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Americans are a confounding lot. On one hand, they’ve never had more opportunities to make money and save than they do right now. There were no app developers, YouTube personalities, Uber drivers, direct deposits, and Roth IRAs when I was growing up. On the other hand, however, they’ve never been more racked by financial insecurity and more dependent on coerced charity (i.e., government welfare and subsidies) than they are today. Cut the benefits of any major transfer program (i.e., Social Security, TANF, SNAP, EITC, Section-8 housing vouchers, etc.) by a mere ten percent and millions of Americans will find themselves in the throes of a fiscal calamity.
Why? Why is the typical American living paycheck to paycheck and so impotent when it comes to saving?
I decided to tackle this vexing problem with my fertile brain and after 15 minutes of somewhat intense rumination, I came up with ten reasons why you—assuming you’re a typical American—can’t save for sh*t. Here is the first five.
First Five Reasons Why You Can’t Save
One: You’re too self-indulgent
For all of my 20s, and most of my 30s, I would come home after work and do three things: lie down on the couch, turn on the television, and peacefully drift into unconsciousness.
It felt great being a bum for two to three hours every afternoon. The only problem was that I was living paycheck to paycheck during that stretch, and being a post-work bum wasn’t going to change that.
Thankfully, things changed in my late 30s. I got disgusted with myself and disgusted with my finances. Being a post-work bum suddenly lost its appeal. I began to use my post-work hours more constructively. I either worked a second job, went to school, or honed my IT skills. And while de-bumming my post-work self didn’t turn me into a prodigious saver overnight, it did lay the groundwork for me becoming a prodigious saver in my mid-40s.
The immediately agreeable is often ruinous to one’s long-term financial health. Conversely, the immediately disagreeable is often beneficial. Take a look at the below table. If you routinely choose column one actions over column two actions, you’ll seriously compromise your ability to grow your income, temper your expenses, and—most importantly—be kind to your future self (i.e., save money).
Things You Can Do with Your Post-Work Hours Prior to Bedtime
| Agreeable Actions | Disagreeable Actions | Comments |
|---|---|---|
| Sleep | Work additional hours | Very few people get wealthy sleeping 12 or more hours every day. |
| Play video games | Go to school to enhance your skills and earn a valuable credential | Unless you're a famous blogger or YouTuber who reviews and analyzes video games, investing a lot of time in gaming is a poor way to increase your value in the labor market. |
| Eat take-out food | Cook healthy meals at home | Subsisting mostly on refined carbs and sugar is a great way to ruin your health and become obese. It's also a great way to become a slave to the healthcare-industrial complex. |
| Party like a rock star | Exercise | Consuming a lot of alcohol and drugs will not only crush your ability to save but it will also crush your ability to earn. Addicts aren't very employable. |
| Fornicate wildly | Write your significant other a poem | Okay, my poem-writing alternative is a stretch. All I know is that promiscuity isn't a friend of your wallet. STDs and children aren't cheap. |
| Watch television | Read a personal finance book to improve your financial competency | Watching people run around in costumes on television (e.g., Game of Thrones, The Walking Dead, NFL football, etc.) isn't going to help you master frugality and learn how to save and invest. |
Two: You Live in a Cosmopolitan City
Suppose we have two average people. They each pay the average rent, and they each make the average salary.
Suppose also that our two average people live in different cities. One lives in Raleigh, North Carolina, a small but vibrant city, and the other lives in Queens, New York, a borough in one of the world’s most famous cities.
Because our two average people live in different cities, they naturally have different rents and salaries. Here’s the breakdown of those differences.
The Cost of Living in a Cosmopolitan City
| City | Average Monthly Rent | Average Annual Rent | Average Annual Salary | Average Annual Take-Home Pay (70% of Average Annual Salary) | Average Annual Rent as a Percentage of Average Annual Take-Home Pay |
|---|---|---|---|---|---|
| Raleigh | $1,208 | $14,496 | $54,388 | $38,072 | 38.08% |
| New York (Queens) | $2,570 | $30,840 | $66,281 | $46,397 | 66.47% |
Now I have a question for you. Who do you think will have an easier time saving money. Our Raleigh resident? Or our Queens resident?
If you said “our Raleigh resident,” go straight to the head of the class. Someone whose rent consumes two-fifths of his or her take-home pay is apt to have more money to save than someone whose rent consumes two-thirds of his or her take-home pay.
The moral of the story: If you’re having trouble saving money and you live in a cosmopolitan city, move to a less glamorous city. You won’t have all the bells and whistles of your previous environment, but at least you’ll be able to save a couple of shekels.
Three: You Let Big Business Make Your Spending Decisions
It took me nearly 40 years, but eventually, I figured out that…
- You don’t have to buy or receive a diamond ring in order to get married.
- You don’t have to exchange gifts and go out for an expensive dinner on an arbitrary day in February in order to prove that you love your spouse or significant other.
- You don’t have to spend hundreds if not thousands of dollars on gifts the day after Thanksgiving in order to prove that you love your family and friends and are a good Christian.
