According to this article I just read in Money mag, it’s due to “scarcity of attention.” Which is a fancy way of saying “we think of the now, rather than the later.” Here’s a clip:
“There’s a popular image of people who don’t save for the future as lacking in self-control. But the reason saving is so hard has less to do with self-control and more to do with a scarcity of attention. If you have urgent current expenses to cover, then future priorities like college and retirement fall off your radar because they are simply less pressing. Scarcity of attention prevents us from seeing what’s really important.”
It’s an article by a behavioral economist, and while I agree for the most part, I’d imagine these “urgent current expenses” seem pretty important too, haha… there may not BE a tomorrow if you can’t find enough money to eat, sleep, etc ;) And plus, not everyone truly *wants* to save save save either – a pretty important variable not to be overlooked. But I do get his point in the general scheme of things – you gotta find ways to save for the future even though it doesn’t seem like a priority right now.
The article then goes on to give tips on how you can improve this:
- Start automating your savings (so you don’t have to think about it)
- Start investing in target-date funds (so you don’t have to think about this either)
- And, my favorite, set up future reminders to yourself! He mentions a site called FutureMe.org which I guess lets you write an email to yourself to be delivered at a later date, haha… That way you can keep an eye out on yourself :) According to a study he’s done, those who set regular reminders save on average 6% more than those who don’t, and those who then add PICTURES to these reminders save an even higher amount at 16% more. Interesting stuff…
(This behavioral economist, btw, is a guy named Sendhil Mullainathan who just put out a book called Scarcity: Why Having Too Little Means So Much. In case you like what you’re seeing here.)
All things that are fine and dandy really – nothing new (except for the cool reminder site) – but of course this scarcity issue is just ONE of the problems in the general scheme of things, as well as the self-control stuff. I don’t think you can whittle down the problem of savings to just one thing though, but I’m certainly no economist. What about:
- Spending more than you make?
- Not having a budget?
- Not KNOWING how to budget, manage your money?
- Not bringing home enough income?
- And my favorite, not *caring* about the future like my friend whom I recently mentioned?
There are a ton of reasons saving is hard if you ask me. But first, you have to really *WANT* something in order to start making progress. Just like with losing weight or stopping smoking, drinking, etc. If you don’t want it bad enough, you’ll never start implementing the changes needing to get you to that next level – despite you understanding what’s best for yourself.
While I can’t speak about weight loss or smoking personally, I can tell you all about my experience with money. And if you look at this timeline here below, it’s really about the *LACK* of experience since I simply didn’t care that much – even though I knew it was important.
- College days: Just wanted to party and have fun!
- After graduating: Wanted my own place to live and my own stuff
- A few years later: Wanted bigger and better stuff!
- A few years after that: Just wanted to woo the pants off my then-girlfriend (literally!) ;)
- And then, finally, I started caring about the future of my money and now here we are…
It was only at this point of *REALLY WANTING IT* that I started implementing changes to save more and invest into retirement, etc. If you had tried to force me into it earlier, I simply wouldn’t have paid attention to you much – unless it directly affected one of those goals of mine on that list (“You’re gonna teach me how to budget by giving me beer? Okay!” “What’s that girlfriend? You’ll let me sleep over if we go over your savings plan? DONE!” :)).
So anyways, yes, scarcity of attention is a variable, but so is really wanting something too. It’s not so black and white unfortunately. The trick is figuring out which of these obstacles are standing in our way ONCE we’re ready to start taking action, and then get to wiping them away as fast as possible. There’s two sets to the equation – the “why” and the “how.” And for all of you reading this right now, you’re in the “how” boat since you obviously already care about your money being here :)
So keep on pushing forward with those goals, everyone! If you’ve found any tricks that help you to save or invest more, please let us know in the comments so the rest of us can learn from them too. As our good friend G. I. Joe used to say back in the day, “Knowing is half the battle!”
Photo by Newtown grafitti… Do you know what “Chien Bizarre” means? ;)
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