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If You Think You Can't Afford To Save Money, Read This

Sarah Schmalbruch   

Girl Sitting on Bench by Water

Flickr / Nuuttipukki

You can probably save more than you think.

Whether for retirement or investing, it's one of the most common and basic pieces of money advice out there: Save.

So why is it so hard?

According to Ellen Rogin and Lisa Kueng, authors of "Picture Your Prosperity: Smart Money Moves to Turn Your Vision into Reality," it's because saving money can feel like losing money.

"When you start a savings plan - even if it's for a very exciting reason, like a Hawaii trip - it can feel like you're losing money," Rogin and Kueng write. "And we all hate to lose money."

But, the authors say, you can turn your thinking around with a simple mental trick.

"Picture Your Prosperity" cites a public opinion survey that asked one group of people if they thought they could save 20% of their income. Only half the group said yes.

The second group of people were asked if they thought they could live on 80% of their income - the same question, just phrased differently. This time, nearly 80% of those surveyed said yes.

The authors don't explicity recommend saving 20%. They recommend saving in general terms, but the exact amount depends on your personal situation.

Here's how Rogin and Kueng interpret the study's results. They write:

These results don't make any logical sense. But it makes intuitive sense because of the way many of us view money. To redirect 20% of your cash flow into savings somehow feels as though you're losing it.

Living on 80% of your income may be an initial adjustment, but ultimately doesn't seem so much like a loss - it's simply what is available, and focuses on what you do have, not on what you don't have.

Focusing on the money you have over the money you don't seems obvious - and easier said than done.

One trick to make this easier is to automate your savings. A quick phone call or visit to your bank's website can usually arrange a transfer of your chosen amount of money from your checking account to savings the day your paycheck hits.

Out of sight, out of mind.

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