- You don’t have to buy one of the automotive industry’s latest and greatest carbon-belching monstrosities and saddle yourself with an onerous car payment for six years in order to transport your less-than-glorious carcass to your less-than-glorious job.
- You don’t have to spend tens of thousands of dollars for a bachelor’s degree in order to learn the rudimentary knowledge and skills needed for an entry-level job.
Don’t let people who profit from your wasteful spending convince you that wasteful spending is a moral, cultural, or financial imperative.
As I’ve said, for nearly 40 years, I bought into the falsehood that corporate-approved spending is the only way to secure happiness and show love. Holding Mrs. Groovy’s hand, for instance, is a much more meaningful way of showing my devotion to her than buying her a dozen roses at the behest of a television commercial. If you’re constantly buying things to feel good about yourself or show you care, you’re doing it wrong.
Four: You Aren’t Comfortable with Change
A sage once remarked that people…
“[A]re more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”
No truer words have ever been written regarding the scourge of inertia. If you’re living paycheck to paycheck, you’re never going to be able to save unless something changes—that is, unless you “abolish the forms to which you’re accustomed.” Change jobs, work more hours, cut cable, eat out less, renounce credit cards, or move to a cheaper apartment—you’re number one priority is to do something that will create a gap between your income and your expenses. And if you’re afraid of making such changes, you’re sunk. It’s as simple as that.
Five: You View Looking Ordinary as a Major Blow to Your Image
During my 20s, I had a salary fit for trailer-park living. But back then, I would never deign to live in such unbecoming housing. I had a bachelor’s degree from an accredited college, after all. And that piece of paper said I was too good to live in a trailer.
So rather than rent a trailer and save 15 to 20 percent of my take-home pay, I rented a fashionable home in a fashionable neighborhood with a couple of buddies and saved nothing.
Final Thoughts
Okay, groovy freedomist, that’s all I got. What say you? Are these first five reasons insightful or what? And if these five reasons gave you an incredible CMLT, just wait to you see the second five reasons on Friday. Peace.
“You don’t have to spend hundreds if not thousands of dollars on gifts the day after Thanksgiving in order to prove that you love your family and friends and are a good Christian.”
This one really short-circuits the consumer-addled minds of so many people. They roll their eyes at my “frugality”, and then max out their credit cards on gifts for people who don’t need them and then trudge back to work burdened with loads of new debt, happy that they performed their holiday obligations. Another great one Mr. G.
Thank you, Mr. G. I don’t know who suggested it, perhaps it was my mother, but about 20 years ago our family decided to stop exchanging Christmas gifts. We now just do a Christmas grab-bag and every adult contributes a single gift–and that gift has to be under $25. This year my mom and sister decided to add a wrinkle to our traditional grab-bag. We all have to make a gift and the supplies for whatever gift we create can’t exceed $25. Like I said, we’ve been doing the Christmas grab-bag for roughly 20 years and we all still love each other. Yep, to paraphrase the Grinch: “Christmas isn’t ribbons, tags, packages, boxes, or bags. It doesn’t come from a store. Christmas means a little bit more.” Thanks for stopping by, my friend. Cheers.
I would add one evolutionary reason “why you can’t save…”
We are social creature – monkey see monkey do.
And here are the strategies to execute depending on your genetic wiring with regard to the social need.
1. Break away from your current social structure and strike out on your own.
2. Break away from your current social structure and find the group with the saving mindset and join them. Similar to the Alcoholics Anonymous, but Financial Independence.
Excellent point. My post should have included this one but my fertile brain missed it. Quick aside. There was a young lady at my last job who moved from Buffalo to Charlotte. When I asked her why she left, she told me that her family was so dysfunctional, both fiscally and socially, that staying would have destroyed her life. She would have ended up being just as dysfunctional. The old saw “you are the average of the five people you hang around most” is so true. Thanks for stopping by, TE. Cheers.
“The immediately agreeable is often ruinous to one’s long-term financial health. Conversely, the immediately disagreeable is often beneficial.”
Fertile rumination, indeed. Great post, my friend.
This needs to be made into a motivational poster
I’m blushing.
You’re too kind, sir.
i found myself unemployed for a few months back in the early 90s, but when my wife looked around for various gubmint handouts she discovered that we didn’t qualify b/c we didn’t have a car loan or big credit card balance–our only debt was three mortgages which didn’t count. Had we been stupidly wasting money by chaining ourselves to financial slavery, the gubmint would have generously made this life-choice easy.
Same thing happened years later when we went looking for college financial aid. One company promised that by transferring assets into “non-qualifying retirement accounts,” we could reduce our apparent net worth to almost zero by taking on a lot of needless debt. Happy for us we didn’t do it.
“Had we been stupidly wasting money by chaining ourselves to financial slavery, the gubmint would have generously made this life-choice easy.”
Haha! It’s almost as if our government prefers us to be indebted and dependent on “government services.” There was a Twilight Zone episode that warned against this duplicity. It was called, “To Serve Man.”
this is the question to ask when considering our relationship with the gubmint: are we citizens or are we cattle?
steve poling recently posted…Dave Ramsey Heresy
Couldn’t agree more, Steve. Sadly, too many Americans prefer cattledom to freedom.