When an obstacle in the road appears, this usually means you take a detour or maneuver around it to get back on the right path – even if it means getting stuck in traffic for a while.
Financial roadblocks are sometimes a bit more difficult to navigate. Many times, they can be obstacles you’ve created for yourself, like poor money habits that derail any desire to save. Worse yet, you might be oblivious to any major money issues to begin with. This means you’re not just stuck in a traffic jam – you’re stalled out on the financial freeway.
The key to overcoming financial obstacles is to first identify them. Once you’ve done this, you can make a plan. To help you out, check out these five common money obstacles, see if any of them apply to you and then get working to overcome them.
Obstacle 1: Lack of financial literacy
We tend to think of an obstacle as something that stands in the way of achieving a goal. But sometimes, an obstacle can manifest as the absence of something, like a lack of financial knowledge.
Financial literacy can be translated as being knowledgeable about how finances work. Insufficient financial know-how can make it hard to save money, especially when you don’t know where to begin, how much to save or even what saving money entails, according to James R. Nowlin, author of "The Purposeful Millionaire."
“You need to be knowledgeable about money management so you can save money,” Nowlin said. “Make sure you at least have a thorough understanding of how credit cards work, how interest rates function, how to set budgets."
Decide where you want to focus first and get reading or asking questions.
Obstacle 2: Not budgeting
A budget is the bedrock of your personal finances. Without a budget, your money may be standing on shaky ground. Why? A budget helps you see how much money you have coming in and going out. And, having a budget in place can help you save money.
“One of the biggest obstacles to saving is the average American’s aversion to creating a budget,” blogger J.R. Duren said. “If you don’t have a budget to guide you, then there’s a good chance you’ll be less conscious of how much money is in your savings account.”
Duren notes that your budget acts as a financial compass to guide you toward monthly money goals.
“When you create a budget with a specific section for savings, you can go through the month with that goal in mind, making decisions based on whether or not your purchases will help you meet your savings goal.”
What you budget for – or rather, what you don’t budget for – can quickly become another obstacle to saving money.
“One of the biggest obstacles that I have noticed people have when trying to save is not budgeting for the small expenses,” said LaKesha Womack, a financial literacy author. “Normally, people budget for the big items like their mortgage, car payment, insurance, utilities, etc., but they fail to consider household and personal items. Those expenses can easily eat away at the budget."
“I noticed this in my own budget,” she continued, adding that she gives herself room for miscellaneous expenses. “I am sure to include reasonable amounts for gas and groceries."
In short: build a budget and the savings will come.
Obstacle 3: Too much debt
Any kind of major debt can be financially oppressive, but student loan debt is perhaps one of the biggest savings killers out there. In fact, according to Student Loan Hero, the average 2016 college graduate has more than $37,000 in student loan debt, a 6% increase from 2015. This often leaves little wiggle room for saving money – even if you have a budget.
“That debt keeps you from putting away the amount of money you desire into your savings,” Jamie Wharton, a marketing coordinator with lending site Earnest. Wharton suggests refinancing your student loans in order to pare down your debt. By refinancing with a lower interest rate, you’ll free up some money to use toward your savings.
Obstacle 4: Spending needlessly
It’s one thing to be wrought with expenses that make it hard to save, like rent or a car payment. It’s another thing to spend your money on unnecessary purchases.
When spending becomes chronic, you may find there’s no money leftover to save.
“Some people just can’t stand having old stuff, or they get tired of their possessions too quickly," Nowlin said. "One example is that guy who always buys the newest model of the iPhone, even though his current iPhone is still 100% functional."
“Chronic overspending is a habit that you should aim to beat,” he said. “Download one of the numerous ‘spending tracking’ apps to identify exactly where your money goes.”
Obstacle 5: Yourself
You can be standing in the way of your own savings goals. It’s true. You may be your own obstacle; your own financial worst enemy.
“You have to avoid being an obstacle to yourself,” said Matt Collins, owner and founder of LoansNow. “For example, paying your bills late can lead to additional fees that may seem small, but can severely restrict your savings ability.”
Another reason you may fail to save money is because you give up on yourself.
“The biggest obstacle I find when it comes to people saving is themselves; that realization and confidence that they can do it,” said Debbi King, personal finance expert and author. “So many people believe that they don’t even have a dollar to save. However, if you are eating out, going to movies, traveling, drinking lattes – you have the money to save."
King recommends paying yourself first — setting aside a portion of your paycheck before paying any bills or expenses.
“Even if it is just $10, start somewhere,” she said. “Have it directly put into your savings account, and very soon, you won’t even miss it. And if you can’t save, have a hard meeting with yourself about where you can cut back and use that money to pay yourself first.”
There are some ways to get your spending to help yourself out. For example, if you open a Chime account, you’ll get a Chime Visa debit card. With each purchase you make on your card, Chime rounds up the dollar amount and puts the change into your savings account. You can also sign up for automatic savings and this feature deposits 10% of each paycheck into your savings account.
There are several options out there, so find an automating option that works for you — you may be amazed at the results.
“I thought for many years that I didn’t have the money; that every dollar had to go to other bills,” King said. “But one day, I set up a direct transfer every week for $50. It happened automatically, so I never saw the money. One day, I thought to check my balance and I had $600. It was amazing. So whether it is $10, $50, or $500, pay yourself first ... You can do it and more importantly, it is the key to building wealth.”
This post originally appeared on the Chime blog.