role here. We often confuse progress in life with visible consumption, especially in environments where success is often signaled through what we own. Expectations can very easily grow faster than wages, and what once felt like a luxury quietly becomes a new “normal”.
How to recognize if this applies to you? If raises, annual bonuses, or job changes don’t improve your savings rate, lifestyle creep is likely at play. The most effective fix isn’t cutting spending, but capturing salary increases. Commit early on to save a large portion of every raise you get. If you get a raise, it also helps to prioritize one-time celebrations, rather than locking in higher fixed costs.
For some, it helps to treat the savings growth as the real indicator of progress, not lifestyle upgrades. Personally, early on in our own FI journey, it helped that as we transitioned from low-paid graduate students to earning our first real incomes, we didn’t change our lifestyle overnight. We continued to live for several years in the same place, and overall didn’t fall into the “keeping up with the Joneses” trap. This allowed us to lock in savings rates over 50% for multiple years—accelerating our path to FI.
Even if you avoid lifestyle creep, the environment still pushes you toward spending by default—which brings us to the next force.
* Further Reading – Article continues below *
Spending Is Frictionless, Saving Takes Effort
In most developed countries, we now live in an environment that is engineered for consumption. Each day, we’re exposed to hundreds or thousands of cues encouraging us to spend—ads, social media, one-click purchases, easy credit. In contrast, very little in our daily lives is actively encouraging us to save or invest.
There are no billboards for “internationally diversified, low-cost index funds” or reminders that future freedom quietly compounds in the background and that you don’t need to work until you are 70.
Easy access to credit can further distort decision-making in many countries. Buy-now-pay-later, low-interest loans, and frictionless payments all reduce the psychological pain of spending while pushing the consequences of overspending into the future. This trains us to prioritize immediate consumption over delayed gratification or long-term financial security.
In some places, incentives to save privately are either weak or poorly communicated, reinforcing the idea that retirement or future stability is someone else’s responsibility—perhaps the governments. It’s confusing because many developed countries are raising the alarm regarding the stability of pension systems; and yet encouraging saving can mean less consumption and lower GDP, so which politician is going to champion the importance of increasing your savings rate as much as possible?
Combine this with stagnant wages and rising costs in key areas like housing, and saving can feel both difficult and unrewarding—even when it’s still possible. To be clear, for many households the constraint is real—especially with housing and childcare—so the goal here isn’t guilt; it’s identifying what you can control and designing a system around it.
If spending feels automatic, but saving feels like effort, you’re likely responding to your environment. One powerful shift is to treat saving as consumption: the first expense of the month should go to savings and investments, not what’s left over at the end of the month. Paying yourself first reframes savings as something you buy—freedom, reduced stress, and optionality.
Once you manage to set up an automatic, pay yourself-first budget, you can slowly increase your savings rate using the 1% Savings Method. Each month adjust the amount you save and invest upward by 1%—in the short and mid-term, you’ll barely notice the difference in lifestyle; over time, though, having a noticeably higher savings rate will accelerate your path to Financial Independence and early retirement.
Consumption has never been easier in all of human history—everything is one click away. Photo by Árpád Czapp on Unsplash.
Investing Feels Confusing (So People Do Nothing)
We also need to address a clear hurdle when it comes to money. Most people were never taught how money actually works. They may have some vague notion of the importance of saving, but usually don’t understand the mechanics of investing or how your saving rate affects your timeline to Financial Independence.
As a result, in the best of cases, many tend to anchor themselves to arbitrary rules—like saving 5-10% of their pay-check, without realizing that being more aggressive with their savings rate could dramatically change their future.
This lack of personal finance education also leads to fear. Investing feels complicated, risky, and easy to mess up. The sheer abundance of choices—ETFs, funds, brokers, and tax rules—understandably creates paralysis by analysis. Ironically, this often results in the worst outcome of all—doing nothing at all or putting all your eggs in one basket and chasing moonshots.
The reality is that simplicity beats optimization. Although there’s no single right answer—it always depends on the specific individual’s circumstances—a simple diversified approach is usually better than waiting. In practice, the biggest lever is almost always savings rate, not clever forecasting. Even a “non-optimal” portfolio combined with consistent contributions tends to beat years of hesitation—because time in the market and behavior drive outcomes more than perfect fund selection.
If you’re unsure where to invest or worry about making mistakes, this hurdle likely applies to you. The solution is to focus on what matters most first: savings rate, consistency, and patience. Learning a simple, good-enough approach like investing in internationally-diversified, low-cost index funds is far more powerful than waiting decades until you feel confident. The details do depend on where you live, but the underlying behavior principles stay the same: diversify, keep investment fees as low as possible, and contribute consistently over time.
But even when people understand the logic, emotions can still override it—especially under stress or social comparison.
Many people are working long hours in jobs they dislike and unconsciously use consumption to justify the effort. Photo by Vitaly Gariev on Unsplash.
Stress, Comparison, and Identity Drive “Comfort Spending”
Spending is often emotional, not rational. Many people are working long hours in jobs they dislike and unconsciously use consumption to justify the effort. Buying things becomes a way to cope with stress, boredom, or dissatisfaction—a short-term reward for enduring something unpleasant.
