Why Most People Fail at Saving Money – And How to Fix It

Saving money sounds easy in theory, but why do so many people struggle with it? From psychological roadblocks to financial illiteracy, the reasons are many. If you’ve ever wondered why your savings never seem to grow, this guide will uncover the real causes and offer practical steps to turn things around.

Whether you’re in your 20s, 30s, or 50s, saving money is a skill you can build, and it’s never too late to start.

1. The Psychology Behind Failing to Save Money

Many people associate saving money with restriction or sacrifice, which naturally leads to resistance. In behavioural finance, this is known as “loss aversion”, people feel the pain of giving up something now more intensely than the reward of long-term gain.

Also Read: How to cultivate an investing mindset

2. Living Beyond Your Means

One of the biggest pitfalls is lifestyle inflation. As incomes rise, so do expenses, often unnecessarily. Instead of directing that raise into a high-interest savings account, people upgrade their cars, gadgets, or wardrobes.

How to fix it: Adopt the 50/30/20 rule, allocate 50% of your income to needs, 30% to wants, and 20% to savings or debt repayment.

3. Lack of Financial Education

Most UK schools don’t teach personal finance, leaving young adults unprepared to manage their money. As a result, budgeting, investing, or building an emergency fund becomes overwhelming.

How to fix it: Follow trusted financial blogs, attend free webinars, and use money management apps like Moneyhub or Emma to gain control.

Also Read: Best budgeting apps in the UK

4. No Clear Savings Goals

Having no clear purpose for saving money makes it easier to spend impulsively. Saving just for the sake of saving is not motivating.

5. Define What You’re Saving Money For

• A house deposit?
• A family holiday?
• A self-invested personal pension (SIPP)?

Creating a tangible goal gives direction and motivation.

How to fix it: Break down big goals into smaller, trackable milestones. Use visual trackers to monitor progress.

6. Not Automating Your Savings

If you wait till the end of the month to save what’s left, chances are, there won’t be anything left. Make it a habit to park a certain percentage of your monthly salary as soon as it gets credited into an ISA. It could be a Cash ISA, Stocks and Shares ISA or a Lifetime ISA based on your financial goals and risk appetite.

Also Read: How to maximize ISA returns

7. Make Saving Money Effortless

Set up a standing order to transfer a fixed amount into a savings or Stocks and Shares ISA as soon as you’re paid.

How to fix it: Use apps like Plum or Monzo’s savings pots that round up purchases or automate small daily savings.

8. Impulse Spending & Credit Reliance

With buy-now-pay-later schemes and tap-to-pay cards, it’s easy to overspend. Most people underestimate their daily expenses and don’t track small purchases.

Also Read: How to boost your credit score in the UK

9. Cut Back Without Cutting Happiness

Try the “no-spend day” rule once a week. Or use the 24-hour rule, wait a day before making any non-essential purchase.

10. Keeping Up With Others

Trying to match others’ lifestyles, especially seen on social media, can derail savings goals. Remember, what you see isn’t always reality.

How to fix it: Set personal financial goals and measure progress only against yourself.

11. No Emergency Buffer

One unexpected bill can derail a savings plan entirely if there’s no buffer.

Build an Emergency Fund First

Aim for at least 3-6 months’ worth of expenses in an accessible account. This keeps you from dipping into long-term savings when the unexpected happens.

Also Read: How to build an emergency fund in the UK

Financial Tools to Help You Succeed:

• Savings accounts with high interest (e.g., Chase, Barclays Rainy Day Saver)
• Budgeting apps like Yolt or Snoop
• Round-up savings apps like Chip

These tools remove friction from the saving process.

Saving Money is About Consistency, Not Perfection

You don’t have to be perfect, you just have to start. Even saving £50 a month can grow into a substantial safety net over time. The trick is to make saving money a habit.

Final Thoughts: Saving Money Starts with Awareness

It’s not your income, but your habits, mindset, and systems that determine your ability to save. Start small, stay consistent, and automate where possible. Remember, saving money isn’t about depriving yourself, it’s about gaining financial freedom in the future.

Also Read: Ultimate guide to why savings isn’t enough in 2025

FCA Disclaimer:

The information provided in this article is for educational purposes only and does not constitute financial advice. WealthilyYours is not authorised by the Financial Conduct Authority (FCA) to offer financial advice. Please consult a qualified financial adviser before making any financial decisions.

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