Today, many people fail to save even the smallest amount of money. Even households earning over $150k/year complain money is tight. Lack of savings can be from a small income or because they simply don't know how to budget. No matter your income you need to understand the psychology of money in order to save and spend wisely. More words on this topic below:

5 Factors That Make Saving Difficult

People often wonder why they can't save money. Scientists have conducted research and identified five main reasons why we can't save money:

1) Need to earn more - most people don't earn enough and that's the main reason why it is hard to save. When living paycheck to paycheck there is no possibility to save even a little money. This is increasingly true as prices have risen in recent years (rent especially).

2) Spending is addictive - many buy impulsively, even when they don't need something, just for the dopamine rush. I grew up with a friend who would go spend $50 at the mall whenever they were feeling blue to cheer themselves up.

3) Rewards from savings aren't immediate - when you buy something you are happy at that moment, but when you save money it can feel like you are getting nothing back. 

However, if you put the money in an emergency fund it will be there for you when a financial crisis or any breakdown comes along. This is for things like losing your job, your car breaking down, or a leaky roof. Knowing that you have the money to cover the emergency will help you be much calmer.

4) We only save when we think we can - people with an average salary think only the rich are able save. But in reality, it is completely different. What really matters over time is saving steadily, and starting as young as possible. Automating your savings, no matter how small, is the sure way anyone can become a millionaire given consistent contributions.

5) Do we unconsciously emulate our parents? - We learn financial habits from our parents and take on their financial baggage. Family and finances can be extremely stressful to mentally and emotionally separate.
 

5 Ways to Master the Psychology of Saving Money

How can you save more money? It depends on your discipline and practice, and the next 5 steps will show you how to do it:

1) Spend less than you earn - logic says we should spend less than we earn. To achieve this, we need to learn to create a monthly budget. When we know how to allocate money every month, we will also know how to save. You need to know what your income, periodic expenses, planned and non-recurring expenses are.

2) Develop plans for the future - can you see where you want to be in 5 to 10 years? Do you want to save money and learn to invest wisely? To invest, it is necessary to take risks.

3) Celebrate your small successes - always set small goals and when you achieve them, celebrate them, because that way you will motivate yourself to achieve the other goals you set.

4) Get in the habit of saving automatically - you can do this if you automatically set money to go from your savings account to a savings account. Start with a goal of something like $5000 in a year and see how it goes.

5) Make budgeting a habit - everything we do in life becomes a habit. By recording all your transitions in a budgeting tool, tracking your spending, income and savings becomes a habit. Once you get into that habit, saving money won't be a problem.

Conclusion: The psychology of money is elementary and people should know that the most important thing in meeting your financial goals is to devote time and energy to building good financial habits.