Saving is central to personal finance. If we save, we can maintain good financial health. But that’s easier said than done. Several things can interfere. What are they and how can we handle them?

Adult male student smiles while studying outdoors

A familiar story

David got his first payslip this month. At 24, he finished university only four months ago and has since started to work. Getting a payslip felt exciting but also overwhelming. “What do I do with all this money?” he wondered. After weighing his many options, he first went shopping for clothes, then to buy the new video game console that had come out the previous week at the electronics store below his flat and, finally, he started planning a trip with friends to celebrate his budding career.

But what about his savings? David didn’t think about them because a few “foes” got in his way. The lack of planning and foresight are holding this young man back from saving for the future and staying financially stable. This is just one foe of frugality, but there are more. Below we’ll delve into three things that hamper our ability to save every month. 

1. Disorganization

If we’re disorganized with our finances and accounting, we won't know how much money we’re spending and, most importantly, on what.  “Do I need it? What does it do for me? Can I go without it?” To ask ourselves these questions, we need to understand our financial behaviour and keep detailed records of our expenses. 

Being truly organized requires motivation. We must know exactly why we’re saving and devise a realistic plan with a set amount that we can actually save. Willpower and discipline are also our allies on this mission.

Temptation is also a foe of frugality. That's why we should do an in-depth, personal analysis of the expenses we actually need.  

We should also steer clear of the optimism bias and not set unrealistic objectives or deadlines that will only leave us feeling frustrated. 

And how can we plan our finances better? Drawing up a monthly budget that shows all our income and spending will help us be more organized. Knowing every minor expense in the short term is key to achieving our savings goal. We can create an Excel to jot down each one and set up a homemade accounting system for our spending.

Senior woman shopping in the city and using her smartphone on the street.

2. Inflation

Inflation can throw a monkey wrench into our savings and reduce their value. Why? Because it makes the goods and services we consume more expensive. At our same pay grade, it will be harder for us to start saving from scratch. As a result, we won’t be able to put away the same amount of money at the end of the month.

To learn more, check out this article by Openbank (in Spanish).

3. Contingencies and ant expenses

When we make our personal finance plan, we should create a special section for contingencies. Otherwise, we’ll have to dip into our savings to cover unforeseen expenses, and may undermine or lose this vital capacity for our financial health

Young friends having fun in the city and in the park

And then we have ant expenses: small sums we spend every day, even without realizing it. We may not even notice them. Do you remember what you spend on a coffee each day? How many times you take a taxi instead of the bus? How many days you order delivery instead of cooking at home? While this type of spending can feel gratifying and doesn’t need to be cut out altogether, setting a limit in our personal finance plan might be useful to put a specific sum into our savings. To understand this idea better, check out this article by Finanzas para Mortales (Finance for mortals) (in Spanish). 

For more tips on better financial health, read this post by Openbank (in Spanish). And if you want to know more about managing your finances at an early age, look at this post by Santander Consumer Finance (in Spanish).

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