As mentioned earlier, social comparison intensifies this dynamic. We compare our lives to the curated lives of others online in the form of highlights, which leads us to raise our expectations and distort lifestyle baselines. What was once considered abundance now feels grossly inadequate. Remember that material living standards have improved dramatically over generations—it’s just that our expectations have outpaced this progress.
For parents, this often shows up as overconsumption for children—more toys, more activities, more stuff—sometimes as compensation for the limited time or energy we spend with them. The result is higher spending without greater fulfillment, and less space for long-term financial security.
If spending spikes when you feel stressed, unhappy, or when you find yourself comparing with others, this pattern could be driving your finances. The long-term solution isn’t guilt, but aligning your spending with your financial goals. Again, reframing savings as freedom, not deprivation, helps break the cycle. Also, being more mindful of the time we spend on social media.
Ultimately, saving more isn’t about becoming extreme, joyless, or obsessively frugal. It’s about reclaiming agency in a world that quietly nudges us towards spending, comparison, and short-term comfort at the expense of long-term freedom.
Once you understand why saving feels so hard for you—whether it’s an abstract future self you don’t recognize, lifestyle creep, emotional compensation, or simply inertia and lack of personal finance education—you can stop blaming yourself and start creating better systems.
Savings aren’t just money taken away from your life; they are a deliberate investment in choice, flexibility, and peace of mind. While this is something difficult to fix overnight, small, consistent shifts—setting clear goals, generating a future vision, automatic saving, simpler investing, and a healthier relationship with consumption—is likely to do the trick in the long run.
Over time, this may not just change your finances, but also how you experience your life.
💬 As you read this, which habit or mindset did you recognize in yourself? Awareness is the first step—let us know in the comments below!
👉 Want to understand how to reach Financial Independence in your mid-40s? Check out what savings rate will get you there depending on age and current portfolio size.
👉 Looking to retire a decade or more early? Use our Financial Independence Calculator (free for email subscribers) to plug in your numbers and see how soon you could go into retirement.
🌿 Thanks for reading The Good Life Journey. I share weekly insights on money, purpose, and health, to help you build a life that compounds meaning over time. If this resonates, join readers from over 100 countries and subscribe to access our free FI tools and newsletter.
Disclaimer: I’m not a financial adviser, and this is not financial advice. The posts on this website are for informational purposes only; please consult a qualified adviser for personalized advice.
About the author:
Written by David, a former academic scientist with a PhD and over a decade of experience in data analysis, modeling, and market-based financial systems, including work related to carbon markets. I apply a research-driven, evidence-based approach to personal finance and FIRE, focusing on long-term investing, retirement planning, and financial decision-making under uncertainty.
This site documents my own journey toward financial independence, with related topics like work, health, and philosophy explored through a financial independence lens, as they influence saving, investing, and retirement planning decisions.
Check out other recent articles
Frequently Asked Questions (FAQs)
-
Because saving fights human psychology and modern incentives. Spending gives immediate rewards, while saving pays off later and feels abstract. The fix is to make saving automatic and tied to a concrete goal. When saving becomes “paying for freedom,” it stops feeling like punishment.
-
Often it’s lifestyle creep: expenses silently rise to match income. Bigger housing, nicer travel, and upgraded conveniences turn raises into fixed costs. The most effective move is capturing future raises (e.g., save 50–80% of each raise) before you feel it.
-
Because “later” has no deadline and your future self feels distant. New expenses also appear over time—so the perfect moment never arrives. A better approach is to start small now and ratchet up automatically (like using the 1% savings method).
-
Usually it’s not one reason but a stack: unclear goals, frictionless spending, and fear of investing mistakes. If saving feels impossible, start by automating even a small amount. Consistency creates momentum, and momentum makes bigger changes easier.
-
“Retirement” is vague, far away, and easy to outsource to governments or employers. Many people also underestimate how strongly savings rate shapes independence. A clear vision—time freedom, career flexibility, resilience—makes saving emotionally real and actionable.
-
For many people, it’s lifestyle creep: income rises, spending rises, and savings stay flat. The enemy isn’t one luxury purchase—it’s locking in higher recurring costs. One-time celebrations are fine; permanent upgrades are what quietly delay financial freedom.
-
If your savings rate hasn’t increased despite raises, bonuses, or job changes, that’s the tell. Another sign is feeling financially “normal” even as income climbs. Track savings rate (not net worth alone) and set a rule to auto-save a portion of any income increase.
-
Fear is common, especially with endless ETF choices and tax rules. But savings rate and time matter more than perfect optimization; doing “good enough” beats waiting. A simple, diversified index-fund approach is usually far better than analysis paralysis or doing nothing.
-
Start with a tiny automated transfer right after payday, even if it’s symbolic. Then reduce one recurring cost or one “default” spending trigger, not everything at once. The goal is to build a system you can keep for years, not a sprint you abandon in two weeks.
-
Give saving an immediate emotional payoff by treating it as purchasing freedom. Track “months of runway,” “days of work avoided,” or “years to FI,” not just account balances. Small visible progress creates the dopamine loop that spending currently owns.
Join readers from more than 100 countries, subscribe below!
Didn't Find What You Were After? Try Searching Here For Other Topics Or Articles:
<script>
ezstandalone.cmd.push(function() {
ezstandalone.showAds(102,109,110,111,112,113,114,115,119,120,122,124,125,126,103);
});
</script>
